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– Amb. Thomas Hajnoczi
Chair, MTCR
May 19, 2021
Congress Takes Aim at Iran
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Peter Crail

On Sept. 25, the House of Representatives adopted a controversial bill that would expand the reach of U.S. sanctions against entities that do business in Iran. Although the bill has received overwhelming bipartisan support in the House, the administration has criticized the legislation for limiting its ability to garner support from other states for multilateral sanctions against Iran.

Similar legislation was filed in the Senate by Senator Gordon Smith (R-Ore.) as an amendment to the fiscal year 2008 defense authorization bill but was not voted on. The defense authorization bill, which was adopted Oct. 1 by a vote of 93-2, includes two amendments pertaining to Iran’s ballistic missile capabilities and its suspected pursuit of nuclear weapons.

House Targets Businesses

The Iran Counter-Proliferation Act of 2007, introduced by House Foreign Affairs Committee Chairman Tom Lantos (D-Calif.), passed by a vote of 397-16. Key provisions of the bill consist of a number of additional sanctions on entities, persons, and governments dealing with Iran and amendments to the current law, which requires the president to sanction any firm investing more than $20 million in Iran’s energy sector.

The bill would extend sanctions to U.S. firms whose foreign-owned subsidiaries abrogate U.S. sanctions on Iran. This measure would not apply to contracts concluded prior to May 22, 2007.

In recent years, U.S. companies have come under fire for trade and investment deals between their foreign-owned subsidiaries and Iran. On April 30, the Senate Commerce Subcommittee on Interstate Commerce, Trade, and Tourism held a hearing with Halliburton Co. Vice President and Corporate Secretary Sherry Williams regarding the work conducted in Iran by a foreign-owned subsidiary of the U.S.-based energy giant. She indicated that “we believe it to be well established that owned or controlled foreign subsidiaries of U.S. companies are not subject to the U.S. trade sanctions against Iran.”

The bill would also prohibit the United States from entering into a nuclear cooperation agreement with any country assisting Iran’s nuclear program or transferring conventional arms or missiles to Tehran. The prohibition would include restrictions on exporting nuclear technology and components to such countries. The sole country explicitly recognized in the bill as applicable for such restrictions is Russia. In July, President George W. Bush and Russian President Vladimir Putin initialed such an agreement, but diplomats said that its progress is likely tied to Russia’s policies toward Iran. Moreover, Moscow is currently constructing Iran’s first nuclear power reactor at Bushehr and has provided Iran with conventional weapons systems, including the transfer of 29 Tor-M1 anti-aircraft systems in January.

The bill would amend current law by removing the president’s waiver authority and making the prohibition of U.S. government procurement from a sanctioned entity a mandatory sanction. Current law allows the executive branch to choose two from a menu of six possible sanctions as well as to exercise waiver authority under certain circumstances. Since a version of the law first went into effect in 1996, the United States has refrained from placing sanctions on European firms due to the European Union’s nonproliferation and counterterrorism cooperation vis-à-vis Iran.

Administration officials have criticized the Lantos bill for targeting the business interests of states on which the United States depends to place multilateral pressure on Iran. Undersecretary of State for Political Affairs Nicholas Burns told members of the House Foreign Affairs Committee March 6, “If the focus of the United States’ effort is to sanction our allies and not sanction Iran, that may not be the best way to maintain this very broad international coalition that we have built up since March of 2005.” The administration did, however, promulgate sanctions Oct. 25 that rely in part on restricting third-country financing of certain Iranian entities.

Senate Chimes In

Two of the amendments adopted along with the fiscal year 2008 defense authorization bill are related to recommendations for U.S. policy in response to Iran’s nuclear and missile programs. The first amendment, approved by a vote of 90-5 July 12, recommends that the United States develop and deploy a missile defense system to counter the threat from Iranian ballistic missiles as soon as technologically possible. The amendment urges that this action should provide protection for “the United States, its friends, and its North Atlantic Treaty Organization allies.”

The United States is currently considering fielding a strategic missile defense system in eastern Europe, with elements of the system based in Poland and the Czech Republic. At present, Iran’s ballistic missile capability can reach portions of eastern and southeastern Europe, but it may be possible for Iran to develop a missile that can reach western Europe by the end of the decade. (See ACT, October 2007.)

By a vote of 76-22, the Senate Sept. 26 passed an amendment introduced by Senators Joseph Lieberman (I-Conn.) and Jon Kyl (R-Ariz.) that recommends that the United States designate the Iranian Revolutionary Guards Corps as a terrorist organization. The amendment also encourages the Department of the Treasury to “act with all possible expediency” to implement sanctions against all of the entities listed under UN Security Council Resolutions 1737 and 1747.

According to the latest U.S. report to the UN committee created to oversee the implementation of the resolutions, the United States has placed restrictions on only 14 of the 50 entities listed in the resolutions. The Oct. 25 sanctions included eight additional individuals listed under the resolutions.