Congress Delays Iran Sanctions

Peter Crail and Matt Sugrue

In a nod to long-standing Obama administration requests, Congress will delay finalizing sanctions legislation on Iran while the UN Security Council considers its own draft sanctions resolution, the two lead sponsors of the legislation said in a May 25 press release. “[W]ith the progress in negotiations at the Security Council, we believe that our overriding goal of preventing Iran from acquiring a nuclear weapons capability is best served by providing a limited amount of time for those efforts—and expected follow-on action by the EU [European Union] at its mid-June summit—to reach a successful conclusion before we send our bill to the President,” said the statement by House Foreign Affairs Committee Chairman Howard Berman (D-Calif.) and Senate Banking Committee Chairman Christopher Dodd (D-Conn.).

The administration has expressed concern that the pending legislation might harm diplomatic initiatives to mount international pressure on Iran because the bills may require sanctioning U.S. allies as well as China and Russia.

A key component in both congressional bills is U.S. sanctions on foreign firms providing gasoline to Iran or investing in Iran’s refining capacity. This measure is intended to expand on the 1996 Iran Sanctions Act, which requires sanctions on foreign firms investing $20 million or more in other parts of Iran’s energy sector. (See ACT, January/February 2010.)

Secretary of State Hillary Rodham Clinton told the Senate Foreign Relations Committee May 18 that the five veto-wielding members of the UN Security Council—China, France, Russia, the United Kingdom, and the United States—had agreed on a draft resolution. The resolution was circulated to the council’s 10 rotating members later that day (see page 25). Berman and Dodd said in the May 25 statement that they had been “skeptical about the prospects for near-term action on Iran sanctions at the United Nations” until that agreement was reached.

The delay comes in the midst of increased momentum by Congress to pass a final bill; many lawmakers have expressed impatience with the administration’s protracted efforts to achieve a fourth set of UN sanctions. Arguing for swift congressional action on the sanctions, Senate Majority Leader Harry Reid (D-Nev.) told reporters April 22, “In my opinion, we have waited long enough for the diplomacy to work.” In April, Congress set a May 28 deadline for the conferees appointed to reconcile the House and Senate versions of the bill. House Majority Leader Steny Hoyer (D-Md.) told reporters May 18 that he expected a floor vote on the final bill the following week.

Although the administration has succeeded in buying time for the UN sanctions effort to move first, it is unclear if the UN action will help the administration carve out exemptions in the sanctions legislation for specific diplomatic partners. Lawmakers from both parties have resisted such a provision. A May 3 letter by a bipartisan group of 10 senators to Berman and Dodd argued against the inclusion of exemptions for “cooperating countries” in the final sanctions bill. “Specifically, we would find it difficult to support any conference report that would weaken…sanctions by providing exemptions to companies or countries engaged in the refined petroleum trade with Iran,” the letter said.

In a May 19 statement, Rep. Brad Sherman (D-Calif.), a member of the conference committee, suggested that the UN sanctions would not be a rationale for loosening the planned restrictions. “Nothing about this resolution, or any measures which countries may take under its cover, justify weakening the legislation currently in conference,” he said.

A congressional source said May 6 that other options may be considered to address the administration’s concerns. For example, the source said,  the legislation might include criteria that would have to be met before exemptions could be made.

In addition to the administration, U.S. allies, particularly in Europe, have expressed concern about the pending legislation. EU High Representative for Foreign Affairs and Security Policy Catherine Ashton sent a letter to Clinton reminding her of a 1998 agreement between the United States and the EU in which Washington pledged not to sanction European firms under the Iran Sanctions Act in return for increased EU cooperation on Iran’s nuclear program. Ashton wrote that she was concerned about the “extraterritorial application of U.S. legislation,” which would be “contrary to the EU-US understanding of 1998 under which it was agreed that such sanctions would not be applied to the EU in the light of the EU’s commitment to work with the U.S. to counter the threat that Iran poses to international security.”

The EU threatened to bring the United States before the World Trade Organization in 1997 in response to the passage of the Iran Sanctions Act on the basis of its extraterritorial application of U.S. law. The 1998 agreement defused that threat.

In interviews with Arms Control Today over the last two months, European diplomats said that EU countries are already engaged in efforts to discourage their own companies from investing in Iran’s energy sector. Those efforts have met with some success, the diplomats said. The EU would continue its previous practice of using the UN restrictions as a baseline for adopting even tougher sanctions, they said.

This page was corrected on June 8, 2010. The original article misidentified Rep. Brad Sherman as the House chairman of the conference committee on the pending Iran sanctions bill. Sherman is a member of the conference committee; the House chairman is Rep. Howard Berman (D-Calif.).