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Senate Approves Amendment That Would Add More Iran Sanctions

November 30, 2012

Senate Approves Amendment That Would Add More Iran Sanctions

The South Pars gas field development in the southern Iranian port town of Asaluyeh is seen in this July 19, 2010 file photo. Photographer: Atta Kenare/AFP via Getty Images

The U.S. Senate approved expanding the economic sanctions that have reduced Iran’s crude oil exports and earnings in an effort to force it to curb its suspected nuclear weapons program.

Senators voted 94-0 today to add the new sanctions to the annual defense authorization bill under consideration on the floor.

Senators Bob Menendez, a New Jersey Democrat, and Mark Kirk, an Illinois Republican, yesterday introduced the added U.S. financial penalties on foreign businesses and banks involved in Iran’s energy, ports, shipping, and shipbuilding sectors, plus sanctions on metals trade with Iran. The lawmakers have led the push in Congress for economic pressure on Iran.

“Our sanctions are making a significant impact, but Iran is working just as hard to develop nuclear weapons,” Menendez said in a statement. “By passing these additional measures,” he said, the U.S. will send a message to Iran that it must make concessions on uranium enrichment, or face the strangulation of its economy.

The Senate defense measure for the current fiscal year still awaits a vote on passage. The measure would still have to be reconciled with a House version and already faces a potential veto by President Barack Obama over provisions unrelated to Iran sanctions.

Revenue Sources

The new sanctions would target Iran’s main sources of revenue and seek to prevent it from evading sanctions by buying gold with local currency earnings. While almost all trade with Iran by any U.S. business or individual has long been banned, yesterday’s proposal would impose penalties on other nations’ trade with Iran, a step closer to imposing a trade embargo on Iran.

The existing sanctions have weakened Iran’s currency, curtailed its oil exports, and forced Iran back to nuclear talks. Still, Iran hasn’t slowed its enrichment efforts, making new measures essential, Menendez said in an e-mail before his planned speech.

The U.S., European Union and Israel say Iran is secretly pursuing a nuclear weapons capability. Iran says its nuclear program is strictly for civilian energy and medical research.

The Senate-backed proposal would continue to allow purchases of Iranian crude as long as the buyer nation is able to show it’s significantly reducing its oil imports from Iran.

Natural Gas

The new measure also allows for purchases of Iranian natural gas if payments are made in local currency into an account that Iran could use only for approved trade. That provision, according to advisers who’ve helped craft the legislation, is especially important for Turkey, a U.S. ally and NATO member that’s a major buyer of Iranian natural gas.

While the U.S. and EU say the sanctions forced Iran back to the negotiating table this year, talks stalled and no agreement has been reached despite the steady tightening of economic penalties on Iran.

Iran’s oil exports were down 1 million barrels a day last month, or 40 percent, compared with October 2011, U.S. Energy Department figures show.

Oil rose today, heading for its first monthly gain since August, on signals U.S. economic expansion is accelerating, while investors weighed developments in government budget negotiations.

Crude oil for January delivery climbed 43 cents, or 0.5 percent, to $88.50 a barrel at 10:40 a.m. on the New York Mercantile Exchange. Futures are up 0.2 percent this week and are 2.6 percent higher this month. Prices are down 10 percent this year.

The new sanctions would include energy, ports, shipping and shipbuilding as sectors of the Iranian economy that support the country’s nuclear program and weapons proliferation.

‘Exceptional Circumstances’

The legislation also would make it illegal to do business or provide insurance or reinsurance to any Iranian business in those sectors or to any Iranian individual sanctioned by the U.S. government.

The provision would add a special exemption from sanctions on oil transactions for a country that may be facing “exceptional circumstances” that make it impossible to further reduce imports of Iranian oil. A hypothetical case, according to those involved in crafting the measure, might be Japan, which is struggling to meet its energy needs in the aftermath of the March 11, 2011, Fukushima nuclear disaster.

The proposal is also aimed at blocking trade in commodities used in Iran’s shipbuilding and nuclear sectors, such as graphite, aluminum, steel, metallurgical coal and software for integrating industrial processes. The measure also seeks to stop Iran from circumventing sanctions by receiving payment in precious metals such as gold, or using oil payments in local currency to buy gold.

‘Sanctions-Busting Techniques’

The proposal would sanction Islamic Republic of Iran Broadcasting for human rights abuses, including airing alleged show trials and forced confessions, and would sanction anyone involved in diverting humanitarian goods to the black market.

Mark Dubowitz, who has advised members of Congress and the administration on pressuring Iran, praised the measure for addressing “the Iranian game of ‘catch me if you can’” by making it easier to crack down on front companies “and other sanctions-busting techniques, like the use of gold or other precious metals as a medium of exchange.”

The Senate defense bill is S. 3254.

To contact the reporter on this story: Laura Litvan in Washington at

To contact the editor responsible for this story: John Walcott at

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