House Adopts Iran Oil Sanctions

Article excerpt

The House of Representatives voted overwhelmingly Dec. 15 to penalize companies that provide refined petroleum to Iran, advancing congressional efforts to strengthen sanctions against Tehran.

The Senate is considering similar measures in more expansive sanctions legislation approved by the Senate Banking Committee in October. House and Senate committee leaders indicated in April that they would delay moving the legislation forward to allow the Obama administration to pursue diplomatic engagement with Iran. (See ACT, June 2009.)

The House adopted the measure by a vote of 412-12, with four voting "present."

The legislation, called the Iran Refined Petroleum Sanctions Act, amends the 1996 Iran Sanctions Act, which imposes trade and financial penalties on foreign firms that invest $20 million in Iran's energy sector in one year. The new legislation is intended to apply similar penalties to companies that supply refined petroleum to Iran or help it to construct petroleum refineries.

The legislation is intended to take advantage of Iran's reliance on foreign sources for about 30 to 40 percent of its refined petroleum. House Foreign Affairs Committee Chairman Howard Berman (D-Calif.), who introduced the bill in April, said in an October 2009 press release that Iran's need to import such a significant percentage of its refined petroleum was its "Achilles' heel."

Iran's suppliers of refined petroleum include firms in a variety of countries in Europe and Asia, but its European suppliers have reduced their exports in recent years under pressure from the United States and their own governments. Tehran has therefore increased its supply of gasoline from Asian countries, particularly China, and in September signed a deal with Petróleos de Venezuela to import 20,000 barrels of gasoline per day.

To date, no firms have been sanctioned under the Iran Sanctions Act although several firms have met the $20 million investment criterion, according to an October report by the Congressional Research Service. Due to concerns that such penalties on foreign firms may hinder international cooperation to address Iranian proliferation, previous presidents have often not made the official determination that a firm is violating the law, skirting the need to issue a waiver or impose sanctions.

The House bill seeks to limit this practice by requiring that the president investigate suspicions of violation and imposing a time frame for making a determination. The bill also makes the conditions under which the president can issue a waiver more stringent by requiring that the waiver be used only when it is "vital" to U.S. national security, rather than just "important."

Concerns Over Senate Bill

Although the sanctions bills have received strong bipartisan support, administration officials have expressed some concern about the potential timing of the passage of the Senate bill as well as some of its provisions. In a Dec. 11 letter to Senate Foreign Relations Committee Chairman John Kerry (D-Mass.), first published on the Web site of Foreign Policy magazine, Deputy Secretary of State James Steinberg said that he is concerned that the current version of the Senate bill "might weaken rather than strengthen international unity and support for" efforts to "impose significant international pressure on Iran."

Steinberg said the administration's substantive concerns related to "the lack of flexibility, inefficient monetary thresholds and penalty levels, and blacklisting that could cause unintended foreign policy consequences."

He requested that the Senate wait until 2010 so that U.S. diplomatic efforts were not undermined. The Obama administration had set a Dec. 31 deadline for Iran to make progress in negotiations with the five permanent members of the UN Security Council (China, France, Russia, the United Kingdom, and the United States) and Germany, pledging to seek additional UN sanctions on Iran if there was insufficient progress by then. …