House Introduces Legislation to Limit Iran’s Gasoline Imports

Would Provide Leverage in Negotiations over Iran's Nuclear Weapons Program

Washington, D.C. (April 23, 2009) — The Foundation for Defense of Democracies (FDD) welcomed the introduction in the House of the bipartisan Iran Diplomatic Enhancement Act, which seeks to extend current U.S. sanctions to suppliers, brokers, insurers, and tankers involved in selling gasoline to Iran. The goal of the legislation is to bolster diplomatic efforts to end the Iranian regime's nuclear weapons program.

FDD has provided substantial research and analysis on this idea, including identifying points of leverage over the foreign energy companies that supply Iran with the vast majority of its gasoline imports.

Iranian oil wells produce far more crude oil than Iran needs. Yet, Iran has not developed sufficient capacity to refine that crude oil into gasoline and diesel fuel. As a result, it must import some 40% of the gasoline it needs for internal consumption.

Peacefully cutting off gasoline sales to Iran until it stops its illicit nuclear activities has attracted broad support across the political spectrum. For more background on the issue, please visit: www.iranenergyproject.org.

The House bill, HR 1985, was introduced by Representatives Brad Sherman (D-CA) and Mark Kirk (R-IL). It has generated bipartisan support, with more than 20 Democratic and Republican cosponsors. For more details, please click here.

“Iran's reliance on imported gasoline to fuel its economy and military is the regime's Achilles' Heel,” said FDD Executive Director Mark Dubowitz. “This legislation would give the Obama administration real leverage when it negotiates over the regime's nuclear weapons program.” Dubowitz recently coauthored an op-ed on the topic for Canada's National Post, available here. He was recently quoted in a Wall Street Journal editorial here.

“Diplomacy is unlikely to succeed unless the U.S. changes Iran's cost-benefit analysis,” said Orde Kittrie, an FDD senior fellow and a law professor at Arizona State University. “Putting Iran's gasoline suppliers to a choice between selling to Iran and doing business in the U.S. is an excellent way to increase U.S. leverage and help to peacefully stop Iran's illegal nuclear program.” In November, Kittrie wrote an op-ed for the Wall Street Journal on how to increase U.S. leverage over Iran by putting Iran's gasoline suppliers to a choice between the U.S. and Iranian markets, available here.

The introduction of this bill is the latest in a series of actions taken by Congress to use Iran's reliance on imported gasoline as a source of leverage over Iran's nuclear weapons program. These include:

* April 2, 2009, the U.S. Senate passed, by unanimous consent, an amendment to a federal budget resolution that opposes federal government expenditures from going to companies earning revenue in Iran's energy sector, including companies providing refined petroleum products to Iran as well as shipment, insurance and reinsurance services assisting those sales. The amendment was sponsored by Senators Joe Lieberman (ID-CT) and Jon Kyl (R-AZ).

* March 26, 2009, seven Representatives, in writing to President Obama about his administration's strategy to address the Iranian nuclear weapons program, recommended specific measures targeting Iran's ability to import gasoline. The seven Representatives were led by House Majority Leader Steny Hoyer (D-MD) and House Committee on Foreign Affairs Chairman Howard Berman (D-CA).

* February 27, 2009, seven Representatives wrote to Energy Secretary Steven Chu asking that he reconsider a federal contract awarded to the Swiss firm Vitol to fill the U.S. Strategic Petroleum Reserve. They were led by Rep. Berman; Rep. Sherman, the Chairman of the House Subcommittee on Terrorism, Nonproliferation and Trade; and Rep. Ileana Ros-Lehtinen (R-FL), the Ranking Minority Member of the House Committee on Foreign Affairs.

* December 17, 2008, eight Representatives wrote to the chairman of the United States government's Export-Import Bank, Mr. James Lambright, requesting that he review $900 million in loan guarantees for Reliance Industries Ltd. of India, which is among Iran's leading suppliers of gasoline. The eight Representatives were led by Rep. Berman, Rep. Sherman, and Rep. Kirk.

* October 29, 2008, Senators Lieberman and Kyl wrote to the Export-Import Bank asking for a review of the loan guarantees to Reliance Industries.

During the presidential campaign, then-Senator Barack Obama endorsed a cut-off of gasoline sales to Iran. On October 7, 2008, Obama stated: “Iran right now imports gasoline … if we can prevent them from importing the gasoline that they need … that starts changing their cost-benefit analysis. That starts putting the squeeze on them.”