May 20, 2009 | Press Release

Iran Missile Test Shows Need for Gasoline Sanctions

Perhaps Last Peaceful Path to End Nuclear Weapons Program

Washington, DC (May 20,  2009)—The Foundation for Defense of Democracies (FDD) said that Iran’s successful test of a medium range missile showed the need for tough sanctions and other steps to stop Iran from importing the gasoline that it needs to fuel its economy and military.

“This latest test-firing of an Iranian missile and the regime’s aggressive pursuit of its illegal nuclear program threaten the region as well as American security,” said FDD Executive Director Mark Dubowitz.  “If talks with Iran are to succeed in ending Iran’s nuclear weapons program, the Obama administration will need some real leverage when it sits down with Tehran’s master negotiators. Iran’s heavy dependence on foreign gasoline may be the last, best chance we have to peacefully change the regime’s behavior.”

Senators Jon Kyl (R-AZ) and Joe Lieberman (ID-CT) today introduced an amendment to the supplemental appropriations bill being considered by the Senate to prohibit companies that sell refined petroleum to Iran from receiving contracts to fill the U.S. Strategic Petroleum Reserve.  In the last month, Democrats and Republicans in the Senate and House introduced three bills focused on limiting Iran’s ability to import gasoline.

“Iran’s need to import 40 percent of its gasoline is its economic Achilles’ Heel,” said Orde Kittrie, an FDD senior fellow, law professor at Arizona State University, and former U.S. State Department official.  “Iran relies on a handful of foreign energy companies, all with significant business interests in the United States, to supply it with the gasoline it needs.  If these companies end their business relationships with Iran, Iran’s economy will slow dramatically, its military will have to look elsewhere for fuel, and the Iranian people may demand that their government start investing in refineries rather than continue pouring money into its illegal and dangerous nuclear program.”

Although Iran is a major producer of crude oil, it must import approximately 40 percent of the gasoline it needs because it lacks adequate refinery capacity at home.  Companies supplying gasoline to Iran include Vitol, Trafigura,  Reliance Industries Ltd., and Total.  Glencore and Shell have also provided periodic shipments.

FDD has provided substantial research and analysis on Iran’s dependence on imported gasoline, including identifying points of leverage over the foreign energy companies that supply Iran with the majority of gasoline it imports.

FDD’s work includes:

•FDD National Post oped on the prospects for using gasoline sales to end Iran’s nuclear program is here.
•FDD Wall Street Journal oped on the companies supplying Iran with gasoline is here.
•Wall Street Journal editorial quoting FDD’s Mark Dubowitz on the effectiveness of gasoline sanctions is here.
•FDD document outlining the strong, bipartisan support that sanctioning gasoline sales to Iran has received is here.
•A summary of Congressional action taken to address Iran’s dependence on imported gasoline is here.
•For more background on the issue, please visit FDD’s Iran Energy Project page here.
FDD will soon publish a policy monograph on Iran’s dependence on gasoline imports, the companies supplying gasoline to Iran,  potential ways to influence the decision making of these companies, and the likely effects that gasoline sanctions would have on the regime’s behavior.  To receive a copy as soon as it is available, please contact Judy Mayka at [email protected].