House Appropriations Committee Amendment Prohibits Funds to Iran’s Gasoline Suppliers

Washington, D.C. (June 24, 2009) – The Foundation for Defense of Democracies welcomed a House Appropriations Committee amendment that would prohibit certain U.S. financial support for companies that supply refined petroleum, including gasoline, to Iran.

“As Iran’s courageous citizens take to the streets, we hope that a Tehran Spring might lead to a future Iranian government that ends its illegal nuclear program, support for terrorist organizations, and abuse of its own people,” said FDD Executive Director Mark Dubowitz.  “However, we must be prepared that the Iranian regime will crack down against its people and press ahead with its nuclear weapons program.  Ending American taxpayer support for the regime by curtailing gasoline supplies could help convince the regime to comply with U.N. Security Council resolutions requiring Iran to suspend its illicit nuclear program.”

“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.  “This legislation directly targets this vulnerability.  It is heartening to see that leveraging Iran’s need to import gasoline enjoys broad and bipartisan support in the U.S. Congress.  It is one of the last, best peaceful options available to prevent the Iranian regime from achieving its nuclear ambitions.”

“The Iranian regime’s recent stolen election and brutal crackdown is yet another in its long series of actions flouting international law,” said Kittrie.  “If the Iranian regime is to halt its illicit nuclear program, its illegal support for terrorism, and its human rights abuses, we must change its cost-benefit calculus.   This amendment is an important step towards doing that.”

The amendment to the FY 2010 State-Foreign Operations Appropriations Act was proposed by U.S. Reps. Mark Kirk (R-IL) and Brad Sherman (D-CA) and approved yesterday by the full Appropriations Committee.  It prohibits the U.S. Export-Import Bank from providing credit, insurance, or guarantees to companies that export refined petroleum, including gasoline, to Iran or support the regime’s domestic refining capacity.  One of Iran’s largest suppliers of gasoline, Reliance Industries Limited of India, has benefited from $900 million in loan guarantees from the U.S. Export-Import Bank.  These loan guarantees included over $500 million to help expand Reliance’s Jamnagar refinery, which currently refines some 30 percent of Iran’s gasoline imports.

Although a major producer of crude oil, Iran must import approximately 40 percent of the gasoline it needs to fuel its economy and military because it lacks refinery capacity to meet its internal consumption.

The Foundation for Defense of Democracies has conducted extensive research on the handful of foreign energy companies supplying gasoline to Iran, has identified potential points of leverage against these companies that could be used to convince them to end their business relationships with Iran, and has formulated policy options available to U.S. and foreign policymakers to target Iran’s reliance on imported gasoline.