May 12, 2010 | Forbes' Energy Source

It’s Smart Business To Get Out Of Iran

Time is running out for Iran's energy partners. The U.S. Congress is exhibiting an obsessive and relentless focus on Iran's energy sector –the lifeblood of the Iranian regime — and is increasingly willing to target companies that are providing the regime with a financial lifeline.

On Wednesday, the powerful Homeland Security & Governmental Accountability Committee of the U.S. Senate held a hearing on why the U.S. government continues to give contracts to companies doing business with Iran. Why indeed? The hearing yielded rare bipartisan agreement — disbelief that energy companies are getting U.S. taxpayer support to do business with a regime that is building a nuclear weapon, supporting terrorism, aiding and abetting militia groups in Afghanistan and Iraq that are killing U.S. soldiers, and committing egregious human rights abuses against its own people.

The predicate for this hearing came in the form of a U.S. Government Accountability Office report this week which disclosed that the U.S. government gave $880 million to seven foreign companies doing business in Iran's energy sector between 2005 and 2009. In March of this year, The New York Times reported that 74 companies received $107 billion in U.S. government contracts.

This disclosure comes at a time when Congress is taking the final steps in a conference committee to reconcile House and Senate versions of the Iran Refined Petroleum Sanctions Act (IRSPA). If enacted, this legislation would expand existing Iran sanctions to target the entire refined petroleum supply chain — suppliers, insurers, shippers, financiers, investors, and those providing key technology, support, services, and specialized information. The bill may also close a major loophole in Iran sanctions laws to shut off the predominantly European companies that provide critical technology and other services to the Iranian oil and natural gas sectors.

Skeptics ask if the U.S. government is serious about sanctions against Iran's energy partners. They're right to ask. After almost 15 years of sanctions on the books that explicitly prohibit investments in the Iranian energy industry, no violating company has ever been sanctioned.

But history is not always a reliable guide.

If President Obama signs the bill into law, he will have more legislative and executive authority than any president in U.S. history to punish Iran. He has tried engagement with Iran, which has failed. He has worked tirelessly for U.N. sanctions, which will be only be a first step if they are adopted. Political pressure now is mounting for him to use his extensive authority. And he just may do it. Remember, November mid-term elections are only six months away.

The Treasury Department also is moving aggressively to blacklist more front companies controlled by Iran's Islamic Revolutionary Guard Corps (IRGC) which have emerged as dominant players in the Iranian energy sector. Thanks to Treasury's hard work, energy companies that remain in Iran will risk punishment for doing business with the IRGC, which is treated no differently under U.S. law than al-Qaeda.

Finally, Congress is committed to holding everyone — the Administration, Treasury, and Iran's energy partners — accountable.

Stay tuned for more enforcement ideas out of Congress. Specifically, keep an eye out for multiple congressional committees (homeland security, foreign relations, armed services, banking, and intelligence) eager to become a part of a successful initiative to thwart the Iranian bomb.

An energized Congress, coupled with U.S. taxpayer frustration, is a dangerous force. CEOs of violating energy companies should take note. It's smart business to get out of Iran.

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Afghanistan Iran