Lawmakers Question Use of Iran Sanctions Law

The Obama administration on Tuesday said it would blacklist a Belarusian firm under an Iran sanctions law enacted last year, but Republican senators called the move an insufficient application of legislation intended to pressure the Middle Eastern nation over its disputed atomic activities, Foreign Policy magazine reported (see GSN, March 29).

The penalties restrict access to U.S. financial networks and loan programs by the state-run oil firm Berorusneft, which in 2007 concluded a $500 million deal with NaftIran Intertrade, an entity already targeted by U.S. penalties.

The administration implemented the new punitive measure under the 2010 Comprehensive Iran Sanctions, Accountability and Divestment Act (see GSN, July 2, 2010). The statute, which updated the 1996 Iran Sanctions Act, is aimed at punishing Iran over nuclear activities that could be tapped to build a nuclear weapon. Tehran has maintained its atomic ambitions are strictly peaceful.

“Since President Barack Obama signed CISADA into law on July 1, 2010, Iran’s ability to attract new investment to develop its oil and natural gas resources, and to produce or import refined petroleum products, has been severely limited,” the State Department said in a press release. “The State Department’s direct engagement with companies and governments to enforce CISADA is raising the pressure on the government of Iran.”

The move would prevent the Belarusian entity from obtaining aid through the U.S. Export-Import Bank, acquiring U.S. trade permits, borrowing more than $10 million from independent U.S. financial institutions, or concluding acquisition agreements with federal agencies, department spokesman Mark Toner said.

While the firm has not attempted any of the steps, its blacklist inclusion “also sends a message to our partners in Europe as well that this is a company that we’ve decided to sanction. And I’m sure they have access or would seek access into European markets,” Toner said. He did not specify whether the administration was encouraging the European Union to adopt similar penalties.

The move is inadequate, Senators Mark Kirk (R-Ill.)., Jon Kyl (R-Ariz.) and Joseph Lieberman (I-Conn.) told Secretary of State Hillary Clinton in a letter. The three lawmakers have previously pressed the Obama administration to tap the law in punishing Iran-linked firms in China and elsewhere.

“We are writing to express our disappointment with today’s announcement that the administration designated only one additional entity for violating U.S. sanctions with regard to Iran,” wrote the lawmakers. “We do not believe this represents full compliance with the sanctions regime put in place by Congress.”

A high-level Republican staffer called the action against Berorusneft “a complete disappointment.”

“You would have thought they had already found a way to only designate the lowest hanging fruit when they sanctioned [NaftIran Intertrade]. Alas, they found a lower hanging fruit,” the staffer said.

The decision suggests the administration is only prepared to apply the sanctions law in nations where U.S. ties and interests are not at stake, another high-level GOP staffer added.

“While the administration is patting itself on the back for its empty action today with Belarus, we can hear the sighs of relief coming from Tehran, Beijing, Ankara and Geneva where bankers, gasoline traders, and oil and natural gas financiers just realized that the Obama administration isn’t serious about stopping Iran’s nuclear weapons program,” the staffer said.

The administration’s action “is a step in the right direction for both human rights and national security, but it’s only a small and incremental one,” Foundation for the Defense of Democracies head Mark Dubowitz said.

“The administration should be praised for moving against the energy lifeblood of both Belarus and Iran, two regimes which savagely repress their own people,” Dubowitz said. “But this was only a borderline meaningful designation since [Berorusneft parent firm] Belneftekhim and three other subsidiaries are already subject to designations. While a designation against this fourth subsidiary is helpful, the time for incrementalism is long past as Iran drives towards a nuclear weapon” (Josh Rogin, Foreign Policy, March 29).

The new penalties also received criticism from House of Representatives Foreign Affairs Committee Chairwoman Ileana Ros-Lehtinen (R-Fla.).

The move is a “positive development,” but “the bottom line is that the State Department has not yet acted to fully implement and enforce our Iran sanctions laws,” Ros-Lehtinen said in a statement.

“The conspicuous absence of any sanctions on Russian and Chinese companies, despite their longstanding involvement in Iran, is deeply troubling,” she added

“In addition to going after the low-hanging fruit like [Berorusneft], the State Department must impose sanctions against energy giants that continue to do business with Iran. That’s the only way that our sanctions will have the force to compel the Iranian regime to stop policies and programs that threaten the United States,” according to the lawmaker (U.S. House of Representatives Foreign Affairs Committee release, March 29).

Meanwhile, new laws aimed at implementing the most recent U.N. Security Council sanctions resolution against Iran entered into force in Hong Kong on Friday, Agence France-Presse reported. The Security Council adopted its fourth round of Iran sanctions last summer.

The new rules incorporate financial and travel restrictions targeting the Islamic Republic of Iran Shipping Lines, which Washington has charged with supporting Iranian missile activities.

Hong Kong’s lax commerce rules make it an attractive base of operations for entities attempting to circumvent import and export restrictions, according to analysts. Beijing last June permitted the partially self-governing Chinese district to implement the new Iran penalties.

“The administration took time to deliberate internally on how best to implement the new and expanded sanctions,” according to a government release published on Wednesday. It offered no further details (Agence France-Presse/Yahoo!News, March 30).