Iran Sanctions Extended

By Jennifer Siegel

Published October 04, 2006, issue of October 06, 2006.
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Following an 11th-hour political showdown, Congress has extended and expanded sanctions against domestic and foreign businesses that invest in Iran’s petroleum sector, but federal lawmakers failed to close a loophole for the foreign subsidiaries of companies in the United States.

The Iran Freedom and Support Act — approved September 29 by the Senate just hours before the scheduled fall recess, and signed into law by President Bush the next day — has received praise from Republican and Democratic leaders, as well as from pro-Israel advocates. An extension of expiring American sanctions against Iran, the legislation contains tough new provisions, such as a measure allowing the U.S. government to pursue financial institutions that help Iran acquire weapons of mass destruction.

At the same time, some Democrat leaders are blasting the GOP for refusing to include several get-tough measures — most notably a provision that would impose on foreign subsidiaries of American companies the same penalties that domestic companies currently face for doing business with Iran — and for bringing the bill to the Senate floor without the chance for amendments, a maneuver that resulted in political brinksmanship in the days before the previous sanctions were set to expire.

Democrats essentially blocked a vote on the bill until the final second, hoping to force the Republicans to allow amendments. But, some Democrats told the Forward, their party decided that it would be bad politics and bad policy to allow the existing sanctions to expire by failing to pass a new bill.

“It’s just infuriating,” said Dan Katz, chief counsel for Democratic Senator Frank Lautenberg of New Jersey. The Republican “strategy was to wait literally until the day before [the bill] expired, knowing that the proposition was do or die and we really couldn’t do anything.”

The scuffle over the Iran sanctions comes as the Bush administration is pushing for international sanctions against Iran in the United Nations Security Council, and in the thick of campaign season, as Democrats are trying to boost their own security credentials and capitalize on emerging holes in the GOP’s stalwart foreign policy image. Lautenberg — who has introduced bills to close the foreign subsidiaries loophole several times in recent years — has been particularly aggressive in translating the sanction disagreements into campaign season talking points: At a press conference in Philadelphia on September 18, he repeatedly brought up the issue in criticizing Republican Senator Rick Santorum, who is struggling to retain his seat in Pennsylvania and was one of the lead sponsors of the new Iran legislation.

“The junior senator from Pennsylvania is presenting an image to the Jewish community that simply doesn’t match the facts,” Lautenberg said at the press conference. “When faced with tough choices on tightening Iranian sanctions, Rick Santorum has not been there — he’s backed down.”

Shortly before the Senate passed the sanctions bill last week, Lautenberg’s office sent reporters a flow chart diagramming the impact of the foreign subsidiaries loophole, with all lines moving toward Hezbollah, Hamas and Shi’ite militias in Iraq.

When asked to respond to Lautenberg’s criticism, Senator Santorum’s spokesperson Robert Traynham said that, in the end, the bill had been a compromise. He characterized Lautenberg as “only interested in scoring political points by going after the Halliburton company.”

In recent years, Halliburton, an oil services company that was headed by Vice President Dick Cheney until 2000, has come under fire for doing business in Iran through a foreign-owned subsidiary.

While Santorum and Lautenberg have negotiated over a measure to address foreign subsidiaries several times, including last week, they could not agree on such details as how long to give companies to divest, and whether the American government, before imposing a penalty, should have to prove that an American company established foreign subsidiaries for the purpose of evading sanctions.

Despite the political wrangling, Democratic leaders, along with the influential pro-Israel lobby the American Israel Public Affairs Committee, are generally hailing the Iran Freedom Support Act as a vast improvement over its predecessor, the Iran and Libya Sanctions Act, which was approved in 1996.

“We’re happy that a broader extension of the sanctions was passed, and believe that that was very important in terms of sending a clear message to Iran,” an aide to Senator Robert Menendez, a New Jersey Democrat who attempted to amend the measure on several fronts, told the Forward.

The current act extends existing sanctions on foreign and American businesses investing in Iran’s petroleum sector for five years. Several new provisions strengthen the earlier legislation, including the measure giving the United States authority to pursue financial institutions used for money laundering in the acquisition of weapons of mass destruction; the authorization of funding for pro-democracy groups in Iran, and newly mandatory sanctions against commercial entities that assist Iran in acquiring weapons of mass destruction or destabilizing conventional weapons.

The bill also states that it is the sense of Congress that the United States should not enter into agreements with governments that are assisting Iran’s nuclear program or transferring weapons or missiles to Iran — a measure seen as a warning to Russia and China, both fellow members of U.N. Security Council.

Menendez, the ranking minority member of the Senate’s banking committee, was prepared to offer four amendments during the mark-up for the Iran sanctions bill, which was originally scheduled for September 28. Senator Bill Frist subsequently decided to bypass the banking committee and bring the bill directly to the full Senate.

According to a Menendez staffer, the amendments the Senate Democrats sought that were not part of the final version of the bill included a provision to address the foreign subsidiaries problem; a measure urging American pensions to divest from entities that violate the Iran sanctions, and several steps designed to encourage Libya, which had been covered by the expired sanctions bill, to meets its financial responsibilities to the families of Americans killed in the bombing of Pan Am Flight 103.

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