Wednesday, February 16, 2005


U.S. Congress Renews Push to Enforce Iran Sanctions

Link to Bloomberg site.

Feb. 16 (Bloomberg) -- U.S. lawmakers are beginning a new push to compel enforcement of a 1996 law imposing sanctions on foreign companies that do business in Iran, a move that might trigger a European Union protest to the World Trade Organization.

Among the companies that would be vulnerable to U.S. sanctions are Siemens AG, Royal Dutch/Shell Group and Total SA of Europe and Inpex Corp. of Japan. European retaliation for such sanctions could mean tariffs across a range of U.S. exports.

Both the Clinton and Bush administrations dodged enforcing the law after the EU threatened to fight sanctions as a violation of WTO rules. The House International Relations committee today opened hearings on a bill sponsored by Florida Republican Ileana Ros-Lehtinen that would limit the administration's ability to delay enforcement.

The measure reflects growing impatience with Iran's suspected nuclear weapons program, said committee chairman Henry Hyde, a Republican from Illinois. ``It increasingly appears likely that there will be legislative action this year to encourage compliance with treaties that Iran itself has ratified,'' Hyde said in an interview.

Hyde declined to say whether he would support the Ros- Lehtinen bill, one of several measures in Congress offered by both Republicans and Democrats that would step up sanctions against Iran or fund opposition Iranian groups.

Other Republicans who have introduced such legislation are Senator Sam Brownback of Kansas, Senator Rick Santorum of Pennsylvania and Representative Tom Tancredo of Colorado.

Expanding Law

The U.S. prohibits American companies from investing in Iran under sanctions dating to 1979, when students in Tehran seized the U.S. embassy and held 66 Americans hostage. The U.S. has imposed additional sanctions since then, citing Iran's alleged support of terrorism and its pursuit of nuclear weapons.

Conflicting reports about an explosion today at an Iranian nuclear facility near Dailam today underscored the country's potential as a trouble spot. Iranian state television reported that an unknown aircraft had a fired a missile near Dailam, according to Reuters. A fuel tank may have dropped from an Iranian plane, the Associated Press later reported.

Iran won a pledge from Syria to form a common front to face challenges from other countries, Agence France-Presse reported, citing Syrian Prime Minister Mohammad Naji Otri. The U.S. has been pressuring both countries, warning Syria against harboring insurgents hostile to the U.S.-backed government in Iraq, and calling on Iran to halt development of nuclear weapons.


The 1996 Iran-Libya Sanctions Act imposed sanctions against companies in other nations that invest in Iran. The Clinton and Bush administrations avoided enforcing it by keeping under indefinite review the cases of foreign companies operating in Iran. The bill offered by Ros-Lehtinen would limit such reviews to 90 days.

Ros-Lehtinen said her bill also would expand the 1996 law to countries -- such as France, Germany, Malaysia and Russia -- that provide funding to companies operating in Iran. In addition, her measure would limit the conditions under which the president could waive penalties, authorize funding to Iranian exile groups, and ban public pension funds in the U.S. from increasing their holdings in any companies with investments in Iran.

`Options are Unappetizing'

Ros-Lehtinen, chairman of the International Relations' subcommittee on the Middle East, led today's hearing that included testimony from two of the former U.S. hostages in Iran and a relative of a U.S. Marine killed in a 1983 bombing in Beirut, which the U.S. blamed on Iranian-backed Islamic Jihad.

The subcommittee's top-ranking Democrat, Representative Gary Ackerman of New York, said he agreed that the Bush administration must confront Iran, even as he acknowledged the difficulty.

``I'll be the first to admit our policy options for Iran are unappetizing at best,'' Ackerman said. But, he said, ``Iran needs to become urgent for the administration before it will become urgent for anyone else.''

The Bush administration has taken no position on the Ros- Lehtinen measure, said Carol Thompson, a spokeswoman for the economic affairs bureau of the U.S. State Department.

The EU will seek WTO protection if the U.S. Congress passes such a bill, said Anthony Gooch, spokesman for the European Commission in Washington. The EU is concentrating on seeking an agreement on nuclear weapons with Iran that promises increased trade and cooperation, Gooch said.

`Trigger a Trade War'

Enforcement and expansion of the law's Iran provisions would trigger ``a trade war with Europe,'' said William Reinsch, president of the Washington-based National Foreign Trade Council, an association of U.S. exporters whose 350 members include Exxon Mobil Corp. and ChevronTexaco Corp. The EU will ``take them to the WTO and win,'' he said.

The current law, as it applies to Iran, requires the president to impose any two on a list of six sanctions, such as restrictions on exports and loans by U.S. banks, against foreign companies that invest more than $20 million in Iran.

An estimated 220 publicly traded companies have ties to Iran, conducting ``tens of billions'' of dollars in business, according to Conflict Securities Advisory Group Inc., a Washington-based consultant.

U.S. companies can operate in Iran through foreign subsidiaries. General Electric Co. and Halliburton Co., which have such units, both announced in recent months that they are withdrawing from Iran, as did BP Plc of Britain. Dusseldorf, Germany-based ThyssenKrupp AG, Europe's fourth-biggest steelmaker, has removed a representative of Iran from its supervisory board, citing U.S. pressure, The Wall Street Journal reported on Jan. 28.

AIPAC'S Priority

Mandating enforcement of the 1996 law is a top priority this year for the American Israel Public Affairs Committee, a Washington-based lobbying group, spokesman Josh Block said.

``We are confident that there is significant concern with Iran's behavior in Congress and they will pass the strengthened version of this legislation,'' Block said. This is ``one tangible way'' of showing the concern.

The Bush administration's declining to take a position on the bill may help its chances of passage, said the National Trade Council's Reinsch. He cited a sanctions bill against Syria that won approval last year only after Secretary of State Colin Powell withdrew his opposition.

If the House passes the measure, the more-reluctant Senate would face pressure to do likewise, Reinsch said. ``The problem with these bills is if they come to a vote, people are afraid to vote against them for fear of being called pro-Iranian, even if they agree it's a bad bill,'' he said.

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