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Roll Call

Plan for Tighter Iran Embargo Likely to Trigger White House Opposition

Senate hawks are bracing for a showdown with Democratic leaders and the Obama administration over their latest round of Iran sanctions and, potentially, the direction of diplomacy with Tehran.

Sens. Mark Steven Kirk, R-Ill., and Robert Menendez, D-N.J., are putting the finishing touches on a set of measures with the aim of eventually creating an economic embargo on Iran that would restrict nearly all forms of international trade and transactions with the country except for food, medicine and related goods that address humanitarian needs. It would also exempt oil transactions allowed by the White House under existing sanctions.

According to a Senate aide informed about the legislation being drafted, the senators are looking to add the measure as an amendment to the Senate’s fiscal 2013 defense authorization bill (S 3254), which could come to the floor as early as Friday.

Some of the most draconian measures in the bill are likely to face resistance from the White House, which is eyeing a renewed round of talks with Tehran over its nuclear enrichment program and, reportedly, considering offering to ease some sanctions if Iran agrees to halt enrichment. A vote by Congress to ratchet up sanctions again would muddy those waters. Efforts to restrict Iranian imports could also anger allies in Europe and Asia.

That means Senate Majority Leader Harry Reid, D-Nev., who has worked closely with the administration on past Iran sanctions laws, is likely to be wary of the measure, as well.

The questions now, said the aide, are “does Sen. Reid try to limit amendments” to the defense authorization legislation or does he ask Senate Armed Services Chairman Carl Levin, D-Mich., to move the bill without amendments? And, the aide said, “do Republicans stand for that?”

“If there is an agreement for a limited number of amendments, is an Iran amendment one of them?” the aide continued. These procedural issues are likely to be hashed out between parties and lawmakers in the next few weeks.

The White House put up a similar fight last year, when Kirk and Menendez sought to attach an amendment to the fiscal 2012 defense authorization bill (PL 112-81) that sanctioned certain transactions with Iran’s central bank, the main financial clearinghouse for Iran’s oil trade. After trying to water down the bill in private, the Obama administration came out publicly against the legislation. The Senate voted for the amendment anyway, 100-0.

Those sanctions have been credited, in part, for the swift nosedive in the Iranian currency this fall, as well as other economic struggles the country is now facing.

Lawmakers passed another round of sanctions in July (PL 112-158) that tighten restrictions on Iran’s energy and financial sectors and also go after shipping companies that help the country transport its oil. But it did not go as far as some hawks on both sides of the aisle, including Kirk and Menendez, would have liked.

Now, they’re pushing many of the provisions not included in that July bill, aides confirm.

“The overall objective,” said Mark Dubowitz, the executive director of the right-leaning think tank the Foundation for Defense of Democracies and an expert on sanctions policy, “is complete economic collapse.” That, he said, is the only thing that stands a chance of changing the calculations of the regime in Tehran.

The final details are still being worked out, but according to Dubowitz and aides informed about the deliberations, the measure is likely to include language designating Iran’s entire energy sector as a zone of “proliferation concern,” which would then require the United States to bar all financial transactions with that sector, per existing law.

Countries would be required to significantly reduce all non-petroleum sales to Iran, much in the way they’ve been made to reduce their oil purchases under the central bank sanctions, with waivers allowed for those countries able to demonstrate significant reductions. The law is also likely to ban the sale of items and materials used in the energy, shipbuilding and other industrial sectors, such as aluminum, steel and coal, entirely. And it would require foreign countries to freeze Iran’s foreign currency reserves, something Dubowitz said has been key to keeping the Iranian economy afloat.

Foreign companies that do not comply would be subject to sanctions, including losing access to the U.S. financial system.

In other words, the new proposal would shift the sanctions regime from one prohibiting certain types of transactions with Iranian entities to one in which, “everything is prohibited unless we say it’s not,” said the aide.

The aide also conceded that such a restrictive sanctions regime could very well disrupt efforts to restart talks with the Iranians over their nuclear program, but argued that any offer of sanctions relief, which hawks fear President Barack Obama will make, would “undermine our own negotiating position.”

Dubowitz, however, said he believes the administration’s diplomatic outreach and the implementation of broad trade sanctions could be complementary. “The administration is certainly looking to ratchet up the pressure,” he said, and is already at work going after Iran’s foreign exchange reserves. He argued that crushing economic sanctions are the only thing that will convince Tehran to negotiate in good faith.

But when it comes to easing sanctions, he said, “You don’t agree to do that unless you’ve received meaningful nuclear concessions.”

Kirk, Menendez and others will also be watching closely to see how the White House comes down on the next round of waivers from the central bank sanctions, due next month. The Obama administration decided to waive sanctions against all of Iran’s leading oil buyers — including allies in Europe, Japan, South Korea, China and India — this summer but needs to decide whether to renew those waivers every 180 days.

The waiver was renewed for Japan and 10 European countries in December, but the status of China, South Korea and India remains up in the air. If they do not receive a waiver, oil buyers in those countries who make their purchases using Iran’s central bank face tough U.S. sanctions, which could ruffle diplomatic feathers.

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