U.S., Allies Seek New Ways to Sanction Iran
By JOE LAURIA, JAY SOLOMON and FARNAZ FASSIHI
UNITED NATIONS -- The Obama administration and its Western allies are looking at new ways to constrict Iran's energy, transportation and financial sectors in the wake of last week's revelation that Tehran had secretly developed a second nuclear-fuel facility.
But the White House will still face numerous challenges matching its rhetoric on sanctions with real international action, said American and European officials involved in the process. That makes the U.S. Treasury -- and not the United Nations -- the main focus of the West's financial campaign against Iran for now, said U.S. and European officials.
China and Russia are still seen as only half-hearted partners in any effort to push forward expansive new financial penalties through the U.N. Security Council. And France and Germany are voicing skittishness about targeting Iran's gasoline imports, a strategy that is seen by the U.S. and Israel as inflicting particular pain on Tehran's leadership.
European officials stressed Monday that they are likely to seriously consider new sanctions on Tehran only at year-end, citing a December deadline -- replacing President Barack Obama's September deadline -- that has now been set to see if diplomacy with Iranian President Mahmoud Ahmadinejad works.
The Treasury has pursued dozens of unilateral sanctions against Iranian banks, government officials and defense companies in recent years in an attempt to pressure Tehran. The U.S. has widened its campaign in recent months by targeting Iranian shipping, insurance and trading firms that play a broader role in Iran's economy.
U.S. officials said they have improved their ability to target key Iranian industries, because of intelligence that has been gathered on the Iranian economy in recent years. Even as Mr. Obama has promoted engagement with Tehran, Treasury officials have continued traveling through the Middle East and Asia to warn foreign governments about dealings with Tehran.
The Treasury and its point man on Iran sanctions, Undersecretary Stuart Levey, have sought to use U.S. sanctions to pressure European and Asian firms to curb their own dealings with Iran. Washington could potentially ban foreign firms from conducting business inside the U.S. if they are in violation of Treasury restrictions on commerce with Iran.
Congress is considering legislation that would target any foreign firms aiding Iran's oil and gas sector. U.S. lawmakers said the bill could be passed into law by year-end, though the White House would have flexibility over how to implement it.
While Iran is a major oil exporter, its lack of refining capacity requires it to import about 40% of its gasoline and other petroleum-based fuels. President Ahmadinejad has brushed off the threat of such sanctions on such gasoline imports, and some experts warn that they can hurt ordinary citizens and serve to rally the public behind a regime.
A ban on gasoline sales also is difficult to get through the Security Council because Chinese state companies this month began providing up to one-third of sales to Iran, filling in the market vacated by BP and Reliance of India.
A total embargo on Iranian oil -- which Israeli officials have suggested -- seems unlikely. U.S. law already forbids U.S. firms from buying Iranian oil, but Europe, Japan and China are big customers. Analysts say an embargo on Iranian oil would drive up global prices and damage the global economy, unless a big producer such as Saudi Arabia made up the difference -- about 3% of world supply.
A U.N. tightening of an arms import ban on Iran would run up against the interests of a powerful sector of the Russian economy. "A lot of larger contractors in those sectors of the Russian economy don't have necessarily other extensive markets that they can easily go to," said Paul Saunders, executive director of the Nixon Center in Washington.
One person familiar with German policy on Iran said a consensus among Western allies is that sanctions should go beyond targeting firms involved in Iran's nuclear program. "The new strategy will be broader," the person said.
With Russian and Chinese support, the U.N. has already adopted three rounds of sanctions against Iran, which attempt to restrict its arms trading and procurement of nuclear materials. The U.S. and European Union also have targeted trade and banking and accused Iran of financing terrorist activities.
But Iran has found ways to get around many of the sanctions. In January, for example, Lloyds TSB Bank PLC in Britain agreed to pay $350 million in fines and forfeiture for, among other things, disguising the illegal transfer of more than $300 million on behalf of Iranian banks and their customers. The transfers were made to buy goods and services from U.S. companies and pay foreign vendors in dollars, in violation of U.S. sanctions on Iranian financial transactions.
Manhattan District Attorney Robert M. Morgenthau, whose office brought the case in coordination with the Justice Department, said in an interview he expects in the next few weeks to bring a similar case against another bank, which he declined to name.
"For sanctions to be effective, there has to be an international commitment," says Adam Kaufmann, an assistant district attorney in Mr. Morgenthau's office, who headed the Lloyds investigation. "If you're going to have EU sanctions, then countries in the EU have to penalize people that transact in violation of their sanctions."
Despite U.S. sanctions on goods, there is virtually no U.S. export that can't be bought there, from General Electric refrigerators to Apple laptops and Levi's jeans. The goods typically are smuggled in via the Persian Gulf from places such as Dubai.
The U.S. restrictions on companies doing business with Iran have largely isolated American firms, especially in the oil and gas sector, and opened the door for Russian, European and Asian companies. It has not brought projects to a halt.
—Steve Stecklow and David Crawford contributed to this article.
China and Russia are still seen as only half-hearted partners in any effort to push forward expansive new financial penalties through the U.N. Security Council. And France and Germany are voicing skittishness about targeting Iran's gasoline imports, a strategy that is seen by the U.S. and Israel
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Comment: Sometimes I really wonder if certain world leaders are insane or they just think that the masses of people are just plain stupid or perhaps both. By way of analogy, if I have a bomb that can blow your house up but deny your right to have one am I being arbitrary or arrogant to think that only I can have such a bomb, then I threaten to use my bomb on your house if you try to get such a bomb?
The long-term solution must be the mutual destruction of all weapons of mass destruction. But who will dismantle their bomb first? The stalemate continues... human beings upon planet earth are still an endangered species.
Education for Liberation! Venceremos Unidos!
Peter S. Lopez ~aka Peta
Sacramento, California, Aztlan
Yahoo Email: peter.lopez51@yahoo.com
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Come Together! Join Up! Seize the Time!
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