Congress unveils hard-hitting Iran sanctions bill

Congress on Monday unveiled a tough new package of unilateral sanctions against Iran’s financial and petroleum sectors, expanding previous measures targeting top regime figures to include a much broader swath of the Iranian economy.

Capitol Hill sources said the legislation was likely to become law, despite the Obama administration’s previous statements objecting to some of the bill’s harsher provisions.

"This is a very strong bill," said one congressional aide working on the issue. "On every major substantive dispute with the administration, the tougher congressional standard won out."

Lead sponsors Sen. Chris Dodd, D-CT, and Howard Berman, D-CA, have been working very closely with the administration on the legislation behind closed doors, so most on Capitol Hill believe that the conference report that was unveiled today will pass overwhelmingly in both chambers and be signed by President Obama.

"If applied forcefully by the president, this act will bring strong new pressure to bear on Tehran in order to combat its proliferation of weapons of mass destruction, support for international terrorism, and gross human rights abuses," Dodd and Berman said in a statement.

The unofficial deadline for sending the bill to the White House is the July 4 recess. Under Secretary of State Bill Burns and Under Secretary of the Treasury Stuart Levey are set to testify Tuesday morning on the administration’s Iran policy in the wake of the U.N. sanctions passed earlier this month.

Sources said the lawmakers in effect traded sequence for substance, agreeing to let the administration first go to the U.N., then allowing the EU to announce measures, and then finally moving forward and getting what they wanted.

For example, there is no explicit exemption in the bill for countries that are closely cooperating with the U.S. sanctions, something the administration has always pushed for. There is a waiver authority that mentions cooperating countries and the administration can consider a government’s cooperation when considering a specific company for such a waiver.

But the conference report details a totally new set of penalties for foreign banks and financial entities doing business with the IRGC or any of its shadow companies.

"It’s putting teeth behind what Stuart Levey is doing," said another congressional aide. "It’s saying if you do business with the IRGC or any of its companies, you are essentially cut off from the U.S. financial system."

Another brand new provision is language that requires the president to compile a list of Iranians who are complicit in human rights abuses and imposes a whole new set of financial and other restrictions on those individuals.

Many are sure to be critical of the tough sanctions the bill places on Iran petroleum industry, a tactic that could cause problems for the entire Iranian economy, not just the regime. But that’s intentional. 

"This is a bill designed to put pressure on Iran’s economy and the petroleum sanctions are a part of that," one aide said. "The people who are against tough sanctions are not going to be thrilled with this bill." 

As for the refined petroleum sanctions, the bill takes a "Chinese menu" approach. The administration can choose any three of nine options for sanctions measures. This would allow the Obama folks to choose based on circumstance and also allow them to avoid problems if a country wanted to object to something specific through the WTO.

In another tweak, when a company is suspected of violating the energy-related sanctions, the new version says the U.S. government "shall" investigate, rather than "should" investigate, as the bill originally stated. But the president can delay the investigationfor six months while he tries to persuade the country diplomatically to stop selling gasoline to Iran. After six months, if the president can show progress on that diplomacy, he can delay the petroleum-related sanctions another six months.