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Kirk and Menendez join forces on new Iran sanctions proposal

Senate Democrats and Republicans have agreed on a way forward regarding new sanctions on the Central Bank of Iran (CBI) that would impose crippling sanctions on the Iranian economy, with an eye toward preventing a catastrophic consequence for the world oil markets. Last night, Sens. Mark Kirk (R-IL) and Robert Menendez (D-NJ) filed a new ...

Senate Democrats and Republicans have agreed on a way forward regarding new sanctions on the Central Bank of Iran (CBI) that would impose crippling sanctions on the Iranian economy, with an eye toward preventing a catastrophic consequence for the world oil markets.

Last night, Sens. Mark Kirk (R-IL) and Robert Menendez (D-NJ) filed a new amendment to the defense policy bill that represents a compromise of the two separate amendments each had filed last week. The new bipartisan language would build upon the administration's announcement last week that it was naming the CBI as a  "primary money laundering concern"  under the Patriot Act and go further than President Barack Obama's Nov. 19 executive order expanding sanctions on Iran's petroleum sector. The Senate amendment would add to that by barring any U.S. financial institution from doing business with any foreign financial institution that knowingly conducted any significant financial transaction with the CBI.

Senate Democrats and Republicans have agreed on a way forward regarding new sanctions on the Central Bank of Iran (CBI) that would impose crippling sanctions on the Iranian economy, with an eye toward preventing a catastrophic consequence for the world oil markets.

Last night, Sens. Mark Kirk (R-IL) and Robert Menendez (D-NJ) filed a new amendment to the defense policy bill that represents a compromise of the two separate amendments each had filed last week. The new bipartisan language would build upon the administration’s announcement last week that it was naming the CBI as a  "primary money laundering concern"  under the Patriot Act and go further than President Barack Obama‘s Nov. 19 executive order expanding sanctions on Iran’s petroleum sector. The Senate amendment would add to that by barring any U.S. financial institution from doing business with any foreign financial institution that knowingly conducted any significant financial transaction with the CBI.

The Kirk-Menendez amendment got unanimous consent in the Senate on Monday for consideration on the defense bill, which is on the floor this week. It will get a vote, probably before Dec. 2, and is expected to pass overwhelmingly. The administration has resisted any congressional efforts to force the imposition of Iran sanctions ahead of its own schedule, but Obama will be hard pressed to veto the must-pass defense bill over the issue.

"The amendment is hard-hitting, responsible and, most importantly, completely bipartisan.  It’ll have an enormous impact on the Iranian economy without hurting our own while providing the administration additional diplomatic leverage," a GOP Senate aide told The Cable today. "Last week the administration told the world that the Central Bank of Iran was a terrorist bank; I think they’d have to agree this amendment is an appropriate way of dealing with a terrorist bank."

The main concern with Kirk’s original amendment was that it would have forced measures against central banks in other countries that do oil business with the CBI. The compromise language softens that requirement by giving a six-month grace period for petroleum-related sanctions to go into effect. And after six months, the penalties against central banks in other countries could be waived by the president for another six months if the Energy Information Agency reports there’s not enough non-Iranian oil supply in the market, or if specific countries are showing strong efforts to move away from Iranian oil purchases.

The amendment would also require the president to initiate a "multilateral diplomacy initiative" aimed at convincing other countries to stop purchasing oil from Iran.

Read a best-guess timeline of the implementation of the Kirk-Menendez sanctions, compiled as a memo by Hill aides and given to The Cable, after the jump:

 

Estimated Timeline of Menendez-Kirk Central Bank of Iran Amendment

January 1, 2012: Estimated date of enactment of National Defense Authorization Act

March 1, 2012: Non-petroleum related transactions with the Central Bank of Iran subject to sanctions (national security waivers possible — 120 day extension)

March 1, 2012: First report from Energy Information Agency on world supply of non-Iranian oil

April 1, 2012: Presidential determination on whether the price and supply of petroleum and petroleum products from non-Iranian suppliers is sufficient to allow purchasers to significantly reduce their purchases from Iran.

May 1, 2012: Report from Energy Information Agency on world supply of non-Iranian oil

July 1, 2012: Report from Energy Information Agency on world supply of non-Iranian oil

July 1, 2012: If waivers issued in March, non-petroleum related transactions with the Central Bank of Iran subject to sanctions (national security waivers possible — 120 day extension)

July 1, 2012: Petroleum-related transactions with the Central Bank of Iran subject to sanctions only if the President determines that there is sufficient alternative supply on the world markets and the country of jurisdiction over the financial institution has not significantly reduced its purchases of Iranian oil.  (negative determination possible — 180 day extension)

September 1, 2012: Report from Energy Information Agency on world supply of non-Iranian oil

October 1, 2012: Presidential determination on whether the price and supply of petroleum and petroleum products from non-Iranian suppliers is sufficient to allow purchasers to significantly reduce their purchases from Iran.

November 1, 2012: Report from Energy Information Agency on world supply of non-Iranian oil

November 1, 2012: If waivers issued in July, non-petroleum related transactions with the Central Bank of Iran subject to sanctions (national security waivers possible — 120 day extension)

January 1, 2013: Report from Energy Information Agency on world supply of non-Iranian oil

January 1, 2013: If President’s July determination exempted financial institutions engaged in petroleum-related transactions, President must again make determination that there is sufficient alternative supply on the world markets and the country of jurisdiction over the financial institution has not significantly reduced its purchases of Iranian oil for sanctions to be imposed.  (negative determination possible — 180 day extension)

Josh Rogin covers national security and foreign policy and writes the daily Web column The Cable. His column appears bi-weekly in the print edition of The Washington Post. He can be reached for comments or tips at josh.rogin@foreignpolicy.com.

Previously, Josh covered defense and foreign policy as a staff writer for Congressional Quarterly, writing extensively on Iraq, Afghanistan, Guantánamo Bay, U.S.-Asia relations, defense budgeting and appropriations, and the defense lobbying and contracting industries. Prior to that, he covered military modernization, cyber warfare, space, and missile defense for Federal Computer Week Magazine. He has also served as Pentagon Staff Reporter for the Asahi Shimbun, Japan's leading daily newspaper, in its Washington, D.C., bureau, where he reported on U.S.-Japan relations, Chinese military modernization, the North Korean nuclear crisis, and more.

A graduate of George Washington University's Elliott School of International Affairs, Josh lived in Yokohama, Japan, and studied at Tokyo's Sophia University. He speaks conversational Japanese and has reported from the region. He has also worked at the House International Relations Committee, the Embassy of Japan, and the Brookings Institution.

Josh's reporting has been featured on CNN, MSNBC, C-Span, CBS, ABC, NPR, WTOP, and several other outlets. He was a 2008-2009 National Press Foundation's Paul Miller Washington Reporting Fellow, 2009 military reporting fellow with the Knight Center for Specialized Journalism and the 2011 recipient of the InterAction Award for Excellence in International Reporting. He hails from Philadelphia and lives in Washington, D.C. Twitter: @joshrogin

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