Despite claiming to be doing everything he can to pressure the Iranians to suspend uranium enrichment and give up their ambition to build a nuclear bomb, President Barack Obama and Democrats in the Senate are seeking to water down congressional sanctions on Iran passed in the House last December.
Specifically, the administration is seeking to weaken sanctions dealing with the insurance and banking industries — two high-powered lobbies in Washington — who stand to lose millions of dollars if the sanctions take effect. The bill has been stuck in limbo since May as differences between the Senate and the House version have to be ironed out before Congress can vote on the entire package.
A vote on the measure is expected before Congress adjourns for the August recess next week.
In Iran, Supreme Leader Ayatollah Khamenei has made it clear that sanctions will not deter the Iranians from continuing their enrichment activities. But the sanctions are beginning to bite very hard for ordinary citizens, as inflation and shortages have hit the Iranian economy hard in recent months.
The sanctions maneuvering in Congress and the harsh effects being felt by the Iranian people serves as a backdrop to the continuing efforts by the European Union to engage the Iranians in serious discussions about their nuclear program. EU foreign policy chief Catherine Ashton will meet with the lead Iranian negotiator “soon” to see if they can get the moribund talks restarted.
The House version of the sanctions bill passed overwhelmingly last December. It largely targeted insurance companies who do business with the Iranian oil industry and transactions by the Iranian Central Bank. The Washington Free Beacon reports that the sanctions would punish “any insurance company that underwrites activities that bolster the Iranian oil industry. Insurance providers could be sanctioned for underwriting shipping companies, cargo carriers, or airlines that have been subject to sanctions.” The measure would also make it easier to ferret out Iranian front companies that Tehran has set up to avoid sanctions on its oil industry.
This is vital because Iran has been able to circumvent restrictions on selling oil by creating a blizzard of fake companies. Emanuele Ottolengh, writing in the Weekly Standard, explains:
Whenever an Iranian company’s ties emerge to proliferation efforts or to Iran’s Revolutionary Guards, a new company is incorporated with a yet unblemished record to take over the business of the sanctioned entity. By the time the West catches up, Iran has already prepared the papers for the next front company.
And the West has a hard time “catching up” because of international rules that require proof that the entity is violating the sanctions regime. Since much of the information comes via intelligence agencies who are reluctant to reveal their methods, regulators must find other means to prove that Iran is cheating. It hardly matters, as Ottolengh notes:
In short, until a complete shutdown of all exports of technology is introduced and the oil embargo is enforced without discounts, waivers, and exceptions, the IRGC, guardian of Iran’s nuclear weapons program, will continue to thrive, and our efforts to block Iran’s progress towards nuclear weapons will only make it costlier and more slowly for Iran, but will ultimately fail to stop its leaders from their deadly pursuit.
And those waivers have been legion. The Obama administration has granted thousands of them to individual companies which allows them to continue to do business with the Islamic Republic, as well as granting permission to China and India to circumvent the oil embargo and purchase crude from Iran. How serious is the president about applying “crippling” sanctions to Iran when he and the Senate Democrats are pulling the teeth from what once was considered a very tough bill?
For instance, one of the major restrictions was aimed directly at the Iranian Central Bank. Congress had pressured the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, a consortium of big banks, to prevent Iranian banks from transferring funds internationally by refusing to supply them with the electronic means to do so. This would have put a severe crimp in the Iranian financial sector. But the banking industry has apparently succeeded in watering down that provision. Along with insurance companies who are pushing to weaken the bill for their own commercial reasons, some Republicans think the bill “won’t even be worth the paper it’s printed on.”
“This is really a game of whack-a-mole,” said Mark Dubowitz, of the Foundation for Defense of Democracies and an expert on Iranian sanctions. “These are incremental measures. What are needed now are measures more akin to economic warfare than these targeted, pinpoint measures.”
Thanks to Harry Reid, President Obama, and the banking and insurance lobbies, it doesn’t appear likely.