US Congress proceeds with Iran sanctions bills

OREANDA-NEWS. US lawmakers are pushing ahead with legislation to further pressure Iran to reverse its nuclear program, despite President Barack Obama's veto threats.

The Republican-controlled Senate Banking Committee will consider legislation on 29 January that would force Iran's oil customers to resume cutting their purchases if no deal is in place by July. And the Senate Foreign Relations Committee is discussing a measure that would require congressional approval of any nuclear agreement.

Obama, during his State of the Union address yesterday, hailed progress the US and its negotiating partners have had in persuading Tehran to pause development of its nuclear program while the parties try to reach a comprehensive agreement. The negotiators' goal is to reach deal, perhaps unwritten, on the key elements by the end of March and finalize all technical details by June.

"But new sanctions passed by this Congress, at this moment in time, will all but guarantee that diplomacy fails," Obama warned.

Obama appears to be swaying few minds on Capitol Hill.

The Banking Committee will hold a hearing on Iran sanctions on 27 January and two days later will take up legislation entitled the "Nuclear Weapon Free Iran Act."

Sponsored by Illinois senator Mark Kirk (R) and Senate Foreign Relations Committee ranking Democrat Robert Menendez (New Jersey), the bill would require the president within five days of reaching an agreement to send lawmakers a copy of the deal, along with an assessment of the US administration's ability to verify Iranian compliance.

If by 6 July, the US administration is unable to reach an agreement with Iran and verify compliance, the bill would require that sanctions eased during the negotiations be reimposed. During the talks, the US has suspended sanctions that otherwise would require Iran's six oil customers – China, India, Turkey, South Korea, Japan and Taiwan – to continue to reduce their oil purchases "significantly." Iran now exports about 1.1mn b/d of crude to these countries.

Sanctions would then be tightened every month for the next five months if a deal is not reached. If no deal is forthcoming by 7 September, the measure would require Iran's oil customers to reduce their oil purchases "dramatically" – by at least 30pc – within 240 days and to minimal levels within two years or face possible sanctions against their financial institutions.

By October, new sanctions would target certain Iranian individuals, by November foreign banks that conduct transactions for Iran's central bank and December Iranian ports, economic zones and strategic sectors such as energy, shipbuilding, automotive and mining.

On a parallel track, Senate Foreign Relations Committee chairman Bob Corker (R-Tennessee) is championing a bill that would require require the administration to present to Congress for an up or down vote any agreement reached with Iran regarding Tehran's nuclear program. "We are trying to find a constructive way for Congress to play its rightful role in these negotiations," Corker said.

US deputy secretary of state Antony Blinken told Corker's committee the US administration would oppose such a bill for fear it would disrupt the negotiations, although he acknowledged the Iranian parliament likely will have to approve at least portions of any agreement.

Blinken said the US' negotiating partners are concerned about Congress taking action while the negotiations are ongoing. Last week, UK prime minister David Cameron spoke with Corker and other senators, warning that new measures "could fracture the international unity that there's been which has been so valuable."

Despite the White House's opposition, Corker told Argus he expects his bill will attract enough votes to override a presidential veto.

US treasury under secretary for terrorism and financial intelligence David Cohen told the Foreign Relations Committee that sanctions have deprived Iran of more than \$40bn in revenue last year. And since 2012, oil sanctions have denied Iran access to more than \$200bn in lost exports and funds it cannot easily use, Cohen said.

Opec's third largest producer, Iran's output reached 2.87mn b/d in December, up from 2.83mn b/d in November.