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NUKEWARS
US: China, private banks helping to punish Iran
by Staff Writers
Washington (AFP) June 22, 2010


US urges firms to step away from Iran
Washington (AFP) June 22, 2010 - The US government urged private companies to go beyond official sanctions and trim back questionable ties with Iran Tuesday, as Washington eyed additional sanctions against the Islamic republic. A senior Treasury official said firms that decided not to trade with government-linked Iranian companies had played an "extremely important" role in building pressure against Tehran, which is suspected of trying to build a nuclear bomb. "Voluntary actions of the private sector amplify the effectiveness of government-imposed measures," said Stuart Levy, the top Treasury official dealing with sanctions, in prepared testimony for Congress.

Top US lawmakers are currently crafting Iran sanctions aimed at piling pressure on Tehran, measures that could be adopted as soon as this week. The bill would target non-US firms that sell goods, services or know-how to Iran that help the Islamic republic develop its energy sector, including insurance, financing and shipping companies. It would also enable US states and local governments to divest from foreign firms engaged in Iran's energy sector, and would tighten the existing US trade embargo on Iranian goods by curbing the number of exempted products. Levy continued to emphasize the role played by private companies in ramping up pressure on Iran. "Once some of the private sector decide to cut off ties to Iran, it becomes an even greater reputational risk for others not to follow, and so often they do.

"Such voluntary reductions in ties to Iran, beyond the requirements of the UN and US sanctions programs, in turn makes it even more palatable for foreign governments to impose restrictive measures because their countries' commercial interests are reduced." The strategy is one that is proving very successful for the US government, according to Patrick Clawson of the Washington Institute for Near East Policy. "This is having a real impact," he told AFP Tuesday, adding that banks doing business with Iran were now saying "we've got to have a lot of information about who is involved in this transaction before we are going to let it proceed. "It is not that the United States is going to ban these transactions, it is simply saying 'think seriously about whether or not you want to get involved because there is going to be a very heavy cost.'"

China and major international financial institutions have been increasingly willing to cut off Iran over its suspect nuclear program, top US officials assured skeptical lawmakers Tuesday.

"China is increasingly aware of its own stake in effective international action against Iran and its nuclear ambitions," the number three US diplomat, William Burns, told the Senate Foreign relations Committee.

But Burns, who is undersecretary of state for political affairs, conceded he was "not sure they (the Chinese) share the same sense of urgency that we and others do, and we're just going to have to keep pressing hard."

Burns and the top US Treasury Department official in charge of sanctions against terrorist groups or blacklisted regimes, Stuart Levey, described growing momentum behind sanctions and other efforts to isolate Iran.

"Virtually all major financial institutions have either completely cut off or dramatically reduced their ties with Iran," said Levey, undersecretary of the treasury for terrorism and financial intelligence.

Levey said firms in the insurance, consulting, energy and manufacturing sectors were making similar decisions, so that "voluntary actions of the private sector amplify the effectiveness of government-imposed measures."

The two officials testified as Congress moved towards approving, as early as this week, a new round of tough US sanctions against Iran in a bid to drive the Islamic republic to freeze uranium enrichment.

The bill would target non-American firms that sell goods, services or know-how to Iran that help the Islamic republic develop its energy sector, including insurance, financing and shipping companies.

It would also enable US states and local governments to divest from foreign firms engaged in Iran's energy sector, and would tighten the existing US trade embargo on Iranian goods by curbing the number of exempted products.

Tehran denies Western charges that it is seeking to develop nuclear weapons, but has refused to suspend sensitive uranium enrichment work, which can be a key step towards developing an atomic arsenal.

The officials cautioned lawmakers against seeing the centerpiece of the new sanctions legislation -- an effort to choke off Iran's imports of refined petroleum products -- as a cure-all, saying Tehran had braced for the blow.

Oil-rich Iran's lack of domestic refining capability leaves it heavily dependent on imports to meet domestic demand for products like gasoline and jet fuel.

"This is a vulnerability and we think it's one that could be exploited," said Levey. "It's not a silver bullet."

Burns said Iran had decreased its dependence on imports to 25 percent of domestic consumption, instead of 40 percent a few years ago.

US lawmakers expressed frustration that the Islamic republic had bucked three previous rounds of UN sanctions and warned that time was running out for settling the tense dispute peacefully.

"We roar like a lion and bite like a puppy. And we need to change that," said Democratic Senator Bob Menendez, who noted that no company has faced sanctions under a 1996 US law targeting investors in Iran's energy sector.

"I'll tell you, we've got to get better at this, because we're going to have a real wreck on hands, and everybody's going to point back to us," said Republican Senator Jim Risch.

Mounting financial pressure "will certainly not change the calculations of the Iranian leadership overnight," said Burns.

The diplomat also urged lawmakers to work with the administration to ensure that the legislation gives President Barack Obama the authority to exempt companies from countries that have helped pile pressure on Iran.

The draft bill allows Obama to waive sanctions only after publicly identifying the companies involved.

Levey urged one senator not to be "overfocused on the bluster" from Tehran dismissing new sanctions.

"We do know that the Iranian leadership is quite concerned," said Levey. "We're at the beginning of pursuing this path of accountability."

earlier related report
US lawmakers unveil Iran sanctions bill
Washington (AFP) June 21, 2010 - Top US lawmakers crafting Iran sanctions legislation announced Monday they had reached a deal on a series of punitive measures aimed at piling pressure on Tehran over its suspect nuclear program.

Senate Banking Committee Chairman Chris Dodd and House Foreign Affairs Committee Chairman Howard Berman said they were circulating their draft bill to colleagues, and sources said the US Congress could approve the measure as early as this week.

Berman and Dodd said their blueprint, which aims to tighten existing US sanctions on the Islamic republic, would give President Barack Obama "a full range of tools to deal with the threats posed by Iran."

"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," they said in a joint statement.

The legislation targets firms that provide Iran with refined petroleum products -- like gasoline or jet fuel. The oil-rich country relies heavily on imports because of a lack of domestic refining capability.

It could also see non-US banks doing business with certain blacklisted Iranian entities -- including Iran's elite Revolutionary Guards and several banks -- shut out of the US financial system, according to a summary.

"In effect, the act would present foreign banks doing business with blacklisted Iranian entities a stark choice: Cease your activities or be denied critical access to America's financial system," the summary said.

White House spokesman Robert Gibbs said "we appreciate that House and Senate leaders have come together with a strong bill that builds upon the recently passed UN Security Council Resolution, grants the President new authority, and strengthens a multilateral strategy to isolate and pressure Iran.

"We will continue to work with the Congress over the coming days as it finalizes work on this important bill, and in our ongoing efforts to hold Iran accountable," Gibbs said.

The measure must first be approved by a House-Senate "conference," then separately by each chamber before Obama can sign it into law.

The compromise bill emerged after the UN Security Council imposed a fourth set of sanctions June 9 in response to Iran's refusal to freeze its uranium enrichment -- which can be a key step toward building a nuclear bomb.

Last week, the European Union imposed new sanctions of its own on Tehran, which denies Western charges that it seeks an atomic arsenal.

The EU measures targeted energy-sector investments, as well as the transportation, banking and insurance sectors, and slapped new visa bans and asset freezes on the Guards.

Australia also acted against Iran, imposing sanctions on Bank Mellat, a major financier of Iranian missile and nuclear programs, as well as a major Iranian shipping line and a "key leader" of the Guards, General Rostam Qasemi.

And the US Treasury Department also tightened the screws on Iran, targeting insurance and oil firms and shipping lines linked to Iran's atomic or missile programs as well as the Guards and Iran's defense minister Ahmad Vahidi, freezing assets and forbidding US firms from doing business with them.

The new US legislation would also aim to hold US banks -- long barred from doing business with Iran -- accountable for actions by their overseas subsidiaries.

The bill would target non-US firms that sell goods, services or know-how to Iran that help the Islamic republic develop its energy sector, including insurance, financing and shipping companies.

It would also forbid US banks from financial transactions with non-US banks that do business with the Guards, help Iran's nuclear program or its support for extremist groups.

The measure would also target the finances of alleged Iranian human rights abusers and impose travel restrictions on those officials.

And it would deny US government contracts to any non-US company that sells or provides Iran with "technology used to restrict the free flow of information or to disrupt, monitor, or otherwise restrict freedom of speech."

The bill would also enable US states and local governments to divest from foreign firms engaged in Iran's energy sector, and would tighten the existing US trade embargo on Iranian goods by curbing the number of exempted products.

The draft also aims to reduce the president's ability to waive sanctions on specific individuals, companies or countries.

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