May 24 (Bloomberg) — President Barack Obama is pressing lawmakers for leeway in applying proposed U.S. gasoline sanctions against Iran so the penalties support a broader plan to prevent the Persian Gulf nation from gaining a nuclear bomb.
National Security Adviser Jim Jones conducted a closed-door briefing in an attempt to sway lawmakers working out differences between House and Senate legislation that would penalize foreign companies selling gasoline to Iran. Both measures would roll back the president’s traditional prerogative on whether and how to impose the sanctions. Obama is seeking to exempt companies from countries he deems to be cooperating with U.S. efforts on Iran, according to a May 3 letter from six Republican and four Democratic senators. House and Senate negotiators aim to agree on final legislation this week.
“The administration wants to make sure this legislation doesn’t compromise our efforts to work with other countries to increase international pressure on Iran,” Gary Samore, the White House coordinator for arms control and terrorism with weapons of mass destruction, told reporters on May 12.
While it is the Middle East’s second-biggest oil producer, Iran relies on imported gasoline because it lacks enough refining capacity.
The penalties on providing gasoline or refining equipment and services to Iran might hurt companies such as China Petroleum & Chemical Corp. China and Russia joined the U.S., U.K. and France last week to back a draft United Nations Security Council resolution that would bolster an arms embargo, enhance authority to stop and seize Iranian cargo suspected of ties to nuclear or missile programs and restrict financial transactions.
Israel Lobby
The American Israel Public Affairs Committee, a pro-Israel lobbying group based in Washington, applauded the UN accord, and said it should be followed by “crippling” U.S. and European sanctions.
Israel says Iran’s nuclear and missile programs pose a threat to its existence.
House Majority Leader Steny Hoyer said last week the UN sanctions agreement shouldn’t deter Congress from taking its own measures and that lawmakers should vote on the joint legislation before the end of the month.
In Congress, Republican impatience that no president has ever applied existing U.S. penalties under the Iran Sanctions Act has spread to Obama’s own Democratic ranks in the past year.
Congressional Backing
The House passed the gasoline sanctions legislation on Dec. 15 by a vote of 412-12. The Senate approved its bill unanimously by voice vote on Jan. 28.
Jones sought to reassure lawmakers during his May 10 briefing that the U.S. is carrying out a comprehensive economic, diplomatic, military and intelligence strategy for confronting the challenge posed by Iran, an administration official said on condition of anonymity. The proposed congressional sanctions are part of that plan, the official said.
The Pentagon has estimated that Iran may be a year from having enough highly enriched uranium to produce a nuclear weapon and three to five years from assembling a bomb. Iran says it only seeks civilian use of nuclear power to generate energy.
The congressional sanctions on gasoline would build on the Iran Sanctions Act’s existing penalties against companies investing more than $20 million in Iran’s energy industry during any one year. U.S. law separately prohibits American companies from investing.
Refinery Development
The House and Senate proposals would expand the list of violations to include selling refined gasoline to Iran, providing shipping insurance or other services for deliveries and helping build refineries in the country.
The penalties against companies deemed to be violating the law would include barring financial transactions through U.S. institutions.
The administration wants to retain “enough flexibility that it wouldn’t be compelled to impose sanctions if it deems such sanctions would cause a backlash” among partner nations, Kenneth Katzman, a Middle East specialist at the Congressional Research Service, said in a May 14 telephone interview.
The U.S. Government Accountability Office, the investigative arm of Congress, in March found 41 businesses, including PetroChina Co., Petroleo Brasileiro SA of Brazil, Total SA of France, Russia’s OAO Gazprom and Indian Oil Corp., invest in Iran’s oil development.
The office reported four companies involved in expanding Iran’s refining capacity, including China Petroleum & Chemical Corp. and Japan’s JGC Corp.
India’s Reliance Industries Ltd. is among companies that said they have stopped selling fuel to Iran.
Christophe de Margerie, chief executive officer of France’s Total SA, said in an interview last month that his company will stop shipping gasoline to Iran if any law imposing sanctions on such trade makes it illegal.
-Editors: Edward DeMarco, Robin Meszoly
