The U.S. Senate passed long-stalled legislation on Thursday that would impose new sanctions on Iran and its suppliers of refined petroleum products, which many analysts believe could prove to be the greatest economic vulnerability of the Tehran regime.
The bill, known as the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2009 (S.2799), requires the president to impose sanctions on companies providing refined petroleum products to Iran or helping Iran to expand its own refining capacity.
Shipping companies that transport the refined petroleum to Iran and their insurers are also targeted by the legislation.
It also provides constitutional protection to state legislatures that have passed laws over the past two years ordering state pension funds to divest from companies doing business with Iran.
The House passed a similar measure last month by a 412-12 vote. The Senate had been sitting on the legislation since April at the request of the Obama White House, senior Senate aides and other sources tell Newsmax.
Then on Tuesday, Majority Leader Harry Reid announced that he intended to bring it to a vote within the next two weeks.
A senior Senate aide told Newsmax two days before the vote that the legislation was stalled because a senator had “placed a hold” on the bill, something that any member of the Senate can do anonymously to prevent legislation from moving forward.
A check with the Republican leadership confirmed that no Republican was blocking the bill.
Several sources have told Newsmax in recent weeks that Massachusetts Democratic Sen. John F. Kerry was holding the bill hostage on orders from the White House.
Shortly before Christmas, Kerry announced that he wanted to go to Tehran to negotiate an end to U.S. sanctions on Iran on behalf of the Obama administration, but eventually dropped those plans when the Iranian government refused to grant him a visa.
But earlier this week, Kerry appears to have switched his position. “Sen. Kerry does not have a hold on that legislation,” Kerry spokesman Frederick Jones told Newsmax just hours before Thursday’s vote.
Regardless of who was holding up on the bill, it’s clear that they are doing the bidding of the Obama White House, says Morton Klein, president of the Zionist Organization of America.
“The fact that the administration delayed the vote in both the House and Senate is further proof that President Obama is not doing all he can to fight the threat of Islamic terrorism against the United States,” Klein told Newsmax. “I think Obama took his foot off the brake in part because of the message from the Massachusetts election.”
Concern over continued White House stalling on Iran led nine senators, four Republicans and five Democrats including Sen. Joe Lieberman, to send a letter to the president just hours before his State of the Union speech, urging him to break the logjam and let the Iran sanctions move forward.
The senators’ letter was also strongly critical of China, whose support for Iran "calls into question whether [China] is interested in being a responsible stakeholder in the international system and does significant damage to its relationship with the United States.
"We fear that Beijing's pursuit of its narrow commercial self-interest in Iran is jeopardizing the chances of reaching a diplomatic solution in the nuclear standoff and greatly increases the risk of developments that could profoundly destabilize the Persian Gulf and global energy markets," the senators wrote.
The effort to cut off supplies of refined petroleum to Iran began two years ago, when Arizona State University scholar Orde Kittrie, now a scholar with the Foundation for Defense of Democracies, noticed that Iran continued to import roughly 43 percent of its gasoline supplies, despite its extensive oil exports.
Research by Kittrie and others at FDD found that Iran was relying on just a handful of suppliers, making this type of legislation a precise strike, rather than a broad one, as opponents often claim of sanctions.
“This is an apple pie and motherhood bill,” says Malcolm Hoenlein, the executive vice chairman of the Conference of Presidents of Major Jewish Organizations.
Hoenlein said his sources were telling him that the administration “didn’t want anything that will alienate” U.N. Security Council members before they bring Iran back before the Council next month.
Even the strongest advocates of “crippling” sanctions on Iran realize that with China holding down the rotating presidency of the Security Council this month, nothing is going to happen there now.
France takes over as U.N. Security Council president in February, and President Sarkozy has publicly supported strong action to prevent Iran from becoming a nuclear weapons state.
The Wall Street Journal is reporting that the U.S. will present a detailed proposal on Friday to the five permanent members of the Security Council plus Germany, urging sanctions that target key companies and individuals tied to the Islamic Revolutionary Guards Corps.
Secretary of State Hillary Clinton met with Russian Foreign Ministry Sergey Lavrov in London this week to discuss the proposal. Speaking to reporters afterward, Lavrov agreed with Clinton that time was running out before another round of U.N. sanctions would be imposed.
But so far, the Obama administration’s proposals do not appear to include sanctions on suppliers who continue to sell refined petroleum goods to Iran, as Congress wants to see.
Opponents of sanctions include the U.S. Chamber of Commerce and other pro-export lobbies, as well as the National Iranian-American Council (NIAC), which argues that sanctions would have a negative impact on the Iranian people.
Most pro-democracy activists dismiss those concerns, and say they play into the hands of the Tehran regime.
Clearly the Iranian regime fears a squeeze on refined petroleum supplies “because they see it as part of a comprehensive economic warfare strategy that threatens to undermine a fragile economy, drive up inflation rates, and fan the flame of domestic discontent,” said Mark Dubowitz, executive director of the Foundation for the Defense of Democracies.
Opposition to tougher sanctions on Iran is also coming from Germany, where more than 1,200 exporting companies, including some of Germany’s top manufacturers, sold more than $5.7 billion worth of goods to Iran in 2008, the last year for which complete figures are available.
Although Chancellor Angela Merkel has repeatedly expressed her support for tougher sanctions on Iran, companies such as ThyssenKrupp and Daimler-Benz continue work on major contracts with the Iranian regime.
On Thursday, Michael Spaney, a German activist who is lobbying for tougher sanctions on Iran, distributed fliers to 3,500 stockholders at the annual ThyssenKrupp shareholders meeting, and publicly challenged company directors if they doing business with Iran’s Revolutionary Guards.
Ekkehard D. Schulz, CEO of ThyssenKrupp, replied that the company was “not aware of involvement with the Revolutionary Guards" but was "dealing with construction companies" in Iran. Schulz dismissed a request that the company issue a statement condemning calls by Iran’s leaders that Israel be wiped off the map. “It is not ThyssenKrupp’s responsibility to issue a statement,” he said. “That is a function of the federal government.”
Despite the hesitation of President Obama, some foreign corporations were already beginning to wonder if continued business in Iran is worth the price.
Just last week, Texas-based chemical manufacturer Huntsman Corp. announced that its subsidiaries would no longer do business in Iran. The company’s action came in response to a public campaign by United Against a Nuclear Iran urging the company to “explain” its ongoing sales to Iran.
And on Thursday, Siemens Corp of Germany, one of Iran’s key suppliers of high-technology goods, announced that it would no longer seek new business in Iran.
Siemens had been under investigation by the German authorities since December over two shipments of turbo-compressors and computers that allegedly were destined for companies associated with Iran’s nuclear weapons program, according to German newsweekly Der Spiegel.
Siemens, along with its Finnish partner, Nokia, came under fire for having sold Iran equipment that was allegedly being used by the security forces to monitor cell phones and text messages during last summer’s anti-regime protests.
The Siemens pullout from Iran was applauded by the Simon Wiesenthal Center, which had been lobbying the state of California to ban Siemens from bidding on lucrative state infrastructure projects, including a $300 million light rail project in Los Angeles.
“If this means that Siemens also will desist from any future third-party deals with Iran, we will drop our opposition to Siemens bids for future projects in California and elsewhere in the U.S.,” the Wiesenthal Center’s Associate Dean, Rabbi Abraham Cooper, told Newsmax in a faxed statement from Jerusalem.