WASHINGTON -- As bargaining
continues at the United Nations Security Council over a new sanctions
resolution on Iran, top officials from the Treasury and State
Departments revealed yesterday that they have won support behind the
scenes for even harsher measures intended to isolate Iran and force its
leaders to back off from developing nuclear weapons.
The U.S. has been working with its allies overseas to impose "new
targeted sanctions," directed at "individual bad actors," Treasury
Undersecretary Stuart Levey told the Senate Banking committee on
The U.S.-backed measures are aimed at "specific individuals, key
members of the [Iranian] government, front companies, and financial
institutions," Levey said. "Some require financial institutions to
freeze funds and close the accounts of designated actors." Others
include "bans on travel or arms transfers."
Only five of the 19 companies and individuals who have been
subjected to these latest Treasury Department sanctions have been
included in U.N. Security Council Resolution 1737, enacted in December.
But Levey insisted that the lack of UN support for the U.S.-led effort
against Iran has not made it less effective.
"I have traveled all over the world, sharing our list of Iran-related
designations with foreign government counterparts and private sector
representatives," he said. As a result of those talks, the U.S. list
has been "incorporated into the compliance systems at major financial
The Iranians have gone to great lengths to conceal their
activities. Front companies are used to disguise the purchase of
weapons-related materials as benign commercial transactions, he said.
"We have also seen Iranian banks request that other financial
institutions take their names off of U.S. dollar transactions when
processing them in the international financial system," he said. "This
practice is used even by the Central Bank of Iran."
The new, targeted sanctions the U.S. has devised are aimed at
stopping Iran's covert procurement activities, as well as its use of
the international financial system to transfer funds to terrorist
groups, he said. [Click here
to view Levey's prepared testimony]
But Democrats pressed the administration to do more.
Banking committee chairman Sen. Chris Dodd, D-Conn., displayed a
at the hearing identifying investments totaling $126 billion in
Iran's oil and gas industry in recent years. Those investments occurred
despite U.S. laws intended to prevent them.
"We've given you very specific tools that allow you to do much
more than just ask people to do things," Dodd said. Instead, the U.S.
has not invoked the sanctions even once.
Undersecretary of State Nicholas Burns argued that sanctions such
as those contained in the Iran Sanctions Act, which target foreign oil
and gas companies, could bring about the collapse of two years of
efforts to build an international coalition to increase pressure on
Iran. "We want the pressure of the sanctions on Iran itself and not on
our allies," he said.
Burns pointed out that many of the 14 deals cited by Dodd have
been put on hold, for fear of U.S. displeasure. Top U.S. officials have
been "jawboning Shell, the Chinese, and the Malaysians . . . We've gone
to their CEOs and said, ‘this is a bad idea.'" Burns said.
In the U.N. talks, Burns said the United States was trying to get
the Security Council to impose a "specific set of sanctions against the
Islamic Revolution Guards Corps (IRGC)," because of its involvement in
terrorism and Iran's nuclear weapons program.
Congressionally-mandated sanctions, such as those contained in
new legislation introduced earlier this month by Rep. Tom Lantos,
D-Calif., and Ileana Ros-Lehtinen, R-Fla., "might break up our
coalition," Burns argued. "We need some help from our allies."
In 2005, the European Union approved $22 billion in export credit
guarantees, to support sales to Iran by European companies, Burns
acknowledged. "We'd like to see that come down," he said. [Click here
to read Burns' prepared statement. Click here
to read testimony from Acting Undersecretary of Commerce for Industry and Security, Mark Foulon]
Top European companies such as DaimlerChrysler AG, Shell, or
TotalFinalElf, continue to do extensive business in Iran. But the
threat of U.S. or U.N. sanctions is beginning to have some impact.
In February, DaimlerChrysler announced it would scale back its
Iranian-based businesses, which include the assembly of Mercedes Benz
E-class vehicles, an interest in a truck plant, and a factory to make
truck and bus engines.
In 2004, DaimlerChyrsler sold through a Saudi affiliate 270
Mercedes Benz commercial vehicles to Iran in a $22 million contract.
Those vehicles have since been used by law enforcement authorities in
Iran for riot control. A German prosecutor in Stuttgart opened an
investigation into the sale.
A number of U.S. companies continue to do business in Iran through overseas subsidiaries.
Under the U.S. trade embargo on Iran, it is illegal for U.S.
companies to trade directly with Iran. Earlier this month, the Treasury
Department fined two U.S. firms for violating the trade embargo.
Guidant Corporation of Indianapolis, Ind., agreed to pay $277,017
for selling medical equipment to Iran through third countries, while
Varian, Inc. of Palo Alto, Calif., paid $114,958 to settle allegations
of embargo-busting stemming from sales of U.S.-origin software.
Both companies voluntarily disclosed their activities, a Treasury Department statement said.
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