Tuesday, December 15, 2009

House of Representatives votes to sanction Iran

Some good news tonight from FNC:
The House voted overwhelmingly to implement new sanctions against Iran in retaliation for its saber-rattling over building a nuclear weapons arsenal.
By a 412-12 vote, lawmakers approved legislation that would penalize foreign companies that sell oil to Iran or help the country with its oil-producing capacity. While Iran is a major crude oil producer, its lack of ability to produce enough gasoline and other refined petroleum products is a major economic vulnerability.

With no Senate action on the legislation expected this year, the House vote was for the time being mainly a warning that the United States is ready to act on its own if the Tehran government doesn't respond to current international efforts to prevent Iran from becoming a nuclear power.

Some lawmakers who voted against the bill worried such economic consequences could harm impoverished Iranians.

Deputy Secretary of State James Steinberg, in a letter to the Senate Foreign Relations Committee last week, said the Obama administration was "entering a critical period of intense diplomacy to impose significant international pressure on Iran." Sanctions legislation "might weaken rather than strengthen international unity and support for our efforts," Steinberg's letter said.

House Foreign Affairs Committee Chairman Howard Berman, D-Calif., said Iran has had ample time to respond to President Obama's efforts at engagement. "President Obama has offered Iran an outstretched hand, but regrettably, Iran has not unclenched its fist."

Hitting Iran in one of its weakest areas could be "the last best hope for diplomatically ending Iran's nuclear weapons program," said Rep. Mark Kirk, R-Ill.

U.S. officials say Iran has already stockpiled enough uranium to produce one nuclear weapon, said Rep. Ileana Ros-Lehtinen of Florida, top Republican on the Foreign Affairs Committee. International diplomacy has proved to be a mirage, she said. "we must use the limited time remaining to impose sanctions so painful that they should threaten the Iranian regime's survival."
This bill was first introduced back in April and only came to the forefront this week because of newly leaked intelligence indicating that Iran is testing a neutron initiator.  After the bill was first published, several gasoline suppliers stopped trading with Iran.
Blocking one-third of Iran's gasoline supplies might seem relatively simple. The country's imports come from a fairly small number of firms, including Swiss-Dutch companies Vitol and Trafigura and India's Reliance Industries. New U.S. sanctions would force those companies to choose between doing business in the U.S. or doing business with Iran — a no-brainer for most firms. "They have bigger fish to fry [than Iran]," says Mark Fitzpatrick, a former State Department official and now director of Nuclear Nonproliferation at the International Institute for Strategic Studies in London. "They all have bigger markets elsewhere, including in the U.S." Indeed, even talk of a refined-petroleum blockade convinced British Petroleum to halt its exports to Iran last year. Oil analysts believe Reliance has suspended sales to Iran too.

Geopolitical consultancy Stratfor believes that the delay in congressional action has given Iran an opportunity to stockpile gasoline in anticipation of sanctions:

But that early talk gave Iran time to prepare for new sanctions. Earlier this year, it began importing far more than it was using. Intelligence consultancy Stratfor noted last week that Iran has probably stockpiled at least three months' worth of gasoline. The National Iranian Oil Refining and Distribution Co. estimates that the country has some 15.7 million bbl. of gasoline — about four months' worth — stockpiled in tankers on land and off its Persian Gulf coast. After BP and Reliance halted exports to Iran, Chinese state-owned oil companies filled the gap, supplying about one-third of Iran's gasoline imports as of last month, according to the Financial Times. Lawrence Eagles, head of commodities research at JPMorgan, told the paper last week that Iran was importing 30,000 bbl. to 40,000 bbl. a day from Chinese companies. And Malaysia's state-owned oil company Petronas delivered three shipments of gas to Iran last month, each containing about 93,000 bbl., according to Stratfor.
Iran is probably confident that any meaningful sanctions launched by the U.S. will be short-lived and ineffective.  In light of our recent foreign policy shifts, Israel probably is too.

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