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July 19, 2013

NIAC Policy Memo: The Iran Export Embargo Act (S. 1001)

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The Iran Export Embargo Act Has No Democratic Support

  • None of the 19 cosponsors of Senator Cornyn’s (R-TX) bill are Democrats, likely because the bill eliminates the President’s authority to manage the risks associated with imposing sanctions on countries importing Iranian oil.

Removes the President’s National Security Waiver

  • The Iran Export Embargo Act removes the President’s ability to waive sanctions when doing so is in the national security interests of the United States.
  • Under existing law, the President may waive for 120 days the application of penalties for a sanctions violation if he determines it is in the national security interest of the United States.

Removes the Presidential Determination Regarding Global Oil Supply; Risks Spiking Gas Prices

  • The Iran Export Embargo Act removes the President’s ability to respond to an oil shock and to ensure that sanctions on Iran do not significantly increase oil prices.
  • Under existing law, the President may waive application of sanctions if the price and supply of petroleum produced in countries other than Iran is not sufficient to permit purchasers of petroleum from Iran to reduce significantly the volume of their purchases from Iran.   

Removes the Cooperating Country Waiver; Risks Angering Allies

  • The Iran Export Embargo Act would require the President to sanction any entity that imports Iranian oil within 180 days, without regard for whether such reductions are realistic or feasible. 
  • Foreign Relations Chairman Menendez, a key sanctions hawk in the Senate, has warned against pushing unilateral sanctions so far that they fracture the international coalition pushing Iran to make concessions on its nuclear program.  (See CQ: Foreign Relations Chairman Cool to Push for Complete Iran Oil Embargo).
  • Under existing law, countries are excluded from the prohibition on transaction with Iran’s central bank if those countries significantly reduce their purchases of Iranian oil over every 180 day period.

Makes Lifting Sanctions Nearly Impossible; Setting the U.S. and Iran on Path to War

  • By removing all waivers and failing to provide sunset criteria, the bill would make it nearly impossible to lift sanctions.  Given the difficulty in reaching bipartisan Congressional consensus on any issue, the prospects of Congress passing legislation to remove sanctions on Iran are extremely bleak.
  • With no prospect for lifting oil sanctions, there would be no incentive for the Iranian regime to continue negotiations with the international community and the view within the Iranian government that the U.S. is seeking regime change would be strengthened.  This would increase both the risk of war and that the Iranian regime would attempt to break out of the IAEA inspections regime to build a nuclear weapon.

Blocks Humanitarian Trade with U.S. Companies

  • The provision that mandates the blocking of all property in which the Government of Iran has an interest may make it impossible for U.S. companies and their foreign subsidiaries to carry out humanitarian trade with Iran.  The provision requiring the blocking of property of the Government of Iran could result in these funds being frozen as they are repatriated to the United States or to a U.S. company’s foreign subsidiary.  Because the blocking of property does not indicate that this is pursuant to the International Emergency Economic Powers Act, the humanitarian exemptions contained in the Iranian Transactions and Sanctions Regulations would not apply. 
  • The expansive definition of the Government of Iran would implicate many of Iran’s major importers who are owned by quasi-governmental organizations, and would prevent transactions with Iran’s Ministry of Health and Medical Education.

 

 

 

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