The U.S. Senate has unanimously approved new sanctions on Iran, with the intent of isolating and crippling the country’s central bank. The vote was 100 to nothing.
The logic of the Senate measure is simple: Iran’s economy and nuclear program depend on oil revenue, which must pass through the central bank. Cutting off the central bank from the outside world will, it is hoped, bring Iran’s economy to its knees.
Republican Senator Mark Kirk of Illinois said, “The central bank of Iran is the heart and soul of a web of terror, of nuclear production, of human rights abuse, and the oppression of other peoples, principally in Syria.”
Under the measure, any business or financial entity that has dealings with Iran’s central bank would be cut off from the U.S. market. “It forces financial institutions and businesses around the world to choose between the small and shrinking $300 billion economy of Iran and the $14 trillion economy of the United States. In that contest, we all know how just about everyone will choose," he said.
But while voicing support for strengthened sanctions against Tehran in general, the Obama administration has not supported this particular measure, approved as an amendment to the Senate’s Defense Authorization bill. U.S. Treasury Undersecretary for Terrorism and Financial Intelligence David Cohen told the Senate Foreign Relations Committee that the administration worries the amendment’s punitive intent will impede, rather than foster, international pressure on Iran.
“That threat being focused on our closest allies risks a dynamic with those governments and with those banks that I think is as likely to push them away and to impede the ability to bring together a coordinated effort against Iran as to generate that," he said.
Undersecretary of State for Political Affairs Wendy Sherman warned the amendment could bring unintended and counter-productive consequences if Iranian oil suddenly disappears from global petroleum supplies. “There is absolutely a risk that, in fact, the [global] price of oil would go up, which would mean that Iran would have more money to fuel its nuclear ambitions, not less," she said.
Democratic Senator Robert Menendez of New Jersey, who co-authored the amendment with Senator Kirk, noted the measure allows for delayed and flexible implementation to reduce the likelihood of negative consequences.
“This amendment was crafted in a way that gives the president two significant pieces of discretion. Number one, to determine that there is sufficient supply in the oil market that would not create a disruption - and if he finds that is not the case, then the actions would not go into effect. He has a second opportunity [to waive provisions]: a national security waiver," he said.
Menendez expressed exasperation about the administration’s resistance to his amendment, noting that U.S. officials have acknowledged it is Iran’s oil industry that fuels its nuclear program.
The Senate’s Defense Authorization bill, now amended to include Iran sanctions, faces additional legislative hurdles and a presidential veto threat over an unrelated matter. The House of Representatives is considering a similar package of heightened Iran sanctions.