Congress rebuffs easing of Iran sanctions

Republicans and Democrats determined to look tough on Iran and avoid any election-year challenges to their pro-Israel bona fides are rebuffing Obama administration pleas to ease proposed penalties on Iran's central bank.

The administration argues that the crippling penalties would undercut a carefully calibrated international effort targeting Tehran and would drive up oil prices, a potential economic boon that would help finance Iran's suspected pursuit of a nuclear weapon while hitting cash-strapped Americans at the gas pump.

Just weeks after announcing a new round of restrictions, President Barack Obama on Thursday dismissed "some of the political noise out there" and said his "administration has systematically imposed the toughest sanctions on Iran ever."

Obama said he was considering all options for dealing with Iran, but declined to be more specific.

Lawmakers are pressing ahead with penalties against foreign banks that do business with Iran's central bank, a plan that the Senate resoundingly endorsed last week on a 100-0 vote.

"The administration does understand the centrality of this issue to forcing Iran. They would like to do it unimpeded by congressional mandates. That's true of every administration," Rep. Howard Berman of California, the top Democrat on the House Foreign Affairs Committee, said in an interview. "On this, we're not going to just roll over and take their suggestions."

The showdown between the administration and Congress encompasses policy realities and political maneuvering.

Tough economic penalties are the most viable option short of a military strike. Looking ahead to the 2012 elections, Republicans and Democrats are intent on presenting a record of hawkishness toward Iran and unwavering support for Israel, mindful of the importance for American Jewish voters and their financial contributions to the political parties.

The sanctions measure sponsored by Sens. Mark Kirk, R-Ill., and Bob Menendez, D-N.J., was added to a broader defense bill that's now the subject of closed-door negotiations between the House and Senate. Lawmakers hope to produce a final version of the policy legislation early next week.

Few lawmakers, even Democrats, have argued the administration's case for weakening the penalties.

"I think Democrats are scratching their heads that the administration is leading them into a policy provision which not a single Democratic senator can support," Kirk said in an interview. He said he spoke to the chairman of the House Armed Services Committee, Rep. Howard "Buck" McKeon, R-Calif., on Thursday and he indicated that the House negotiators would accept the sanctions provision.

The Kirk-Menendez measure would go after foreign financial institutions that do business with the central bank by barring them from opening or maintaining correspondent operations in the United States. It would apply to foreign central banks only for transactions that involve the sale or purchase of petroleum or petroleum products.

The petroleum penalties would only apply if the president, in six months, determines there is a sufficient alternative supply and if the country with jurisdiction over the financial institution has not significantly reduced its purchases of Iranian oil. It also allows the president to waive the penalties based on national security.

Treasury Secretary Timothy Geithner, in a Dec. 1 letter to senators, said the administration opposed the measure in its current form because it would undermine its effort to bring international pressure on Iran. He also warned that the penalties could actually boost oil prices and benefit Iran financially.

"Iran's greatest economic resource is its oil exports," Geithner wrote. "Sales of crude oil line the regime's pockets, sustain its human rights abuses and feed its nuclear ambitions like no other sector of the Iranian economy."

The administration is seeking both substantive and technical changes, including delaying implementation of all the penalties for six months. Berman favors speeding up the penalties to four months.

In arguing for tougher sanctions, lawmakers cite the recent International Atomic Energy Agency report that Iran is suspected of clandestine work that is "specific to nuclear weapons," its alleged role in the plot to assassinate the Saudi ambassador in the United States and the attack on the British Embassy in Tehran.

U.S.-Iranian relations have been put further on edge by Iran's capture of a high-tech, stealth CIA drone on a surveillance mission over Iran.

Two weeks ago, the administration announced a new set of penalties against Iran, including identifying for the first time Iran's entire banking sector as a "primary money laundering concern." This requires increased monitoring by U.S. banks to ensure that they and their foreign affiliates avoid dealing with Iranian financial institutions.

Arguing that it isn't enough, the pro-Israel lobby, the American Israel Public Affairs Committee, and advocacy group American Jewish Committee, endorsed the tougher congressional penalties without any changes. The powerful AIPAC has put considerable pressure on lawmakers, especially those facing re-election next year, according to officials on Capitol Hill.

"Most of us know in the end that the forces in Iran are not going to go quietly into the night," said Rep. Gary Ackerman, D-N.Y., in an interview. "We may have to send them into the night not so quietly."