Finance Panel to Consider Baucus Iran Sanctions Plan
Finance Chairman’s mark to be considered Wednesday strengthens U.S. hand on Iran, complies with international rules on trade and allows agricultural, humanitarian exports
Washington, DC – Senate Finance Committee Chairman Max Baucus (D-Mont.) today unveiled
an original Chairman’s Mark of legislation strengthening U.S. sanctions on Iran, for consideration
by the full Committee this week. The markup will take place at 10:00 a.m. on Wednesday, June
18, in Room 215 of the Dirksen Senate Office Building. Baucus’s Iran sanctions plan reflects a
number of elements in S. 970, an Iran sanctions bill on which the Committee held a hearing in
April, but is written to ensure that America remains in compliance with World Trade Organization rules and to continue to allow limited sales of agricultural and humanitarian products. The bill strengthens existing U.S. sanctions on Iran by tightening the trade ban on goods to and from Iran, expanding financial sanctions on Iranian persons who are subject to U.S. sanctions, and closing loopholes through which U.S. companies establish foreign subsidiaries just to invest in Iran.
“Slowing the flow of funds and nuclear assistance to Iran’s current regime is in the interest
of the American people, and this week the Finance Committee will consider legislation with
a much stronger stance on Iran sanctions,” Baucus said. “My Iran sanctions bill cracks
down on resources to Iran’s regime, abides by international rules, and permits appropriate
assistance and outreach directly to Iran’s people at the same time. I will encourage the entire Congress to pass this sensible, strong legislation as quickly as possible.”
A detailed summary and full text of the Chairman’s Mark are available on the Finance Committee website. Provisions of the bill are listed below.
Trade and Economic Sanctions
Expansion of export and import bans on goods to and from Iran: Executive Orders from the
President currently prohibit, with some exceptions, the direct or indirect exportation of U.S.-
origin goods to Iran, and the direct or indirect importation of Iranian-origin goods into the United
States. The Baucus proposal codifies the direct and indirect export ban on U.S. goods destined
for Iran, and tightens the export ban so that only agricultural commodities, medicine and medical devices, humanitarian assistance provided to relieve human suffering, and information materials are specifically excepted. The proposal does not provide any specific exceptions for the import ban. The President may waive the prohibitions if he determines a waiver to be in the national interest of the United States.
World Trade Organization (WTO) accession of Iran: Under U.S. law, Iran may not benefit
from U.S. trade preference programs while it is designated by the State Department as a state
sponsor of terrorism. The proposal prohibits the United States Trade Representative or any other
Federal official from taking action that would extend trade preferences to Iran or that would lead
to the WTO accession of Iran. The President may waive the prohibitions if he determines a
waiver to be in the national interest of the United States.
Freezing of assets of certain Iranian persons: Under current law, the President has frozen the
U.S. assets of several Iranian governmental, military, and quasi-governmental assets, as well as
those of Iranian individuals designated as proliferators of weapons of mass destruction or
terrorists, and the U.S. assets of their supporters as well. The proposal removes the President’s
discretion to freeze or not freeze such assets, and instead requires the President to freeze the funds and assets under U.S. jurisdiction of Iranian diplomats and representatives of other government and military or quasi-governmental institutions of Iran if such persons are subject to sanctions under IEEPA or other provisions of U.S. law. The President may waive this requirement if he determines a waiver to be in the national interest of the United States.
U.S. parent company liability for violations of sanctions by foreign entities: Under current law,
foreign subsidiaries of U.S. companies may invest in Iran if the foreign subsidiary is independent
of the U.S. parent companies. The proposal subjects U.S. parent companies to sanctions if the
parent company knowingly participates in violations of U.S. sanctions laws by its foreign subsidiaries. The President may waive this requirement if he determines that such a waiver
would be in the national interest of the United States.
Nuclear Energy and Cooperation
U.S. – Russia Nuclear Cooperation: On May 6, 2008, the United States and Russia concluded
a nuclear cooperation agreement (“123 Agreement”) pursuant to section 123 of the Atomic
Energy Act, to permit the United States to license exports of nuclear material, facilities,
components, or other nuclear-related goods and services to Russia. Under the Atomic Energy
Act, the 123 Agreement will enter into force unless Congress passes a disapproval resolution
soon. The Baucus proposal would prohibit the Untied States from entering into a 123 Agreement
with Russia, and from issuing licenses for the export of any nuclear material, facilities,
components, or other goods, services, or technology that fall within the scope of the 123
Agreement. The United States would not be allowed to approve the direct or indirect transfer or
retransfer to Russia of any such nuclear material, facilities, components, or other goods, services, or technology. These prohibitions would remain in place unless the President certifies to
Congress that Russia has suspended all nuclear assistance to Iran and all transfers of conventional weapons and missiles to Iran, or that Iran has completely, verifiably, and irreversibly dismantled all nuclear enrichment-related and reprocessing-related programs.
International Fuel Bank: Current law authorizes the Department of Energy to contribute
$50,000,000 to the International Atomic Energy Agency (“IAEA”) for the creation of a nuclear
fuel bank that would stockpile low-enriched uranium to supply nuclear fuel for peaceful means.
The proposal expresses the sense of Congress that the United States should support the creation of an international nuclear fuel bank by the IAEA, and that before the U.S. makes any
contribution the President should ensure that the fuel bank has multilateral support, is under
IAEA control, and has necessary safeguards in place. The President would be required to report
to the Senate Foreign Relations and House Foreign Affairs committees on the activities of the
United States to support the establishment of an assured supply of nuclear fuel for peaceful
Reductions in World Bank Contributions for Loans to Iran
The United States currently opposes World Bank loans to Iran, as the Treasury Department is
required to oppose such loans to countries that the Secretary of State identifies as supporting
international terrorism, or that engage in a pattern of gross violations of internationally
recognized human rights. The State Department designated Iran as a state sponsor of terrorism on January 19, 1984, and has identified Iran as having a poor human rights record and engaging in systematic violations of human rights. The proposal provides that for new loans granted to Iran after 2008, the United States must cut its contributions to the World Bank by an amount that is proportional to the total amount of loans the World Bank provided to Iran, and gives the money instead to the U.S. Agency for International Development’s Child Survival and Health Programs. The President may waive this requirement if he determines that such a waiver would be in the national interest of the United States.
Increased Capacity to Combat Terrorist Financing
The Department of Treasury’s Office of Terrorism and Financial Intelligence (TFI), of which the
Office of Foreign Asset Controls is part, and the Department of Treasury’s Financial Crimes
Enforcement Center (FinCEN) play a critical role in administering U.S. sanctions laws. The
proposal authorizes nearly $62 million for the TFI and more than $91 million for FinCEN for
fiscal year 2009.
Direct Contact with the People of Iran
Exchange Programs: To promote people-to-people exchanges with citizens of Iran, the proposal
authorizes the President to carry out exchange programs with the people of Iran, with a focus on
exchange programs with Iranian youth.
Radio Broadcasting to Iran: Radio Farda is a 24-hour-a-day, seven-day-a-week channel that
broadcasts news, information, and Persian and Western music to Iran. It is a joint project of
Radio Free Europe and Voice of America. The proposal states that the Broadcasting Board of
Governors that controls Radio Farda should devote a greater proportion of programming to news
Reporting Requirements to Increase Monitoring of Investment in Iran
Foreign investment in Iran: The Iran Sanctions Act of 1996 (“ISA”) requires the President to
impose sanctions on a U.S. or foreign natural person if the President determines that the person
invested $20,000,000 or more in Iran’s petroleum or natural gas sectors, but the President has
never done so even though foreign companies have invested more than the specified amount. The proposal requires the President to report to the Senate Finance, Banking, and Foreign Relations Committees and House Ways and Means, Financial Services, and Foreign Affairs Committees any foreign investments made in Iran’s energy sector and the determination of the President on whether such investments qualify as sanctionable offenses.
Export Credits: Current law does not require the Secretary of Treasury to report to Congress on
export credits issued by foreign banks to persons investing in Iran’s energy sector. The Baucus
proposal requires the Secretary of Treasury to report to the committees of jurisdiction on export
credits issued by foreign banks to persons investing in Iran’s energy sector, and any fines,
restrictions, or other actions taken by the President to discourage such export credit guarantees.
Report on U.S. entities that invest in Iran: The President is not currently required to provide to
Congress a report on companies that have or conduct business in the United States that also invest in Iran. The proposal requires the President to provide Congress with an annual report on the names of persons that have or conduct business in the United States and also invest in Iran, and the amounts of each such investment.
Thrift Savings Plan: The Executive Director of the Federal Retirement Thrift Savings Board is
not currently required to report to Congress on whether any investments from the Thrift Savings
Plan are in entities that invest in Iran. The proposal includes the sense of Congress that the
Executive Director of the Thrift Savings Board should report any investments from the Thrift
Savings Plan that are in entities that invest in Iran.
All provisions of the Baucus Iran sanctions package will sunset five years after the date of
enactment, or will terminate entirely if the President determines and certifies to committees of
jurisdiction that Iran has completely, verifiably, and irreversibly dismantled all nuclear enrichment and reprocessing-related programs, or if such a determination is not made.
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