Obama, Congress at odds over Iran sanctions relief

HTR Media — The Obama administration is weighing whether to offer Iran the chance to recoup billions of dollars in frozen overseas assets if it takes steps to scale back its nuclear program, U.S. officials and congressional aides said Friday. The proposal would face a skeptical Congress determined to make the end of Tehran’s uranium enrichment activity the condition for any sanctions relief.

The brainstorming comes after two days of nuclear negotiations between Iran and world powers ended this week in Geneva. The talks — the first since Iranian President Hassan Rouhani took office — ended on an upbeat note although it fell short of specific and concrete commitments by Iran to stop enriching uranium or ship out its stockpiles of higher-enriched uranium.

The proposal is one of several under consideration to spur negotiations to ensure Tehran can’t produce atomic weapons. Enriching uranium can produce material for peaceful energy purposes or nuclear arms.

Under the plan being weighed, Iran would be able to access money from oil sales overseas that it currently can only barter with because of U.S. and international sanctions. Senate aides put the total between $50 billion and $75 billion. It’s not clear what Iran would have to do in return to prompt the Obama administration to allow banks to release the money.

The premise behind providing Iran with cold cash is that opening and shutting such a valve would be far easier than beginning to take apart years of complicated, international financial and oil sanctions that would also be difficult to put back together if Iran failed to live up to the bargain. Finding a formula for sanctions relief is important if President Barack Obama is going to be able to offer the Iranians good reason to be open about their nuclear program before they reach the point of nuclear weapons capability. A nuclear-armed Iran could prompt a U.S. or Israeli military intervention.

“Iran will have to agree to meaningful, transparent and verifiable actions before we can seriously consider taking steps to ease sanctions,” White House spokeswoman Bernadette Meehan said. Meehan and State Department spokeswoman Jen Psaki declined to comment on specific types of sanctions relief, calling such questions “premature and speculative.”

Officials who confirmed the cash reserves approach weren’t authorized to speak publicly on the matter and demanded anonymity.

Congress is already weighing in. Sen. Mark Kirk of Illinois, a key proponent of Iran sanctions, plans to introduce an amendment to a new package of international restrictions on commerce with Iran that would seek to provide the administration with more sticks and carrots for talks through Iran’s cash reserves, a Senate aide said.

Kirk’s plan would freeze any remaining assets overseas that Iran can still access by threatening to cut off from the U.S. market any foreign banks that continue doing business with Iran. At the same time, it would also give Obama the flexibility to allow Iran to access some of the money it can only use for limited purposes today, said the Senate aide, who wasn’t authorized to speak publicly on the pending legislation and demanded anonymity.

There’s a catch, however. Kirk’s legislation would allow Iran to get the money only if it agrees to end all uranium enrichment and reprocessing, activities that even Rouhani’s new reformist government has vowed to continue. Iran insists its program is solely for peaceful energy production and appears unlikely to accept such an offer.

Thus, the proposed legislation may actually constrict the administration’s negotiating ability rather than give it more leeway.

“Now is a time to strengthen, not weaken, U.S. and international sanctions,” Kirk and fellow Republican Sens. Kelly Ayotte of New Hampshire and Lindsey Graham of South Carolina said in a statement. “The U.S. should not suspend new sanctions, nor consider releasing limited frozen assets, before Tehran suspends its nuclear enrichment activities.”

The strategy to leverage Iran’s cash reserves is the brainchild of Mark Dubowitz, executive director of the hawkish Foundation for the Defense of Democracies. Dubowitz, who often advises Congress and the administration on sanctions policy, said the strategy offers the administration an easy way to raise or ease pressure on Iran.

“If Iran were to cheat in fulfilling any of its obligations, the quarantine would be re-imposed,” Dubowitz said. He contrasted his idea with the tactics employed earlier this year by the Obama administration, which, he said, offered Iran a major concession allowing Iran to sell petroleum abroad in exchange for gold.

“It ended up permitting Iran to earn billions of dollars in gold in exchange for no nuclear concessions,” Dubowtiz said.

As this week’s talks in Geneva finished Wednesday, demands in Congress grew for a speedy escalation in sanctions.

Sen. Marco Rubio, R-Fla., introduced a Senate resolution calling for more pressure, echoing a statement by six Democratic and four Republican senators insisting that Iran end all uranium enrichment activity.

That demand could put them at odds with Obama, who has recognized Iran’s right to nuclear energy as recently as September, when he spoke to Rouhani by phone. Obama, however, hasn’t said enrichment is acceptable in Iran, as Tehran demands. The issue remains a key one for international negotiators to resolve.

The sanctions debate is likely to continue between Congress and the administration ahead of another round of Iranian nuclear talks in November and in the months ahead.

The Senate Banking Committee is expected to take up a new sanctions package soon, largely mirroring a House bill that passed by a 400-20 vote in July. It seeks to blacklist Iran’s mining and construction sectors and calls for all Iranian oil sales to end by 2015.

The Senate’s bill may narrow that timeframe, block international investment in more economic sectors, try to close off Iran’s foreign accounts and tighten Obama’s ability to waive requirements for allies and key trading partners who continue to do business with Iran, according to an aide involved in the process.

The Obama administration has expressed concerns that countries may ignore sanctions they deem excessive, undercutting international unity against Iran. They’ve also expressed concern that moving too quickly with additional sanctions packages also could undermine Rouhani with hardliners in his own country and not give him adequate chance to prove his seriousness in the nuclear talks.