Congress hearts Iran sanctions too

Galrahn, the Armchair Admiral, recommended that I also do an analysis of the Iran sanctions bills currently moving through the House and Senate.

One of these three bills is the "Iran Sanctions Enabling Act of 2007" that was originally sponsored by Representative Barney Frank (D-MA) and introduced in the House in May.

HR.2347 "Iran Sanctions Enabling Act of 2007"

The bill orders the Department of Treasury to maintain a list of foreign or U.S. persons who have invested more than $20 million in the Iranian oil industry. It then gives investors who divest themselves from a person on the Treasury list a safe harbor from civil, criminal and administrative actions and suits against the divestiture.

It also makes it the policy of the United States to support decisions by state and local governments and educational institutions to divest themselves from persons who are on the Treasury list.

The bill was passed by a hefty margin (408-6) in the House in early July and was introduced in the Senate in early August. I know socially responsible investing is really popular with folks on the left, but I bet the tangible impact of this Representative Frank's bill will be marginal.

The other two bills share the title "Iran Counterproliferation Act of 2007" and share most of the same content. The House version was introduced in March 2007 by Representative Tom Lantos (D-CA).

HR.1400 "Iran Counter-Proliferation Act of 2007"

The Lantos bill closes off the exemptions for the importation of Iranian rugs, foodstuffs and informational materials and the exportation of civil aviation safe equipment. Not surprisingly, exemptions for medicine and food exports are left alone, no doubt the handiwork of the pharmaceutical and farm lobbies.

It also mandates the President impose six types of sanctions on persons found to be violating the Iran Sanctions Act of 1996. Currently, the President is only require to impose two sanctions from a list that includes exclusion from the U.S. financial system, being listed as a denied party under all of the major export control regulations and disbarment from doing business with the U.S. government. It also removes the President's ability to waive these sanctions under any circumstances.

The bill also makes the foreign subsidiaries of any U.S. company subject to the Iran Sanctions Act by making the parent company liable for the subsidiary's sanctions busting. The definition of a foreign subsidiary is also defined down from super majority ownership to simple majority ownership.

Ironically, Lantos's bill would require that the executive list the Iranian Revolutionary Guard Corp as a 'specially designated global terrorist,' a 'foreign terrorist organization' and a 'weapons of mass destruction proliferator.'

S.970 "Iran Counter-Proliferation Act of 2007"

The Senate version of this bill was introduced shortly after the Lantos bill in March 2007 by Senator Gordon Smith (D-OR).

The only major difference between the House and Senate bills is that the Senate takes the additional step of negotiation and implementation of a U.S.-Russian 123 agreement until the President can certify that Russia has stopped assisting the Iranian nuclear program.

Given the broad scope of unilater U.S. sanctions already imposed on Iran and persons who deal with Iran, I imagine the impact of any of these measures will be marginal as best. At worst, they will have no impact on Iran while driving a larger wedge between Russia, Europe and the U.S.