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US Senate votes for new sanctions on Iran

15 Jun 2017, 5.22 pm GMT

US Senate votes for new sanctions on Iran

Washington, 15 June (Argus) — The US Senate today overwhelmingly approved a bill imposing new sanctions on Iran over its ballistic missile tests.

The legislation, approved in a 98-2 vote, would mandate sanctions on entities supporting Iran's ballistic missile program, as well as stricter sanctions against the Islamic Revolutionary Guard Corps, a security force with extensive holdings in Iran's economy.

The bill also codifies new sanctions on Russia, which lawmakers approved 97-2 yesterday through an amendment to the bill. The addition would make it even harder for Russian energy companies to raise capital in world markets and allow the US to sanction investors in Russian pipelines, such as the proposed Nordstream 2 pipeline that would transport 5.3 Bcf/d of natural gas from Russia into Germany.

Senators from both parties said the move to impose sanctions on Iran was necessary to confront what they describe the country's efforts to exert its powers throughout the Middle East, at the expense of US allies and partners. Iran describes its ballistic missile program as defensive in nature, and in turn ascribes hegemonic intentions to the US policy in the Middle East.

The bill shows a convergence of views on Iran in Congress. The nuclear agreement with Tehran — the Joint Comprehensive Plan of Action (JCPOA) — enjoyed only tepid support from the Senate Democrats, who supported it out of deference to former president Barack Obama's foreign policy priorities. Republican opponents of the agreement since Trump took office have toned down their criticism but are pushing for more action on other fronts.

"We can no longer allow the nuclear agreement with Iran to dictate US policy throughout the Middle East," Senate Foreign Relations Committee chairman Bob Corker (R-Tennessee) said.

The JCPOA, which went into effect in January 2016, lifted restrictions on Iran's crude oil sales. Obama-era officials prevailed on the senators to change the text of the legislation to avoid directly undermining the nuclear agreement. "There is nothing in the underlying bill that violates the JCPOA," as a result of consultations with officials who negotiated the agreement and European officials, Senate Foreign Relations Committee ranking member Ben Cardin (D-Maryland) said on 14 June. The bill would protect foreign companies inadvertently doing business with any of Iranian entities that could be affected by the legislation.

Former US secretary of state John Kerry has said the bill does not explicitly violate the nuclear agreement but warned that it could still backfire. And senator Chris Murphy (D-Connecticut) said that new US sanctions are meant to provoke Iran into taking action justifying the US administration's withdrawal from the JCPOA.

Trump's decision to withdraw the US from the Paris climate accord creates a possible precedent for the JCPOA, according to Colin Kahl, who served as national security adviser to former vice president Joe Biden.

"JCPOA is not unlike the Paris climate accord — it is a non-binding agreement," Corker said on 14 June. The administration can exit from the JCPOA simply by declining to waive existing sanctions on Iran. "No matter what the president decides, we remind the president that the Congress will remain involved," Corker said.

The US administration has publicly confirmed Iran's compliance with the agreement and continues to waive sanctions on Iran. But it is undertaking a review of the agreement to determine if it remains in the US national interests. US secretary of state Rex Tillerson said he backed the bill.

Tougher rhetoric from the new administration on Iran has not affected foreign companies' investment plans, Iran's oil minister Bijan Namdar Zanganeh said in a recent interview with Argus. "I have not received any negative signal [from these companies] recently."

Iran following the lifting of the nuclear-related sanctions boosted production by around 900,000 b/d to 3.8mn b/d in May. The country hopes to attract foreign investment to boost its crude capacity to 7mn b/d from about 4mn b/d at present and to develop phase 11 of the South Pars natural gas field in the Mideast Gulf.

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