As senators work on Iran sanctions bill, White House lobbies lawmakers not to act

By Karen DeYoung and Joby Warrick

Originally published in The Washington Post, December 1, 2013

As much as any other foreign policy issue during President Obama’s five years in office, the question of Iran sanctions now finds him at odds with a hefty portion of his own party’s lawmakers, as well as most Republicans.

A bipartisan juggernaut of senior senators is spending the remaining week of the Thanksgiving recess forging agreement on a new sanctions bill that the senators hope to pass before breaking again for Christmas.

The administration believes the legislation could scuttle the interim nuclear agreement reached with Iran on Nov. 23 and derail upcoming negotiations on a permanent deal — scheduled for completion in six months — to ensure that Iran will never be able to build a nuclear weapon.

“If you want to hold our feet to the fire on the final deal, fine, do that,” a senior administration official said. “If people have concerns about elements of a final agreement, come in and tell us. . . . But that is a separate discussion from passing a sanctions bill in the middle of negotiations.”

The administration contends that new sanctions not only would violate the terms of the interim agreement — which temporarily freezes Iran’s nuclear programs and modestly eases existing sanctions — but also could divide the United States from its international negotiating partners across the table from Iran and give the upper hand to Iranian hard-liners in upcoming talks.

“The purpose of sanctions from the outset was to create a dynamic so that you can get a change in policy from the Iran­ians,” David Cohen, the Treasury Department’s undersecretary for terrorism and financial intelligence. said in an interview. “It’s not sanctions for the sake of having sanctions.”

The White House has organized a full-court press between now and the Senate’s return Dec. 9 to persuade lawmakers not to act. In addition to briefings for anyone who wants one, Obama, Secretary of State John F. Kerry, national security adviser Susan E. Rice and other top officials are making personal calls. Kerry sent a video to his former Capitol Hill colleagues explaining the deal, “because some people are putting out some misinformation on it.”

On Friday, the National Security Council distributed to reporters a 25-page compendium of what it called “welcoming” comments about the agreement from lawmakers, foreign policy experts and editorials. A separate 19 pages listed foreign governments, from Afghanistan and Albania to the United Arab Emirates, that have said anything remotely positive.

Nathan Diament, executive director for public policy at the Union of Orthodox Jewish Congregations of America, said he listened in on three White House conference calls last week — two to pro-Israel groups and one to a broader collection of faith-based groups — during which officials stated their case.

“This is going to make the president’s Hanukkah party very interesting,” said Diament, whose group favors new sanctions. The American Israel Public Affairs Committee has declared passage of a sanctions bill its top current priority.

Obama has urged Israeli Prime Minister Benjamin Net­an­yahu, who has called the interim agreement a “historic mistake,” to shift attention to the terms of the final deal still under negotiation. Netanyahu’s top national security advisers are due in Washington this week to express Israel’s concerns and hear the administration’s arguments.

Senate Foreign Relations Committee Chairman Robert Menendez (D-N.J.), one of the leading proponents of new sanctions, said he wonders what all the fuss is about.

“From my perspective, it strengthens the administration’s hand” and positions the United States “for the possibility that [a permanent] agreement cannot ultimately be struck,” Menendez said of a new sanctions bill. “It would make clear to the Iranians if they don’t strike a deal, this is what’s coming.

“I find it interesting that the Iranians can play good cop, bad cop with ‘hard-liners’ in their country,” he added, while “we can’t.”

Menendez favors a measure that would bring further reductions in international purchases of Iranian oil and find new opportunities for sanctions on Iran’s private sector. While some other proposals include requirements ranging from presidential reports to Congress every 30 days during the interim period to an outright ban on U.S. dealings with any country buying Iran’s oil, Menendez would vote now but delay implementation for six months until it was clear that the long-term negotiations had failed. He would also include a presidential waiver provision.

If Congress waits to fashion a sanctions package and there is no final deal, he said, Iran may well have the four to six weeks he believes it needs to fashion a nuclear weapon before lawmakers could respond.

Despite its resistance, he said, the administration “may very well be very happy to have that extra tool” as it enters new negotiations.

The administration begged to differ. “Our view is that passing these sanctions during the life of the negotiations would complicate the negotiations in a number of ways,” said the senior official, speaking on the condition of anonymity as the administration embarks on the delicate effort to shift congressional views.

After a new sanctions bill passed with near-unanimity in the House this summer, 76 senators, including Democratic stalwarts such as Barbara A. Mikulski (Md.), Kirsten Gillibrand (N.Y.) and Charles E. Schumer (N.Y.), along with conservative Republicans such as Ted Cruz (Tex.) and Kelly Ayotte (N.H.), signed a letter urging Obama to take tougher action against Iran, even as a new Iranian president declared a willingness for serious negotiations.

The Senate had agreed to an administration request to postpone a vote until after the most recent round of negotiations, which ended with the successful interim accord.

Now, many see no reason not to move ahead. Schumer, in a statement after the accord was announced, said a new sanctions package could pass this month. Menendez said that is also his goal, adding that the measure could be appended to legislation such as the pending defense appropriations bill, making it difficult for Obama to veto.

Opponents of the pact see many flaws, from allowing Iran to continue low-level uranium enrichment to the possibility that even a modest easing of economic restrictions would lead to the collapse of the entire sanctions regime.

The administration has sought to push back against what it calls inaccuracies and distortions of the agreement, particularly the limited sanctions relief that officials say was specifically structured to make certain that the harshest existing measures remain intact.

On Tuesday, Treasury officials announced a $100 million settlement with a Swiss oil services company, Weatherford International, for supplying technology to Iran in apparent violation of sanctions. The settlement, the largest of its kind, was intended to signal a “deep commitment to target those who seek to violate our sanctions,” said Adam Szubin, director of the department’s Office of Foreign Assets Control.

While various U.S. and U.N. sanctions have been in place for more than a decade, the Obama administration and allies in Congress and Western Europe imposed restrictions beginning in 2010 that dramatically increased the pain for Iran’s economy. The measures blocked Iranian banks from using international financial networks and wiped out more than half of Iran’s foreign oil exports, the country’s chief source of hard currency. The sanctions triggered soaring inflation and unemployment and a steep drop in the purchasing power of Iran’s currency, the rial.

Iranian officials have acknowledged the crippling impact of the sanctions, which were a major factor in Iran’s decision to seek a nuclear deal with the West. Still, under the preliminary agreement reached in Geneva, the harshest sanctions remain intact.

Cohen said that banking sanctions still in place will continue to make it difficult for foreign companies to receive payment from Iran, except in a handful of newly approved circumstances.

“There is no bank in the world that is going to process any transaction with Iran without our explicit consent,” Cohen said. “We’re saying to banks and business, ‘If you do business with any of the [sanctioned] entities — of which there are 600 — you will risk losing access to U.S. financial networks and U.S. markets.’ That is a very powerful lever.”

U.S. officials have estimated the sanctions relief allowed under the interim agreement to be worth about $7 billion over six months, a sum that includes $4.2 billion in assets released from frozen accounts and additional earnings from eased ­restrictions on Iran’s trade in petrochemicals, automobile parts and precious metals. By contrast, about $100 billion in Iranian oil revenue remains frozen by sanctions, and Iran continues to lose $4 billion a month in depressed oil sales.

Holly Yeager contributed to this report.