Congress fears Obama may further slacken sanctions on Iran

In what appears to be an attempt to appease Iran, Obama is considering new sanctions relief – an extra reward that is not required by the nuclear deal – and which experts say would have “devastating” consequences.

By: AP   
Majority Leader Kevin McCarthy

Majority Leader Kevin McCarthy. (AP/Jacquelyn Martin)

The Obama administration is leaving the door open to new sanctions relief for Iran, including possibly long-forbidden access to the US financial market, prompting increased concern from Republican opponents of last year’s nuclear deal.

Congressman Ed Royce, the House Foreign Affairs Committee chairman, expressed alarm in a letter this week to the president that the US could grant Iranian businesses the ability to conduct transactions in dollars within the United States or through offshore banks. House Majority Leader Kevin McCarthy, (R-Ca.), said he is “deeply troubled” by the possibility.

The concession would go a long way to meet Iran’s complaints that it hasn’t been sufficiently rewarded by the West for taking thousands of uranium-spinning centrifuges offline, exporting its stockpile of the bomb-making material and disabling a facility that would have been able to produce weapons-grade plutonium.

But critics of the Iran deal say the action would break pledges the administration made while selling the seven-nation agreement last summer.

Asked if such a move was being considered, the Treasury Department told The Associated Press in an emailed statement: “We will continue to analyze the sanctions lifting and its effects.”

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The State Department wouldn’t comment.

Treasury Secretary Jack Lew told Congress after the July accord that Iran would still be “denied access to the world’s largest financial and commercial market.”

“Iran will not be able to open bank accounts with US banks, nor will Iran be able to access the US banking sector,” Adam Szubin, the department’s sanctions chief, told a House panel at the time. He said that would hold true even for simple transactions to “dollarize” a foreign payment.

But asked specifically about that commitment earlier this week, Lew allowed for future US action to “make sure Iran gets relief.”

At home and abroad, critics of President Barack Obama’s outreach to Iran fear the administration is backtracking on its promises to only end “nuclear-related” sanctions on Iran, not those related to the Islamic Republic’s abysmal terrorism and human rights records.

The administration also promised last year to step up US efforts to combat Iran’s regional ambitions, but has since embraced an Iranian role in Syrian peace efforts and has limited its response to Iran’s testing of several ballistic missiles in violation of a UN ban.

On Thursday, the Treasury Department issued new penalties against two Iranian companies involved in Iran’s ballistic missile program and several people and firms from Britain and the United Arab Emirates for helping the US-blacklisted Mahan Air evade sanctions to secure American plane parts and financing.

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In his letter, Royce, a California Republican, focused on the potential for any new US steps to “substantially ease additional international investment in Iran.”

He noted that the US still considers Iran a state sponsor of terrorism, money laundering center and systematic abuser of religious freedom, warning: “Any financial transaction with Iran risks supporting the regime’s illicit activities.”

And McCarthy said Obama administration officials explicitly said US financial system access wasn’t included in the nuclear deal.

“This all seems to stem from Iranian displeasure with the lack of foreign investment following the nuclear deal — which is a direct result of the nature of the regime and its actions abroad in the non-nuclear space,” he told the AP. “The administration needs to stop bending over backwards to satisfy Iran.”

Mark Dubowitz, an Iran sanctions expert at the Foundation for Defense of Democracies who regularly advises Congress, said offering Iranian banks and businesses even limited access to the US market would be devastating.

The sanctions have effectively prevented European banks from significantly investing in Iran out of fear of running afoul of US sanctions regulators. Several banks have been hit with fines in recent years, into the billions of dollars.

Congressional aides and experts monitoring the matter aren’t sure how the administration might proceed. They say one possibility being considered would allow clearinghouses in Hong Kong to conduct dollar transactions with Iranian banks and businesses.

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“If they permit this, it is the end of US sanctions on Iran,” Dubowitz said.