China and Singapore will receive exemptions from U.S. sanctions scheduled to go into effect Thursday that would have cut off banks in those countries from the U.S. financial system for handling Iranian oil transactions, a source in the office of Sen. Robert Menendez, D-New Jersey, a source in the office of Sen. Robert Menendez (D-N.J.) tells Security Clearance.
Secretary of State Clinton called Senator Menendez earlier today to inform him.
Under legislation signed by President Barack Obama In December, the United States will take action against countries that continue buying large volumes of Iranian oil through Iran’s Central Bank by cutting off financial institutions engaged in those transactions from the U.S. banking system.
– State Department released a statement from Secretary of State Hillary Clinton:
Today I have made the determination that two additional countries, China and Singapore, have significantly reduced their volume of crude oil purchases from Iran. As a result, I will report to the Congress that sanctions pursuant to Section 1245(d)(1) of the National Defense Authorization Act (NDAA) for Fiscal Year 2012 will not apply to their financial institutions for a potentially renewable period of 180 days.
A total of 20 world economies have now qualified for such an exception. Their cumulative actions are a clear demonstration to Iran’s government that Iran’s continued violation of its international nuclear obligations carries an enormous economic cost. According to the International Energy Agency (IEA), Iran’s crude oil exports in 2011 were approximately 2.5 million barrels per day, and have dropped to roughly 1.5 million barrels per day, which in real terms means almost $8 billion in lost revenues every quarter. When the European Union oil embargo goes into effect July 1, Iran’s leaders will understand even more fully the urgency of the choice they face and the unity of the international community.
Today marks an important milestone in the implementation of the NDAA and U.S. sanctions toward Iran. Following the President’s determinations on March 30 and June 11 on the availability of non-Iranian supplies of oil, as of today, any foreign financial institution based in a country that has not received an NDAA exception is subject to U.S. sanctions if it knowingly conducts a significant transaction with the Central Bank of Iran for the sale or purchase of petroleum or petroleum products to or from Iran.
We have been clear all along that there is a path for Iran to fully re-join the global economy. Iran’s leaders have the opportunity to address international concerns by engaging seriously and substantively in negotiations with the P5+1. I urge Iran to demonstrate its willingness to take concrete steps toward resolving the nuclear issue during the expert-level talks scheduled in Istanbul on July 3. Failure to do so will result in continuing pressure and isolation from the international community.
- US Sanctions Policy on a Collision Course against Iran; Increasing Tensions with China (alethonews.wordpress.com)
America’s policy on Iran-related secondary sanctions is on a collision course with itself as well as China. Secondary sanctions violate the United States’ obligations under the World Trade Organization and are, thus, illegal. (While a WTO signatory may decide, on national security grounds, to restrict its trade with another country, there is no legal basis for one state to impose sanctions against another over business that the second state conducts with a third country.) If Washington actually imposed secondary sanctions on another state for, say, buying Iranian oil and the sanctioned country took the United States to the WTO’s Dispute Resolution Mechanism, the United States would almost certainly lose the case.
Given this reality, the whole edifice of Iran-related secondary sanctions is in reality a house of cards. It rests on an assumption that no state will ever really challenge the legitimacy of America’s Iran-related extraterritorial sanctions—and this means that the United States cannot ever really impose them. Instead, successive U.S. administrations have used the threat of such sanctions to elicit modifications of other countries’ commercial relations with the Islamic Republic; when these administrations finally reach the limit of their capacity to leverage other countries’ decision-making regarding Iran, the United States backs off.
The Obama Administration is bringing this glaring contradiction increasingly to the fore, by supinely collaborating with the Congress to enact secondary sanctions into laws that give the executive branch less and less discretion over their actual application. This dynamic is now coming to a head in the Administration’s dealings with China.
We are currently in China, as Visiting Scholars at Peking University’s School of International Studies. And that means we are here during the run-up to formal implementation of the United States’ newest round of Iran-related secondary sanctions, due to go into effect on June 28.
These new sanctions, at least as legislated, threaten to punish financial and corporate entities in countries that continue to purchase Iranian oil at their historic levels of consumption. So far, the Obama Administration has issued sanctions waivers to all of the major buyers of Iranian oil, see here and here—all the major buyers, that is, except the People’s Republic of China.
Trade data indicate that China’s imports of Iranian oil declined significantly in the first quarter of this year. It is unclear to what extent this reduction was intended as an accommodation to the United States and to what extent it was the product of a payment dispute with Tehran. But, whatever the reason, the reduction prompted Secretary of State Hillary Clinton to note last week that “we’ve seen China slowly but surely take actions,” see here. Clinton even seemed to hint that the Administration might be looking for an opening to waive the imposition of sanctions against China: “I have to certify under American laws whether or not countries are reducing their purchases of crude oil from Iran and I was able to certify that India was, Japan was, South Korea was… And we think, based on the latest data, that China is also moving in that direction.”
Since the resolution of the payments dispute between China and Iran, however, China’s imports of Iranian oil have picked up once again, see here and here. And the Chinese government continues to insist that the country’s purchases of oil from the Islamic Republic are “fully reasonable and legitimate,” see here.
Once June 28 comes the White House and State Department will be under enormous pressure from the Congress (Hill Democrats will provide the President no cover on the issue), the Romney campaign, and various domestic interest groups to sanction China over its continued oil buys from Iran. The Administration’s alliance with Congress and the pro-Israel lobby on Iran sanctions, combined with its misguided assessment that the United States can somehow compel Iran’s “surrender” on the nuclear issue, have put the President and his team in a “damned if you do, damned if you don’t” position. This is very much a problem of the Administration’s own making.
- Russia: US anti-Iran sanctions against international law (alethonews.wordpress.com)
Italian Prime Minister Mario Monti says complying with the European Union sanctions against Iran will cause many problems for the country’s ailing economy.
Speaking to reporters in a joint press conference with the president of the European Parliament, Martin Shulz, in Rome, Monti noted that Italy is grappling with serious economic recession and crisis and cutting Iran oil imports will cause the country to suffer more than other EU members.
The Italian premier added that due to heavy dependence on energy, Italy feels the pinch of Iran oil sanctions more than other European countries, but Rome is unable to disobey certain decisions.
Meanwhile, the Italian official news agency, ANSA, published a report quoting energy experts as saying that sanctions against Iran are useless and will only harm Italian and other European companies.
Referring to high trade volume between Tehran and Rome, the report added that given the existing economic crisis in Europe, compliance with sanctions may be an end to the longstanding presence of Italian companies in Iran, which will be replaced with Turkish and Chinese companies.
ANSA further stated that complying with Iran sanctions will also cost Italians 30,000 jobs.
On January 23, EU Foreign Ministers met in Belgium to approve new sanctions against Iran aimed at banning member countries from importing Iranian crude oil and carrying out transactions with its central bank.
The EU has considered a period of six months before sanctions are fully enforced in order to allow member states to adapt to new conditions and find new sources of crude oil.
EU decision followed imposition of similar sanctions by Washington on Iranian energy and financial sectors on the New Year’s Eve which seek to penalize other countries for buying Iran oil or dealing with the its central bank.
After approving new sanctions, EU foreign policy chief, Catherine Ashton, told reporters that the sanctions aim to persuade Tehran to suspend its peaceful nuclear activities and get back to negotiating table with P5+1 — comprising US, UK, France, Russia, China, and Germany.
The United States, Israel and some of their allies accuse Tehran of pursuing military objectives in its nuclear program, using this pretext to impose sanctions against Iran and threaten the country with military attack.
Iran has refuted the allegations, arguing that as a committed signatory to the nuclear Non-Proliferation Treaty and member of IAEA, it has the right to use nuclear technology for peaceful use.
The IAEA has never found any evidence indicating that Tehran’s civilian nuclear program has been diverted towards nuclear weapons production.
- Israel lobbies Japan to support anti-Iran sanctions (alethonews.wordpress.com)
- ‘Iran sanctions will backfire’ – Minister (laaska.wordpress.com)