Calendar No. 863
110th Congress Report
SENATE
2d Session 110-408
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IRAN SANCTIONS ACT OF 2008
_______
July 7, 2008.--Ordered to be printed
_______
Mr. Baucus, from the Committee on Finance, submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany S. 3227]
[Including cost estimate of the Congressional Budget Office]
The Committee on Finance, having considered an original
bill (S. 3227) to impose sanctions on Iran and for other
purposes reports favorably thereon without amendment and refers
the bill to the full Senate with a recommendation that the bill
do pass.
I. Background and General Reasons for the Bill
The Finance Committee's consideration of the ``Iran
Sanctions Act of 2008'' (``Act'') takes place in the context of
heightened domestic and international concern over Iran's
commitment to continue its uranium enrichment program. Reports,
including the 2007 National Intelligence Report entitled
``Iran: Nuclear Intentions and Capabilities'' (``2007 NIE
Report''), suggest that Iran's uranium enrichment program may
eventually provide Iran with the ability to create a nuclear
weapon. Reports also suggest that members of Iran's government,
including its President, Mahmoud Ahmadinejad, are dedicated to
ensuring that Iran attains a nuclear weapon. Iran's uranium
enrichment program poses a significant threat to the national
security of the United States, as well as allied countries
around the world. U.S. trade, economic, and other sanctions
create a disincentive for Iran to continue its uranium
enrichment program.
A. BACKGROUND OF U.S. SANCTIONS ON IRAN
Since the fall of the Shah of Iran on February 11, 1979,
the relationship between the United States and Iran has been
limited and strained. On November 4, 1979, Iranian radicals
seized the U.S. Embassy in Tehran. The United States broke off
relations with Iran in April 1980, and the United States and
Iran have had only limited official contact since that time.
The U.S. Embassy diplomats were ultimately released on January
20, 1981, but their release did not mark any improvement in
U.S.-Iran relations.
Relations between the United States and Iran were minimal
throughout the Administrations of Presidents Reagan and George
H.W. Bush. In 1984, following the bombing of U.S. Marine
barracks in Lebanon, President Reagan designated Iran as a
``state sponsor of terrorism,'' which resulted in the
application of sanctions against Iran for repeated support of
acts of international terrorism. U.S. sanctions against Iran
were strengthened in 1987, when President Reagan imposed an
import ban to ensure that the United States would not
contribute to the financial support of terrorism through the
purchase of Iranian goods. President Clinton took additional
steps to sanction and further isolate Iran.
U.S.-Iran relations thawed somewhat with the election of
the more liberal Ayatollah Khatami in 1997, and the United
States offered to engage in official dialogue with Iran. In
1998, Khatami agreed to participate in ``people-to-people''
dialogue with the United States, but refused to engage in
direct talks with the United States.
In 2000, reformists won control of Iran's parliament, which
led to an easing of U.S. trade sanctions with Iran. In 2003,
however, conservatives again gained strength with victories in
Iran's municipal elections. And in June 2005, Mahmoud
Ahmadinejad won a landslide victory in Iran's Presidential
elections.
Since entering office, Ahmadinejad has been a controversial
President, and U.S.-Iran relations have further deteriorated
under his watch. He has reiterated his commitment to continuing
Iran's uranium-enrichment program, and ensuring that Iran
attains a nuclear weapon. He has also made several remarks
indicating his hostility toward the United States and our
allies, including Israel.
In the past several years, the United States has pursued
unilateral and multilateral efforts to deter Iran's nuclear
ambitions. The United States has imposed unilateral sanctions
against Iran pursuant to Executive Orders and legislation. The
United States has also pursued multilateral sanctions within
the United Nations (``UN''), as well as with the European Union
(``EU'') and other allies.
B. SANCTIONS IMPOSED PURSUANT TO EXECUTIVE ORDER
In an effort to further isolate and contain Iran,
Presidents Reagan, Clinton, and George W. Bush issued several
Executive Orders that imposed sanctions on Iran.
Executive Order (``EO'') 12613, issued on October 29, 1987,
bans the importation into the United States of goods or
services of Iranian origin.
EO 12957, issued on March 15, 1995, prohibits U.S. persons
from entering into contracts that lead to the development of
Iran's petroleum sector.
EO 12959, issued on May 6, 1995, bans the importation into
the United States of goods or services of Iranian origin. EO
12959 also bans the exportation to Iran of any U.S. origin
goods, services, or technology. And EO 12959 banned new
investment by U.S. persons, or entities owned or controlled by
U.S. persons, in entities owned or controlled by the Government
of Iran.
EO 13059, issued on August 19, 1997, further tightened
sanctions by prohibiting the direct or indirect exports of U.S.
origin products to Iran. EO 13059 also expanded the import
prohibition to cover goods or services owned or controlled by
the Government of Iran.
EO 13224, issued on September 23, 2001, allows the
President to block the assets of persons who commit, threaten
to commit, or support terrorism. Several Iranian entities have
been designated under this EO.
EO 13382, issued on June 28, 2005, allows the President to
block the assets of proliferators of weapons of mass
destruction and their supporters. On October 21, 2007, the
President designated several Iranian entities, including the
Iranian Revolutionary Guard and several Iranian banks, under
this EO.
C. LEGISLATIVE SANCTIONS IMPOSED ON IRAN
The Iran-Iraq Arms Nonproliferation Act of 1992 was signed
into law on October 23, 1992 (Pub. L. 102-484). It requires
denial of license applications for exports to Iran of dual use
items, and imposes sanctions on foreign countries that engage
in proliferation activities that contribute to Iran's efforts
in this area.
The Iran and Libya Sanctions Act of 1996 was signed into
law on August 5, 1996 (Pub. L. 104-172). It requires the
President to sanction U.S. and foreign companies if the
President determines that such companies have invested more
than $20,000,000 annually in Iran's petroleum or natural gas
sectors. To date, no companies have been sanctioned under this
legislation. In 2006, the title of this legislation was changed
to the Iran Sanctions Act (``ISA'') (Pub. L. 109-293).
The Iran Nonproliferation Act of 2000 was signed into law
on March 14, 2000 (Pub. L. 106-178). It imposed sanctions
against foreign persons transferring controlled goods to Iran.
It was amended in 2005 to include Syria and renamed the Iran
and Syria Nonproliferation Act (Pub. L. 109-112). In 2006, it
was further amended to include North Korea and renamed the
Iran, North Korea, and Syria Nonproliferation Act (Pub. L. 109-
353).
The Iran Freedom Support Act (``IFSA'') was signed into law
on September 30, 2006 (Pub. L. 109-293). It codified certain
sanctions imposed under EOs 12957, 12959, and 13059, but
provided the President with the discretion to terminate these
sanctions if the President notified Congress at least 15 days
in advance of termination. The IFSA also provided that the
President should initiate investigations upon the receipt of
credible information that a U.S. or foreign person is investing
in Iran's petroleum or natural gas sector in violation of the
ISA. In addition, the IFSA removed Libya from the scope of the
Iran and Libya Sanctions Act of 1996, changing the title of the
legislation to the Iran Sanctions Act and extending sanctions
in the legislation until December 31, 2011.
D. UNITED NATIONS SANCTIONS ON IRAN
The UN Security Council has recently passed several
resolutions calling on Iran to suspend its uranium enrichment
activities, and has imposed sanctions on Iran due to its
failure to comply with such Resolutions.
UN Security Council resolution 1696 (``resolution 1696''),
adopted in July 2006, demanded that Iran suspend all its
uranium enrichment and reprocessing activities. Resolution 1696
also called on UN Member States to prevent the transfer of
goods and services that could assist Iran in its uranium
enrichment and reprocessing activities, or ballistic missiles
programs.
UN Security Council resolution 1737 (``resolution 1737''),
adopted in December 2006, found that Iran had not complied with
Resolution 1696, required Member States to take all necessary
measures to prevent the supply of certain goods or technologies
that could contribute to Iran's uranium enrichment,
reprocessing, or heavy water-related activities, or to the
development of a nuclear weapon, and prohibited Member States
from procuring such products from Iran. Resolution 1737 also
required Member States to impose export controls on sensitive
goods and technologies not covered by the export ban. The
Resolution further required Member States to freeze the assets
of certain persons and called upon Member States to exercise
vigilance regarding the entry into their territories of persons
engaged or associated with providing support for Iran's
proliferation of sensitive nuclear activities. And the
resolution required Member States to report the entry of
certain persons to the UN Security Council.
UN Security Council resolution 1747 (``resolution 1747''),
adopted in March 2007, found that Iran had failed to comply
with Resolutions 1696 and 1737. It prohibited Member States
from procuring arms or related materials from Iran and called
on Member States to prevent the export of goods listed on the
UN Register on Conventional Arms to Iran. Resolution 1747
further expanded the list of persons whose assets must be
frozen by Member States. And resolution 1747 expanded the list
of persons whose entry Member States must report to the UN
Security Council.
UN Security Council resolution 1803 (``resolution 1803''),
adopted in March 2008, noted that Iran had not fully ceased its
uranium enrichment and reprocessing activities. It expanded
sanctions by prohibiting the export of additional sensitive
goods and technologies to Iran. It also prohibited the entry of
certain named individuals into Member States and expanded the
list of persons whose assets must be frozen by Member States.
E. PERSISTENCE OF NUCLEAR WEAPONS THREAT
Notwithstanding U.S. and multilateral sanctions against
Iran, significant concern remains that Iran continues to enrich
uranium in order to develop a nuclear weapon. But Iran
continues to insist that it is enriching uranium only for
peaceful purposes.
The 2007 NIE Report found that Iran had likely discontinued
its nuclear weapons program in 2003. But the NIE Report also
stated that Iran's political leadership could reverse that
decision at any time. Finally, the 2007 NIE report found that
Iran has the scientific, technical, and industrial capacity
eventually to produce nuclear weapons if it decides to do so.
In recent months, both the EU and the United States have
offered Iran a package of incentives to convince Iran to
abandon its uranium enrichment program in exchange for
increased official dialogue with both the EU and United States.
Iran rejected this offer, and Britain and the EU have announced
their intent to apply strengthened financial sanctions against
Iran.
F. CONGRESSIONAL ACTION
Congressional action has focused on applying additional
sanctions to pressure Iran to abandon its uranium enrichment
program.
In the 110th Congress, Members have introduced several
bills to strengthen and tighten sanctions on Iran. S. 970
(Smith) and H.R. 1400 (Lantos) would tighten U.S. sanctions on
Iran by, in part, removing the President's authority to waive
trade and other economic sanctions against Iran. Additionally,
H.R. 1400 would attempt to compel third countries, such as
Russia, to impose strengthened sanctions against Iran.
H.R. 1357 (Ros-Lehtinen) would require managers of U.S.
Government pension plans or thrift savings plans, managers of
pension plans maintained in the private sector by plan sponsors
in the United States, and managers of mutual funds sold or
distributed in the United States to divest assets from those
entities that invest more than $20,000,000 annually in Iran's
petroleum and natural gas sectors. S. 1430 (Obama) and H.R.
2347 (Frank) would authorize State and local governments to
require and enforce the divestment of their assets from
entities that invest more than $20,000,000 annually in Iran's
petroleum and natural gas sectors. Both S. 1430 and H.R. 2347
would protect mutual fund and other investment companies from
shareholder action for losses that occur from such divestment.
II. Summary of the Bill
The Act has nineteen sections. It includes provisions (1)
tightening trade and financial sanctions on Iran; (2)
tightening other sanctions on Iran; (3) eliminating certain tax
incentives for U.S. taxpayers that are subject to sanctions for
investing in Iran; (4) governing nuclear cooperation between
the United States and third countries, and supporting the
creation of an international nuclear fuel bank; (5) providing
for additional engagement with the people of Iran; (6)
requiring the United States to cut its contributions to the
World Bank if the World Bank grants new loans to Iran; and (7)
imposing reporting requirements on the President and
administration. These provisions are described in more detail
below.
A. TRADE AND FINANCIAL SANCTIONS
The legislation tightens existing, and imposes additional,
trade and financial sanctions on Iran. The legislation would do
this by codifying the existing prohibition on direct and
indirect (1) exports of United States origin goods to Iran; and
(2) imports of Iranian origin goods into the United States. The
legislation also provides specific exceptions to the export ban
for agricultural commodities, medicine and medical devices,
products exported for humanitarian purposes, and informational
materials. The legislation does not provide any specific
exceptions for the import prohibition. But the legislation
provides that the President may waive the export and import
prohibition if the President determines that such a waiver is
in the national interest of the United States.
The legislation also prohibits the United States Trade
Representative or any other Federal official from taking
actions that would grant trade preferences to, or lead to the
World Trade Organization (``WTO'') accession of, Iran. The
President may waive this prohibition if the President
determines that such a waiver is in the national interest of
the United States.
Further, the legislation freezes the assets of Iranian
diplomats and representatives of other government, military, or
quasi-governmental institutions of Iran that are subject to
sanctions under the President's International Emergency
Economic Powers Act (``IEEPA'') authorities or any other
provision of law. And the legislation freezes the assets of
family members or associates of such persons if those family
members or associates receive transfers of assets or property
from such persons.
B. OTHER ECONOMIC SANCTIONS
The legislation tightens existing U.S. sanctions laws by
imposing sanctions on U.S. parent companies if they knowingly
participate in violations of U.S. sanctions laws conducted by
their foreign entities. And the legislation requires the
President to initiate investigations under the Iran Sanctions
Act to determine whether companies are investing in Iran's
petroleum or natural gas sectors in violation of section 5(a)
of that Act.
C. TAX INCENTIVES
The legislation eliminates certain tax incentives for U.S.
taxpayers that are subject to sanctions for investing in Iran.
Specifically, the legislation includes a tax provision that
would require U.S. taxpayers who are subject to certain
economic sanctions for investing in Iran, or on whose
affiliates such sanctions would have been imposed if such
affiliates were U.S. persons, to amortize geological and
geophysical costs paid or incurred in connection with the
exploration for, or development of, oil or gas within the
United States over 10 years.
D. NUCLEAR COOPERATION
The legislation includes provisions that govern U.S.
nuclear cooperation with Russia and support the creation of a
nuclear fuel bank. The legislation includes a provision that
prohibits the United States from entering into a nuclear
cooperation agreement with Russia pursuant to section 123 of
the Atomic Energy Act of 1954. Further, the legislation
prohibits the United States from granting licenses for the
direct or indirect export of nuclear-related goods, services,
or technologies. And the legislation prohibits the United
States from approving the direct or indirect transfer or
retransfer to Russia of nuclear-related goods, services, or
technologies.
The legislation also expresses the sense of Congress that
the President should provide contributions to the International
Atomic Energy Agency (``IAEA'') for the IAEA's creation of a
nuclear fuel bank to assure a backup supply of low-enriched
uranium in nuclear fuel reactors. It further expresses the
sense of Congress that in determining whether to make
contributions, the President should consider whether other
governments or entities have provided pledges to the IAEA for
the nuclear fuel bank, whether the IAEA will oversee the
nuclear fuel bank, and whether nuclear fuel will be provided
only to those countries that comply with IAEA safeguards.
E. EXCHANGE PROGRAMS
The legislation authorizes the President to carry out
exchange programs with the people of Iran, especially the young
people of Iran.
F. WORLD BANK CONTRIBUTIONS
The legislation requires the United States to make
proportional cuts in its contributions to the World Bank for
loans granted by the World Bank to Iran after December 31,
2008. The President may waive this requirement if the President
determines that such a waiver is in the national interest of
the United States.
G. REPORTING REQUIREMENTS
The legislation requires the Secretary of Treasury to
report to Congress foreign investments made in Iran's energy
sector after January 1, 2008, and the determination of whether
such investments are sanctionable offenses under section 5(a)
of the ISA.
The legislation also requires the Secretary of Treasury to
report to Congress the names of people that operate or conduct
business in the United States and also invest in Iran. And it
requires the Secretary of Treasury to report to Congress on
export credits given by foreign banks to persons that invest in
Iran's energy sector, as well as any actions taken by the
President to discourage or prevent such export credits.
Further, the legislation requires the President to report
on the actions taken by the United States to support the
establishment of an international regime for the assured supply
of nuclear fuel for peaceful means.
Finally, the legislation expresses the sense of Congress
that the Executive Director of the Federal Thrift Savings Board
should report to Congress any investments in entities that
invest in Iran.
III. General Description of the Bill
Section 1. Short Title
Section 1 entitles the bill the ``Iran Sanctions Act of
2008'' and provides a table of contents.
Section 2. Findings
Section 2 makes Congressional findings that Iran is seeking
to develop a nuclear weapons capability and that such a
capability would be detrimental to the national security of the
United States and its allies. Section 2 also finds that Iran
has refused to comply with UN Security Council Resolutions and
that Iran may be close to acquiring the material necessary to
make a nuclear weapon. Finally, section 2 finds that the United
States should use all political, economic, and diplomatic tools
at its disposal to prevent Iran from acquiring a nuclear
weapon.
Section 3. Sense of Congress
Section 3 expresses the sense of Congress regarding UN
Security Council Resolutions against Iran and expresses the
sense of Congress regarding actions the United States should
take to deter Iran from attaining a nuclear weapon.
Section 3(1) expresses the sense of Congress that the
United States should restrict Iran's ability to conduct
international financial transactions.
Section 3(2) expresses the sense of Congress that Iran
should fully comply with UN Security Council Resolutions 1737,
1747, 1803, and any subsequent UN Security Council Resolutions
related to Iran's nuclear program.
Section 3(3) expresses the sense of Congress that the UN
Security Council should take further measures to tighten
sanctions on Iran, as long as Iran fails to comply with the
international community's demand to halt its uranium enrichment
program.
Section 3(4) expresses the sense of Congress that the
United States should encourage foreign governments to require
state-owned and private entities to cease investments in Iran's
energy sector, and cease exports to and imports from Iran of
refined petroleum products.
Section 3(5) expresses the sense of Congress that Federal
and State pension administrators should divest all assets from
foreign companies that invest, or have invested, in Iran's
energy sector.
Section 4. Construction with Respect to use of Military Force
Section 4 states that nothing in the ``Iran Sanctions Act
of 2008'' shall be construed as giving the President the
authority to use military force against Iran.
Section 5. Definitions
Section 5 defines several terms that are used throughout
the Act.
Section 6. Expansion of Definition of Person in the Iran Sanctions Act
of 1996
Section 6 amends the definition of ``Person'' in the Iran
Sanctions Act of 1996 to include a financial institution,
insurer, underwriter, guarantor, and any other business
organization, including any foreign subsidiary, parent, or
affiliate of one of the foregoing. Section 6 also clarifies
that a governmental entity operating as a business enterprise
may include an export credit agency.
Section 7. Russia Nuclear Cooperation
The provisions of section 7, which fall within the
jurisdiction of the Senate Foreign Relations Committee, govern
nuclear cooperation between the United States and Russia.
Section 7(a) provides that certain policies shall apply to
Russia until such time as the President makes the certification
to Congress described in section 7(c).
Section 7(b) sets out the policies that apply to Russia.
First, it provides that the United States may not enter into a
nuclear cooperation agreement with Russia pursuant to section
123 of the Atomic Energy Act of 1954 (``a 123 Agreement'').
Second, it provides that the United States may not issue
licenses for the direct or indirect export to Russia of any
nuclear goods, services, or technology that would be subject to
a 123 Agreement. Third, it prohibits the United States from
approving the direct or indirect transfer or retransfer of
nuclear goods, services, or technology that would be subject to
a 123 Agreement.
Section 7(c) provides that the President may only make a
certification to Congress under this section if the President
determines that (1) Russia has suspended nuclear assistance and
transfers of advanced conventional weapons and missiles to
Iran; or (2) Iran has completely, verifiably, and irreversibly
dismantled all nuclear enrichment-related and reprocessing-
related programs.
Section 7(d) provides that the policies in section 7(b)
shall remain in effect until such time as the President makes a
certification to Congress as described in section 7(c).
Section 8. Economic Sanctions Relating to Iran
Section 8 codifies existing, and imposes additional, trade
and financial sanctions against Iran.
Section 8(a) provides that the sanctions set forth in
section 8 shall enter into force 15 days after enactment of the
Act.
Section 8(b) imposes trade-related and financial sanctions.
There are three trade-related sanctions imposed by section
8(b). First, section 8(b) provides that no articles of Iranian
origin may be imported directly or indirectly into the United
States, and no articles of United States origin may be exported
directly or indirectly to Iran. Second, section 8(b) sets forth
several exceptions that permit the direct or indirect
exportation of (1) agricultural commodities; (2) medicine or
medical devices; and (3) articles that provide humanitarian
assistance to the Iranian people and (4) information materials
to Iran. Third, section 8(b) prohibits the United States Trade
Representative or any other Federal official from taking any
action that would extend trade preferences--such as those
afforded under our Generalized System of Preferences program--
to, or lead to the World Trade Organization accession of, Iran.
The financial sanctions included in section 8(b) require
the President to freeze the assets of Iranian diplomats and
representatives of other government and military or quasi-
governmental institutions of Iran that are subject to sanctions
(``sanctioned Iranian persons'') imposed under the President's
International Emergency Economic Powers Act authorities or any
other provision of law. Section 8(b) also requires the
President to freeze the assets of family members or associates
of sanctioned Iranian persons if those family members or
associates receive transfers of assets or property from such
sanctioned persons. Section 8(b) requires the President to
report to Congress the names of any individuals sanctioned
under this section. And section 8(b) prohibits the head of a
U.S. executive agency from entering into a procurement contract
from a person that is sanctioned under section 5(a) of the Iran
Sanctions Act of 1996.
Section 9. Liability of parent companies for violation of sanctions by
foreign entities
Section 9(a) subjects U.S. parent companies to penalties if
the parent company knowingly participates in violations of U.S.
sanctions laws carried out by its foreign subsidiaries. This
section is intended to close a loophole that allows U.S.
companies to establish foreign subsidiaries to circumvent U.S.
sanctions law.
Section 9(b) provides that penalties shall be imposed for
violations of section 9 only for acts that are commenced on or
after the date of enactment, or ongoing on the date of
enactment. Section 9(b) excepts U.S. parent companies from
liability under this section if the parent divests or
terminates its business with the foreign subsidiary not later
than 90 days after the date of enactment of this Act. Section
9(b) ensures that section 9 does not have retroactive effect.
Section 9(c) defines terms used in Section 9.
Section 10. Mandatory investigations into the imposition of sanctions
Section 10(a) amends section 4(f) of the Iran Sanctions Act
of 1996 to require the President to initiate investigations to
determine whether companies are investing in Iran's petroleum
or natural gas sectors in violation of section 5(a) of the Iran
Sanctions Act of 1996. Section 10(a) also provides that the
President may extend the time period for making a determination
under this section if the President is unable to make such a
determination in the initial 180 day period.
Section 10(b) provides that this section shall apply only
to investigations that are based on information received on or
after 90 days after the date of enactment of the Act.
Section 11. Elimination of certain tax incentives for oil companies
investing in Iran
PRESENT LAW
Geological and geophysical expenditures (``G&G costs'') are
incurred by a taxpayer for the purpose of obtaining and
accumulating data that will serve as the basis for the
acquisition and retention of mineral properties by taxpayers
exploring for minerals. G&G costs incurred by independent
producers and smaller integrated oil \1\ companies in
connection with oil and gas exploration in the United States
may generally be amortized over two years.\2\ Major integrated
oil companies are required to amortize all G&G costs over seven
years.\3\ For these purposes, a major integrated oil company,
with respect to any taxable year, is a producer of crude oil
which has an average daily worldwide production of crude oil of
at least 500,000 barrels for the taxable year, had gross
receipts in excess of $1 billion for its last taxable year
ending during the calendar year 2005, and generally has an
ownership interest in a crude oil refiner of 15 percent or
more.\4\
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\1\ Generally, an integrated oil company is a producer of crude oil
that engages in the refining or retail sale of petroleum products in
excess of certain threshold amounts.
\2\ Sec. 167(h)(1).
\3\ Sec. 167(h)(5).
\4\ Id.
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In the case of abandoned property, any remaining basis may
not be recovered in the year of abandonment as all basis is
recovered over the applicable amortization period.
DESCRIPTION OF PROPOSAL
Section 11 provides that for taxpayers on whom certain
economic sanctions for investing in Iran are imposed, or on
whose affiliates such sanctions would have been imposed if such
affiliates were U.S. persons, G&G costs paid or incurred in
connection with the exploration for, or development of, oil or
gas within the United States must be amortized over 10 years.
For this purpose, the economic sanctions requiring the extended
G&G amortization consist of (1) sanctions under section 5(a) of
the Iran Sanction Act of 1996 and (2) sanctions described in
Executive Orders 12959 \5\ or 13059,\6\ or under any other
prohibition on transactions with respect to Iran imposed under
the authority of the International Emergency Economic Power
Act.\7\ For purposes of this provision, an affiliate is defined
as a member of an affiliated group under section 1504(a)
determined using a 50 percent (instead of 80 percent) voting
and value test and including insurance companies, foreign
corporations, and corporations with respect to which an
election under section 936 is in effect.
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\5\ 60 Fed. Reg. 24,757 (May 9, 1995).
\6\ 62 Fed. Reg. 44,531 (Aug. 21, 1997).
\7\ 50 U.S.C. sec. 1701 et seq.
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If the sanctions with respect to the taxpayer are lifted
(either because the taxpayer comes into compliance or because
the sanctions regime terminates), the taxpayer may elect to
treat any remaining unamortized G&G costs incurred prior to or
during the sanction period as incurred on the date the
sanctions are lifted and amortize them over the period
described in section 167(h)(1) or (h)(5), as the case may be.
Taxpayers not making an election must continue to amortize
those expenses over the ten year period. The provision
terminates five years after the date of enactment.
Example 1
Taxpayer A, a domestic corporation with a foreign parent,
FP, incurs $5 million of G&G costs in Year 1 and begins
amortizing the costs over seven years under section 167(h)(5).
In Year 2, FP invests in Iran and sanctions under section 5(a)
of the Iran Sanctions Act of 1996 would be imposed if Foreign
Parent were a domestic company. As a result, Taxpayer A must
amortize any remaining unamortized G&G costs that were incurred
in Year 1 over a 10 year period beginning in Year 2 (applying
the half-year convention rule of section 167(h)(2)).
In Year 4, FP abandons its investment in Iran and is no
longer subject to sanctions. Taxpayer A may either continue to
amortize the costs over the remaining 10 years or treat the
remaining costs as incurred in Year 4 and recover the costs
over seven years under section 167(h)(5).
Example 2
Assume the same facts as Example 1, except that instead of
FP abandoning its investment in Iran, the sanctions are no
longer in effect in Year 6 due to the termination of the Iran
Counter-Proliferation Act of 2008. In this case, Taxpayer A may
either continue to amortize the costs over the remaining 10
years or treat the costs as incurred in Year 6 and recover the
costs over seven years under section 167(h)(5).
Example 3
Taxpayer B, a domestic corporation, and Taxpayer C, a
foreign corporation, have a common foreign parent. In Year 1,
Taxpayer C invests in Iran and sanctions under section 5(a) of
the Iran Sanctions Act of 1996 would be imposed if Taxpayer C
were a domestic company. In Year 3, Taxpayer B incurs $5
million of G&G costs and absent this proposal would amortize
the costs over two years under section 167(h)(1). Under the
proposal, Taxpayer B must amortize the G&G costs over a 10 year
period beginning in Year 3 (applying the half-year convention
rule of section 167(h)(2)).
In Year 4, Taxpayer C abandons its investment in Iran and
is no longer subject to sanctions. Taxpayer B may either
continue to amortize the costs over the remaining 10 years or
treat the remaining costs as incurred in Year 4 and recover the
costs over two years under section 167(h)(1).
EFFECTIVE DATE
The proposal is effective for G&G costs paid or incurred on
or after January 1, 2009.
Section 12. World Bank loans to Iran
Section 12(a) requires the Secretary of Treasury to submit
to the Senate Finance, Banking, and Foreign Relations
Committees and House of Representatives Ways and Means,
Financial Services and Foreign Affairs Committees
(``appropriate congressional committees'') a report on (1) the
number of loans provided by the World Bank to entities in Iran
and for projects or activities in Iran; (2) the dollar amount
of such loans; and (3) the voting record of each member of the
World Bank on such loans.
Section 12(b) requires the United States to reduce its
contributions to the World Bank for loans made by the Bank to
Iran after December 31, 2008. The United States must reduce its
contribution by an amount that is proportional to the total
amount of loans provided by the World Bank to Iran in the
preceding year.
Section 13. Increased capacity for efforts to combat unlawful or
terrorist financing
Section 13(a) finds that the Office of Terrorism and
Financial Intelligence of the Department of Treasury, which
includes the Office of Foreign Assets Control and the Financial
Crime Enforcement Network, is critical to ensuring that the
international financial system is not used to support terrorism
or develop weapons of mass destruction.
Section 13(b) authorizes $61,712,000 for fiscal year
(``FY'') 2009, and whatever sums may be necessary for FY 2010
and 2011 to the Secretary of Treasury for the Office of
Terrorism and Financial Intelligence.
Section 13(c) authorizes $91,335,000 for FY 2008, and such
sums as may be necessary for FY 2010 and 2011 for the Financial
Crimes Enforcement Network.
Section 14. Exchange programs with the people of Iran
Section 14(a) expresses the sense of Congress that the
United States should seek to enhance its friendship with the
people of Iran, particularly by identifying young Iranian
people to come to the United States to participate in exchange
programs.
Section 14(b) authorizes the President to carry out
exchange programs with the people of Iran, particularly young
people. Section 14(b) also states that such exchange programs
should be carried out in a manner consistent with the
requirements for eligibility specified in section 302(b) of the
Iran Freedom Support Act.
Section 14(c) authorizes $15,000,000 to be appropriated to
the President from title IV of the Science, State, Justice,
Commerce, and Related Agencies Appropriations Act, 2006 to
carry out section 14.
Section 15. Sense of Congress on radio broadcasting to Iran
Section 15 expresses the sense of Congress that the
Broadcasting Board of Governors should devote a greater
proportion of Radio Farda's programming to programs offering
news and analysis.
Section 16. Sense of Congress regarding the international regime for
the assured supply of nuclear fuel for peaceful means
Section 16(a) states that it is the policy of the United
States to support the establishment of an international regime,
under a multilateral authority, to assure the supply of nuclear
fuel for peaceful means.
Section 16(b) expresses the sense of Congress that: (1) the
Concept for a Multilateral Mechanism for Reliable Access to
Nuclear fuel is welcome and should be expanded upon; (2) the
proposal by the Russian Government to bring one of its uranium
enrichment facilities under international management and
oversight is welcome and should be encouraged by the United
States; (3) the offer by the Nuclear Threat Initiative to
provide $50,000,000 to support the creation of a nuclear fuel
bank by the IAEA is welcome, and the United States and other
IAEA members should pledge an additional $100,000,000 to
support the creation of a nuclear fuel bank; and (4) the Global
Nuclear Energy Partnership is intended to provide reliable fuel
supply throughout the fuel cycle and promote the
nonproliferation goals of the United States.
Section 16(c) expresses the sense of Congress that the
President should contribute to IAEA to establish a nuclear fuel
bank. Specifically, section 16(c) expresses the sense of
Congress that: (1) the President should determine the
appropriateness of making voluntary contributions to the IAEA
for the creation of a nuclear fuel bank that would maintain
backup supplies of low-enriched uranium for the production of
reactor fuel; (2) the President should consider the following
when determining whether to make voluntary contributions for
the creation of a nuclear fuel bank: whether (a) the IAEA has
received pledges of not less than $100,000,000 for other
governments or entities for the creation of the nuclear fuel
bank; (b) the IAEA or another multilateral authority will
oversee the nuclear fuel bank; and (c) the nuclear fuel bank
will provide nuclear reactor fuel to countries only if the
country is in compliance with IAEA safeguards and the country
does not operate uranium enrichment or spent-fuel reprocessing
facilities of any scale. Section 16(c) also authorizes the
appropriation of $50,000,000 for FY 2009 to carry out this
section, and provides that amounts appropriated should remain
available until September 30, 2011.
Section 17. Reporting requirements
Section 17 sets forth several reporting requirements.
Section 17(a) requires the Secretary of Treasury to submit
to the appropriate congressional committees 180 days after
enactment of this Act and every 180 days thereafter a report on
(1) any foreign investments made in Iran's energy sector on or
after January 1, 2008; and (2) the President's determination on
whether such investments qualify as a sanctionable offense
under section 5(a) of the Iran Sanctions Act of 1996.
Section 17(b) requires the Secretary of Treasury to submit
to the appropriate congressional committees 180 days after the
enactment of this Act and annually thereafter the names of
persons that have operations or conduct business in the United
States that also have invested in Iran, and the dollar amount
of such investment.
Section 17(c) requires the President to submit to the
Senate Foreign Relations and House of Representatives Foreign
Affairs Committees not later than 180 days after the enactment
of this Act a report on the activities of the United States to
support the establishment of an international regime for the
assured supply of nuclear fuel for peaceful means.
Section 17(d) requires the Secretary of Treasury to report
to the appropriate congressional committees not later than 90
days after the date of enactment of this Act and every 90 days
thereafter a report on the export credits granted by foreign
banks to persons investing in Iran's energy sector, and any
fines, restrictions, or other action taken by the President to
discourage or prevent the issuance of such export credits.
Section 17(e) expresses the sense of Congress that the
Executive Director of the Federal Retirement Thrift Investment
Board should report to the appropriate congressional committees
not later than 180 days after the date of enactment of this Act
and annually thereafter any investments in entities that invest
in Iran.
Section 18. Waiver Authority
Section 18 grants the President the authority to waive
sanctions required pursuant to sections 8, 9, or 12 of this Act
if the President (1) determines that such a waiver is in the
national interest of the United States and (2) submits to the
appropriate congressional committees a report describing the
reasons for the President's determination to waive such
sanctions.
Section 19. Termination
Section 19 provides that except as provided in section 7,
the provisions of and amendments made by this Act shall
terminate on the earlier of (1) the date on which the President
determines and certifies to the appropriate congressional
committees that Iran has completely, verifiably, and
irreversibly dismantled all uranium enrichment-related and
reprocessing-related programs; or (2) the date that is 5 years
after the date of enactment of this Act.
IV. Hearings
The Finance Committee held a hearing on a substantially
similar bill, S. 970, the Iran Counter-Proliferation Act of
2007, on April 8, 2008. The hearing discussed international
trade concerns raised by the bill, the role of the bill in a
broader multilateral sanctions regime, and the humanitarian
impact of the bill.
V. Votes
In compliance with paragraph 7(b) of rule XXVI of the
Standing Rules of the Senate, the following statement is made
concerning roll call votes in the Committee's consideration of
the ``Iran Sanctions Act of 2008.''
A. MOTION TO REPORT THE BILL
The original bill was ordered favorably reported, as
amended by the Chairman's modification, by a roll call vote of
19 ayes and 2 nays on June 18, 2008. The vote, with a quorum
present, was as follows:
Ayes--Baucus, Conrad, Kerry (proxy), Lincoln (proxy),
Wyden, Schumer, Stabenow, Cantwell, Salazar, Grassley, Hatch
(proxy), Snowe, Kyl, Smith, Bunning, Crapo, Roberts, Ensign
(proxy), Sununu
Nays--Rockefeller, Bingaman
B. VOTES ON OTHER AMENDMENTS
(1) An amendment by Senator Bingaman to delete the section
of the ``Iran Sanctions Act of 2008'' pertaining to Russia
nuclear cooperation in its entirety failed by a roll call vote
of 4 ayes and 15 nays.
Ayes--Rockefeller, Bingaman, Lincoln (proxy), Cantwell
Nays--Baucus, Wyden, Schumer, Stabenow, Salazar, Grassley,
Hatch (proxy), Snowe, Kyl, Smith, Bunning, Crapo, Roberts,
Ensign (proxy), Sununu
(2) An amendment by Senator Bunning to amend the ``Iran
Sanctions Act of 2008'' to require the President to initiate
investigations into violations of section 5(a) of the Iran
Sanctions Act of 1996 when the President receives credible
information that such a violation has occurred passed by voice
vote.
VI. Budgetary Impact of the Bill
Iran Sanctions Act of 2008
Summary: The Iran Sanctions Act of 2008 would authorize
appropriations for two programs within the Department of
Treasury relating to financial crimes, an exchange program with
Iran, and U.S. contributions to the International Atomic Energy
Agency (IAEA). The bill also would limit trade with Iran and
allow the President to impose sanctions on certain individuals.
Finally, the bill would prohibit the United States from
entering into a nuclear energy agreement with Russia and would
prevent the transfer of certain nuclear materials, components,
or technologies to Russia until it has suspended nuclear
assistance to Iran.
CBO estimates that implementing the bill would cost $173
million in 2009 and $600 million over the 2009-2013 period,
assuming appropriation of the specified and estimated amounts.
In addition, CBO and the Joint Committee on Taxation (JCT)
estimate that enacting the bill would increase revenues by
about $1 million in 2009, $24 million over the 2009-2013
period, and $45 million over the 2009-2018 period. Enacting the
legislation also could increase direct spending as a result of
additional civil and criminal penalties. CBO estimates this
increase would not be significant because of the relatively
small number of cases likely to be involved.
The bill contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA) and would impose no
costs on state, local, or tribal governments.
The bill would impose private-sector mandates, as defined
in UMRA, by prohibiting imports from and exports to Iran. It
also could impose mandates by freezing the assets of certain
family members and associates of Iranian government officials
subject to sanctions as designated by the President; some of
those individuals may reside in the United States. Finally, the
bill would impose mandates by requiring any financial
institution that holds funds and other assets of any designated
person to report such information. The cost of complying with
those mandates is uncertain because the number of people and
the value of assets to be frozen are currently unknown and
because CBO lacks information on the value of lost profits to
importers and exporters. Therefore, CBO cannot determine
whether the aggregate cost to comply with the mandates in the
bill would exceed the annual threshold for private-sector
mandates established in UMRA ($136 million in 2008, adjusted
annually for inflation).
Estimated cost to the Federal Government: The estimated
budgetary impact of the bill is summarized in Table 1. The
costs of this legislation fall within budget functions 150
(international affairs), 750 (administration of justice), and
800 (general government).
TABLE 1. ESTIMATED BUDGETARY IMPACT OF THE IRAN SANCTIONS ACT OF 2008 \1\
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
------------------------------------------------------------
2009 2010 2011 2012 2013 2009-2013
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level...................... 220 175 181 18 18 612
Estimated Outlays.................................. 173 174 179 56 18 600
CHANGES IN REVENUES
Estimated Revenues................................. 1 3 5 6 9 24
----------------------------------------------------------------------------------------------------------------
\1\ In addition to the amounts shown above, implementing the bill would increase revenues by $45 million over
the 2009-2018 period (see Table 3).
Basis of estimate: For the purposes of this estimate, CBO
assumes that the bill will be enacted before the start of
fiscal year 2009 and that spending will follow historical
patterns for similar programs.
Spending subject to appropriation
The bill would authorize appropriations for specific
programs within both the Department of the Treasury and the
Department of State. In total, CBO estimates that implementing
those programs would cost $600 million over the 2009-2013
period, assuming appropriation of the specified and estimated
amounts (see Table 2).
TABLE 2.--COMPONENTS OF THE ESTIMATED CHANGES IN SPENDING SUBJECT TO APPROPRIATION UNDER THE IRAN SANCTIONS ACT
OF 2008
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
------------------------------------------------------------
2009 2010 2011 2012 2013 2009-2013
----------------------------------------------------------------------------------------------------------------
Department of Treasury Programs:
Estimated Authorization Level.................. 153 158 163 0 0 474
Estimated Outlays.............................. 117 156 161 38 0 472
Exchange Programs:
Estimated Authorization Level.................. 15 15 16 16 16 78
Estimated Outlays.............................. 8 13 15 16 16 68
Contribution to the IAEA:
Estimated Authorization Level.................. 50 0 0 0 0 50
Estimated Outlays.............................. 46 3 1 0 0 50
Other Reports:
Estimated Authorization Level.................. 2 2 2 2 2 10
Estimated Outlays.............................. 2 2 2 2 2 10
Total Changes:
Estimated Authorization Level.............. 220 175 181 18 18 612
Estimated Outlays.......................... 173 174 179 56 18 600
----------------------------------------------------------------------------------------------------------------
Note: IAEA = International Atomic Energy Agency.
Department of Treasury Programs. In total, section 13 would
authorize the appropriation of $153 million in 2009 and such
sums as may be necessary for 2010 and 2011. (The 2009
authorization consists of $62 million for the Office of
Financial Terrorism and Financial Intelligence and $91 million
for the Financial Crimes Enforcement Network, both of which are
in the Department of Treasury.) Based on information from the
Department of Treasury, CBO expects that $153 million, adjusted
for inflation, would be sufficient for fiscal years 2010 and
2011. Accordingly, CBO estimates that implementing section 13
would cost $472 million over the 2009-2013 period.
Exchange Programs. Section 14 would authorize the President
to implement exchange programs with Iran, particularly for
Iranian youth, and would authorize the appropriation of $15
million in 2009 for those purposes. Because the exchange
program has a permanent authorization, CBO estimates that the
bill also would authorize funding for fiscal years 2010 through
2013 equal to the $15 million authorized for 2009, adjusted for
inflation. Thus, CBO estimates that implementing section 14
would cost $68 million over the 2009-2013 period, assuming
appropriation of the specified and estimated amounts.
Contribution to the International Atomic Energy Agency
(IAEA). Section 16 would authorize the appropriation of $50
million in 2009 for a voluntary contribution to the IAEA. The
funds would be used to establish an international nuclear fuel
bank that could be used in the event of market disruptions in
the supply of reactor fuel. CBO estimates that implementing
section 16 would cost $50 million over the 2009-2013 period,
assuming appropriation of the specified amount.
Other Reports. Several sections would require the
Department of Treasury and the President to provide the
Congress with a variety of reports about Iran, including
details of investments in Iran by the United States and other
countries. The bill also would require a report on
international efforts to promote the peaceful uses of nuclear
fuel. Based on the costs to prepare similar reports, CBO
estimates that those reports would cost about $2 million
annually.
Revenues and direct spending
Prohibition on Imports. Section 8 would prohibit the
importation of any product from Iran. This prohibition would
expire five years after enactment of the bill. CBO expects that
the aggregate trade volume subject to customs duties would
decrease, thus reducing revenues by an estimated $2 million
over the 2009-2018 period.
Modified Tax Treatment. Section 11 would modify the income
tax treatment of geological and geophysical (G&G) costs for oil
companies on which certain economic sanctions for investing in
Iran have been imposed. Under the bill, any G&G costs incurred
by such a company after 2008 in connection with the exploration
and development of oil or gas supplies within the United States
would be amortized over 10 years rather than the two- or seven-
year periods allowed under current law. This modified treatment
would terminate after five years. JCT estimates that the
provision would increase revenues by $47 million over the 2009-
2018 period.
Civil and Criminal Penalties. The bill would impose civil
and criminal penalties for violations of the new sanctions and
could result in additional federal revenues. Collections of
civil penalties are recorded in the budget as revenues.
Collections of criminal penalties also are recorded in the
budget as revenues, deposited in the Crime Victims Fund, and
later spent without further appropriation. CBO estimates that
any additional revenues and direct spending that would result
from those penalties would not be significant because of the
relatively small number of cases likely to be involved.
TABLE 3. ESTIMATED CHANGES IN REVENUES UNDER THE IRAN SANCTIONS ACT OF 2008
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------------------
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2009-2013 2009-2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
Prohibition on Imports............................ * * * -1 -1 0 0 0 0 0 -2 -2
Modified Tax Treatment............................ 1 3 5 7 10 10 10 7 1 -7 26 47
Total Changes................................. 1 3 5 6 9 10 10 7 1 -7 24 45
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: * = revenue loss of less than $500,000.
Estimated impact on state, local, and tribal governments:
The bill contains no intergovernmental mandates as defined in
UMRA and would impose no costs on state, local, or tribal
governments.
Estimated impact on the private sector: The bill contains
private-sector mandates, as defined in UMRA. However, CBO
cannot determine whether the aggregate cost to comply with
those mandates would exceed the annual threshold for private-
sector mandates established in UMRA ($136 million in 2008,
adjusted annually for inflation).
The bill would impose mandates on certain businesses by
banning all imports from and exports to Iran, with the
exception of agricultural commodities, medicine, medical
devices, certain informational materials, and other
humanitarian assistance. According to the Department of
Commerce, in 2007 the United States imported from Iran
approximately $173 million in goods, mostly carpets and
foodstuffs, and exported $146 million in goods, mostly items
that would be excluded from the export ban. The cost of the ban
is uncertain because CBO lacks information on the value of lost
profits to importers and exporters.
The bill also could impose private-sector mandates by
directing the President to freeze the funds and other assets of
certain Iranian government officials, and the assets of their
family members and associates to whom such officials have
transferred assets on or after January 1, 2008. Some of those
individuals may reside in the United States. Because the
Iranian government officials who would be subject to sanctions
have not been named, the cost of that mandate also is
uncertain. Finally, the bill also would impose a mandate on
financial institutions that hold funds and other assets of
persons subject to sanctions by requiring them to report such
information. CBO expects the cost to comply with this reporting
requirement would be small.
Previous CBO estimates: On July 11, 2007, CBO transmitted a
cost estimate for a similar bill, H.R. 1400, the Iran Counter-
Proliferation Act of 2007, as ordered reported by the House
Committee on Foreign Affairs on June 26, 2007. Both bills
contain provisions for the exchange programs and Department of
Treasury programs discussed above. H.R. 1400, however, would
have authorized lower appropriations for those programs. In
addition, the earlier bill did not include an authorization for
the U.S. contribution to IAEA that is authorized in the Iran
Sanctions Act of 2008. H.R. 1400 also contained private-sector
mandates by requiring sanctions on certain imports and exports
with Iran, but CBO expected that the direct cost of complying
with those mandates would fall below UMRA's annual threshold.
The differences in CBO's estimate of the costs of the two bills
reflect differences in the legislative language.
On February 27, 2007, CBO transmitted a cost estimate for
H.R. 957, a bill to amend the Iran Sanctions Act of 1996 to
expand and clarify the entities against which sanctions may be
imposed, as ordered reported by the House Committee on Foreign
Affairs on February 15, 2007. That bill is similar to sections
6 and 9 of this legislation and the estimated costs for those
sections are the same. CBO determined that H.R. 957 contained
no new mandates as defined in UMRA.
Estimate prepared by: Federal spending: International
Affairs--Neil Hood; Exchange Programs and IAEA Contribution--
Sunita D'Monte; Department of Treasury Programs and Reports--
Matthew Pickford; Federal revenues: Zachary Epstein; Impact on
state, local, and tribal governments: Neil Hood; Impact on the
private sector: MarDestinee Perez.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis; G. Thomas Woodward, Assistant
Director for Tax Analysis.
VII. Regulatory Impact and Other Matters
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee states
that the bill will not significantly regulate any individuals
or businesses, will not affect the personal privacy of
individuals, and will result in no significant additional
paperwork.
The following information is provided in accordance with
section 423 of the Unfunded Mandates Reform Act of 1995 (UMRA)
(Pub. L. No. 104-04). The Committee has reviewed the provisions
the ``Iran Sanctions Act of 2008'' as approved by the Committee
on June 18, 2008. In accordance with the requirements of Pub.
L. No. 104-04, the Committee has determined that the bill
contains no intergovernmental mandates, as defined in the UMRA,
and will not affect the budgets of State, local, or tribal
governments. The bill contains private-sector mandates, as
defined in UMRA, by (1) banning all imports from and exports to
Iran, with the exception of agricultural commodities, medicine,
medical devices, certain informational materials, and other
humanitarian assistance; (2) directing the President to freeze
the funds and other assets of certain Iranian government
officials, and the assets of their family members and
associates to whom such officials have transferred assets on or
after January 1, 2008; and (3) requiring financial institutions
that hold funds and other assets of persons subject to
sanctions to report such information. The Committee cannot
determine whether the aggregate cost to comply with those
mandates would exceed the annual threshold for private-sector
mandates established in UMRA ($136 million in 2008, adjusted
annually for inflation).
VIII. Changes in Existing Law Made by the Bill,
as Reported
Pursuant to the requirements of paragraph 12 of rule XXVI
of the Standing Rules of the Senate, changes in existing law
made by the bill, as reported, are shown as follows (existing
law proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
IRAN SANCTIONS ACT OF 1996
* * * * * * *
SEC. 4. MULTILATERAL REGIME.
(a) * * *
* * * * * * *
(f) Investigations.--
(1) In general.--The President [should] shall
initiate an investigation into the possible imposition
of sanctions under section 5(a) against a person upon
receipt by the United States of credible information
indicating that such person is engaged in investment
activity in Iran as described in such section.
(2) Determination and notification.--Not later than
180 days after an investigation is initiated in
accordance with paragraph (1), the President [should]
shall determine, pursuant to section 5(a), if a person
has engaged in investment activity in Iran as described
in such section and shall notify the appropriate
congressional committees of the basis for any such
determination.
(3) Extension of time for investigations.--The
President may extend the time period for making a
determination under paragraph (2) by not more than an
additional 180 days if the President determines that
the President will be unable to make a determination
during the time period required under paragraph (2).
* * * * * * *
SEC. 14. DEFINITIONS.
As used in this Act:
(1) * * *
* * * * * * *
(13) Person.--The term ``person'' means--
(A) a natural person;
[(B) a corporation, business association,
partnership, society, trust, any other
nongovernmental entity, organization, or group,
and any governmental entity operating as a
business enterprise; and]
(B)(i)(I) a corporation, business
association, partnership, society, trust,
financial institution, insurer, underwriter,
guarantor, or any other business organization,
including any foreign subsidiary, parent, or
affiliate of one of the foregoing; or
(II) any other nongovernmental
entity, organization, or group; and
(ii) any governmental entity operating as a
business enterprise, including an export credit
agency; and
* * * * * * *
----------
TITLE 31, UNITED STATES CODE
* * * * * * *
Subtitle I--General
* * * * * * *
CHAPTER 3--DEPARTMENT OF THE TREASURY
* * * * * * *
SUBCHAPTER I--ORGANIZATION
* * * * * * *
Sec. 310. Financial Crimes Enforcement Network
(a) * * *
* * * * * * *
(d) Authorization of Appropriations.--
(1) In general.--There are authorized to be
appropriated for FinCEN [such sums as may be necessary
for fiscal years 2002, 2003, 2004, and 2005]
$91,335,000 for fiscal year 2009 and such sums as may
be necessary for each of the fiscal years 2010 and
2011.
* * * * * * *
----------
SECTION 167, INTERNAL REVENUE CODE OF 1986
* * * * * * *
Subtitle A--Income Taxes
Chapter 1--Normal Taxes and Surtaxes
Subchapter B--Computation of Taxable Income
PART VI--ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS
* * * * * * *
SEC. 167. DEPRECIATION.
(a) * * *
* * * * * * *
(h) Amortization of geological and geophysical
expenditures.
(a) * * *
* * * * * * *
(6) Longer amortization period when iran sanctions in
effect.--
(A) In general.--In the case of geological
and geophysical expenses paid or incurred
during any taxable year ending during a
sanction period with respect to the taxpayer--
(i) paragraphs (1) and (4) shall be
applied by substituting ``10-year'' for
``24-month'', and
(ii) paragraph (5)(A) shall be
applied by substituting ``10-year'' for
``7-year''.
(B) Special rule for unamortized expenses as
of beginning of sanction period.--In the case
of geological and geophysical expenses paid or
incurred after December 31, 2008, and remaining
unamortized as of the beginning of the first
taxable year ending during a sanction period
with respect to the taxpayer, such unamortized
expenses shall be treated as having been paid
or incurred during such first taxable year for
purposes of applying subparagraph (A).
(C) Special rule for unamortized expenses as
of end of sanction period.--In the case of
geological and geophysical expenses paid or
incurred after December 31, 2008, and remaining
unamortized as of the beginning of the first
taxable year ending after the last day of a
sanction period, the taxpayer may elect to
treat such unamortized expenses as having been
paid or incurred during such first taxable year
for purposes of applying this subsection.
(D) Sanction period.--For purposes of this
paragraph, the term ``sanction period'' means,
with respect to any taxpayer, any period during
which sanctions under section 5(a) of the Iran
Sanctions Act of 1996 or section 8 of the Iran
Sanctions Act of 2008 (relating to sanctions
with respect to the development of petroleum
resources of Iran)--
(i) are imposed on the taxpayer, or
(ii) are imposed on any other member
of the expanded affiliated group which
includes the taxpayer, or would be so
imposed if such other member were a
domestic corporation.
(E) Expanded affiliated group.--For purposes
of this paragraph--
(i) In general.--The term ``expanded
affiliated group'' means an affiliated
group as defined in section 1504(a),
determined--
(I) by substituting ``more
than 50 percent'' for ``at
least 80 percent'' each place
it appears, and
(II) without regard to
paragraphs (2), (3), and (4) of
section 1504(b).
(ii) Other affiliated entities.--
Under regulations prescribed by the
Secretary, the term ``expanded
affiliated group'' shall include
entities other than corporations which,
based on principles similar to the
principles which apply in the case of
clause (i), are members of the same
affiliated group.
* * * * * * *
IX. Additional Views
----------
ADDITIONAL VIEWS OF SENATORS BINGAMAN AND ROCKEFELLER
We respectfully submit these additional views to express
our strong opposition to Section 7 of the Iran Sanctions Act of
2008. This section would prohibit the United States from
entering into a civilian nuclear energy cooperation agreement--
known as a ``Section 123'' agreement, after the provision of
the Atomic Energy Act that authorizes civilian nuclear
cooperation agreements--with the Russian Federation. Passing
this legislation with the present language of Section 7 would
be contrary to our national interest.
On May 6, 2008, the United States signed a Section 123
agreement with Russia. This agreement would bring about a
significant deepening of the cooperative nuclear relationship
between the United States and Russia that began with the Nunn-
Lugar Cooperative Threat Reduction program, which aimed to
dismantle weapons of mass destruction and their associated
infrastructure in the former Soviet Union. Section 7 of the
Iran Sanctions Act would, in its present form, halt civilian
nuclear cooperation with Russia. It makes no sense to backslide
on the Nunn-Lugar program at the moment when we are poised to
enter into a long-term agreement that will consolidate the
counterproliferation gains that we have made since the collapse
of the Soviet Union.
We oppose the present Section 7 language for three
fundamental reasons. First, it undermines our efforts at
containing Iran's nuclear program, lessens our leverage with
Russia on counterproliferation matters, and effectively gives
Iran control over American civilian nuclear cooperation with
Russia. Second, the Finance Committee is voting on this
legislation hastily, without having considered crucial
intelligence as to how the Section 123 agreement provides
useful leverage with Russia in our counterproliferation efforts
vis-a-vis Iran. Third, the Finance Committee has marked up
Section 7 without consulting the Foreign Relations Committee,
which--by virtue of its jurisdiction over civilian nuclear
cooperation agreements--has the technical expertise necessary
to evaluate the Section 123 agreement properly.
We will elaborate on each of these points in turn.
I. Section 7 undermines our efforts at containing Iran's nuclear
program, lessens our leverage with Russia on
counterproliferation matters, and effectively gives Iran
control over American civilian nuclear cooperation with Russia
Russia is an important, even indispensable, partner in our
global counterproliferation efforts, and U.S. nuclear
cooperation with Russia has produced tangible and substantive
results in the effort to stop Iran from developing nuclear
weapons. To halt these efforts categorically, as Section 7
would do, would thwart, rather than advance, our
counterproliferation goals with respect to Iran, to the
detriment of our national interests, as well as to the
interests of Russia, Israel, and moderate Arab states.
We harbor no illusions that the interests of the U.S. and
Russia are perfectly aligned. We have grave concerns about
Russia's energy diplomacy in Europe, and we believe that
Russia's state oil and gas companies are too often
instrumentalities of Russian foreign policy. But these facts
should not stop our nation from cooperating with Russia when it
is in our national interest to do so.
Russia certainly has not been as helpful as it could be on
Iran. Most notably, in the 1990s, when Germany stopped work on
the Bushehr reactor in Iran because of counterproliferation
concerns, Russia completed its construction, and it shipped
nuclear fuel there. It does not follow, however, that Russia
has been entirely unhelpful. And in our opinion, Russia has
contributed to our counterproliferation goals in at least four
ways.
First, Russia now has an agreement in perpetuity to take
back all spent fuel from Bushehr, so that it cannot be
weaponized.
Second, Russia has proposed the creation of an
international enrichment facility at Angarsk, where countries
can enrich uranium for civilian purposes, on Russian territory
and under International Atomic Energy Agency (IAEA)
supervision. This facility would rob Iran and other
proliferators of any pretext that they must enrich to develop a
domestic civilian nuclear energy industry.
Third, the U.S. and Russia have also proposed the creation
of an international spent fuel storage facility. This facility
could accept spent nuclear fuel from both the U.S. and other
countries, which reduces incentives for countries like Iran to
have their own nuclear reprocessing facilities. At Sochi on
April 8, 2008, the United States and Russia agreed to proceed
with this international fuel bank program. Last year, the
Congress even appropriated $50 million to establish the
international fuel bank program, a fact recognized in the Iran
Sanctions Act.
The United States needs the Section 123 agreement to
continue with the international enrichment facility, the spent
fuel bank, and collaboration in the development of
proliferation resistant nuclear tchnologies--as well as R&D in
areas such as fast neutron reactors and advanced fuel cycle
technologies.
Fourth, Russia has supported four resolutions in the United
Nations Security Council aimed squarely at stopping Iran's
nuclear ambitions. These are Resolution 1696 of 2006,
Resolution 1737 of 2006, Resolution 1747 of 2007, and
Resolution 1803 of 2008.
These resolutions impose progressively tougher sanctions on
Iran--and Russia is a part of those sanctions. Under these
resolutions, Iran must suspend all enrichment-related and
reprocessing activities, and states must take necessary
measures to prevent the sale or transfer of all goods and
technology that could contribute to Iran's enrichment
activities. This is not advisory language. It is a mandate from
the international community, including Russia, to place broad-
based sanctions on Iran.
If Congress now repudiates the Section 123 agreement with
Russia, Russia will be far less likely to cooperate with the
United States on counterproliferation matters, whether in the
United Nations Security Council, bilaterally with Iran, or in
the context of the Nunn-Lugar Cooperative Threat Reduction
program. That would be a grave setback for the United States
and contrary to its national security interests.
The United States needs Russia as a partner to contain
Iran's nuclear weapons ambitions. The Section 123 agreement is
an effective way to secure a partnership with Russia, to
provide incentives for Russian cooperation on Iran, and to
discourage bad behavior on the part of Russia. The agreement
allows the U.S. to maintain flexibility in its relations with
Russia. Although it provides a roadmap for future cooperation
on civilian nuclear energy, the agreement does not open the
floodgates to untrammeled technology transfer. Instead, it
regulates how such cooperation will proceed. For instance, the
executive branch must issue a license for each and every
shipment of civilian nuclear technology to Russia pursuant to
the Section 123 agreement. Therefore, it is incorrect to
suggest, as some of our colleagues have, that the agreement
would force the U.S. to ship sensitive nuclear technology to
Russia were our relations with Moscow to deteriorate.
Because the Section 123 agreement memorializes the nuclear
non-proliferation commitments that Russia has made, it provides
a mechanism for monitoring Russia's counterproliferation
behavior--including in Iran. Conversely, repudiating the
agreement would remove Russia's incentives to cooperate with
the United States on counterproliferation matters.
Furthermore, Section 7 effectively makes continued civilian
nuclear cooperation with Russia contingent on Iranian, rather
than Russian, behavior. Section 7(c) would allow civilian
nuclear cooperation with Russia only if the President certifies
that (1) Russia has suspended all nuclear assistance to Iran
and all transfers of advanced conventional weapons and missiles
to Iran, or (2) Iran has completely, verifiably, and
irreversibly dismantled all of its nuclear enrichment and
reprocessing programs.
Because intelligence concerning nuclear assistance and arms
transfers between two large countries can never be perfect or
complete, it is unrealistic to expect that the President could
ever make an unequivocal certification based on the first prong
of Section 7( c). Therefore, for practical purposes, the second
prong--the complete, verifiable, and irreversible dismantling
by Iran of its nuclear enrichment and reprocessing programs--is
the criterion for any presidential certification. This language
effectively makes civilian nuclear cooperation with Russia
contingent on the actions of our adversary, Iran. This
situation is unacceptable.
Finally, Iran has not procured its enrichment technology
from Russia--most of it has come from Pakistan. It is misguided
to link Russia's Section 123 agreement to Iranian enrichment
behavior when Russia has nothing to do with Iran's enrichment
program.
II. The Finance Committee is voting on this legislation hastily,
without having considered crucial intelligence as to how the
Section 123 agreement provides useful leverage with Russia in
our counterproliferation efforts vis-a-vis Iran.
The Finance Committee has reported the Iran Sanctions Act
without having considered crucial intelligence as to how the
Section 123 agreement is helpful in our counterproliferation
efforts vis-a-vis Iran. The classified annex of the agreement
contains discussion detailing the positive effects the Section
123 negotiations appear to have had on Russia's role in
nonproliferation issues in general, and on its influence on
Iran's nuclear program in particular. We urge every member of
the Senate to seek out a classified briefing before voting to
stop this accord with Russia.
In 2003, the Senate voted to give the President authority
to go to war in Iraq without a full understanding of all
aspects of the relevant intelligence. This experience should
remind all senators that when considering critical matters of
national security, it is imperative that we be fully briefed on
the relevant intelligence before votes take place. The Finance
Committee has not been fully briefed on Russia's
counterproliferation efforts vis-a-vis Iran; thus, it is
inappropriate that the Committee should legislate on the
subject at this point.
III. The Finance Committee has marked up Section 7 without consulting
the Foreign Relations Committee, which--by virtue of its
jurisdiction over civilian nuclear cooperation agreements--has
the technical expertise necessary to evaluate the Section 123
agreement properly.
The Finance Committee is not the place to have a debate
over U.S. policy on international civilian nuclear cooperation.
Section 123 of the Atomic Energy Act of 1954 gives the Foreign
Relations Committee jurisdiction over Section 123 agreements in
the Senate.
The Foreign Relations Committee staff has deep expertise on
Section 123 agreements. To date, Congress has approved civilian
nuclear cooperation agreements with every major civilian
nuclear power other than the Russian Federation. These
agreements are highly complex and involve lengthy hearings by
members and staff steeped in the details and processes of such
agreements. The Finance Committee, while highly competent in
matters of its jurisdiction, such as trade sanctions, is the
wrong venue in which to consider language barring a civilian
nuclear cooperation agreement with Russia.
Before pronouncing judgment on the Section 123 agreement,
we urge senators to avail themselves of the technical expertise
necessary to understand the agreement.
In conclusion, Senators Nunn and Lugar, two of the most
highly respected figures in the non-proliferation community,
recently wrote an op-ed article in the New York Times in which
they stated, ``One goal of [the Section 123] agreement is to
prevent more countries from following Iran's path to becoming a
nuclear power. We should not sacrifice our most promising long-
term nonproliferation strategy in pursuit of short-term
leverage that is likely to backfire.'' The Bush administration,
as well as Senators Biden and Lugar in their capacity as
chairman and ranking member of the Foreign Relations Committee,
have also written in opposition to Section 7 of the Iran
Sanctions Act for this reason.
We heartily endorse their words. For this reason, Senator
Bingaman offered an amendment to strike the harmful Section 7
and replace it with a resolution expressing the sense of the
Senate that the Section 123 agreement should be reviewed
carefully in light of Russia's past and present actions with
respect to Iran and as a mechanism by which the U.S. and Russia
can work on preventing proliferation to countries such as Iran.
This amendment would have highlighted the need for the
Committee of jurisdiction, and eventually the whole Senate, to
take a close look at this important agreement. This is a
critical matter of national security, one that we must not get
wrong.
For these reasons, we must oppose the Iran Sanctions Act in
its present form.
Jeff Bingaman.
John D. Rockefeller IV.
ADDITIONAL VIEWS OF SENATOR CANTWELL
I am concerned about the impact of Section 7 on the ability
of U.S. aviation companies to obtain ``safety of flight''
licenses from the Treasury Department's Office of Foreign
Assets Control. Safety of flight licenses can cover domestic or
foreign fleet (if the foreign fleet incorporates U.S. parts)
repairs that are mandated by a Federal Aviation Administration
Airworthiness Directive, airplane-on-the-ground situations,
other urgent parts replacement or repair needs, or airplane
crash investigations.
Under current law (the Iran-Iraq Sanctions Act of 1992) and
regulation (the Iran Transactions Regulations), safety of
flight activity that did not require a license prior to 1992
does not require a Presidential waiver. Activity that did
require a license prior to 1992 does require a Presidential
waiver and S. 970 would not change the treatment of these
licenses--a waiver from the President would still be required.
But for activities that do not currently require a Presidential
waiver, the bill would now require one.
The reason for this current bifurcated treatment lies in
the differences in the level of significance of a particular
request for export approval for a safety of flight activity.
Requests for export approvals related to safety of flight may
require no transfer of information/technology to Iran, and the
parts involved may be insignificant, i.e., the export does not
rise to a level that would pose either a national security or
foreign policy concern.
For example, a license to export the data map of an Iran
Air 747 flight data recorder in support of a third country
investigation of a nose wheel collapse which the plane
experienced while landing outside of Iran in 2004 did not
require a presidential waiver. On the other hand, the export of
wing strut modification kits for 747 aircraft operated by Iran
Air required a presidential waiver because that could improve
the airworthiness of the aircraft. It should be noted that, in
this case, the parts and related technology were exported to
Germany and that Lufthansa performed the repairs, not Iran.
This concern may be addressed by simply allowing the
President to delegate his waiver authority for activities that
do not currently require a waiver to the Secretary of the
Treasury and/or to the Secretary of State.
Maria Cantwell.
ADDITIONAL VIEWS OF SENATOR KYL
It is critical that the United States strengthen and focus
our diplomatic and economic resources to persuade Iran to
comply with U.N. Security Council Resolutions. This bill is
vitally important to our nation's effort to increase pressure
on the Iranian regime.
I support Section 7 of this bill. While the committee's 15
to 4 vote in favor of this section and the House of
Representatives' 397 to 16 vote in favor of legislation--the
Senate companion of which has 72 cosponsors--containing a
nearly identical provision clearly indicate the broad consensus
behind efforts to promote a sensible policy toward Russia, the
merits of this section warrant thorough review.
Open and classified intelligence documents Russia's history
of cooperation and assistance to Iran.
In support of Iran's effort to master nuclear technology,
Moscow has provided critical aid in the construction and
operation of the Bushehr nuclear reactor; Iran has paid about
$800 million for these services. Russia has also made at least
seven shipments of nuclear fuel to Iran and trained at least
700 Iranian nuclear engineers. I am aware of no limitation as
to what these Iranian engineers will do with that training.
Since the 1990s, Russia has sold Iran billions in military
equipment, such as submarines, aircraft, tanks, helicopters,
and advanced air defense systems, which, according to open
source reporting, likely includes the capable SA-20 missile
system, modeled after the U.S. Patriot system.
Additionally, a March 1, 2007 letter from the Office of the
Director of National Intelligence stated, ``We assess that
Russian entities continue to provide assistance to Iran's
ballistic missile programs. We judge that Russian-entity
assistance, along with assistance from entities in China and
North Korea, has helped move toward self-sufficiency in the
production of ballistic missiles.''
It is, therefore, clear that, in addition to preventing
meaningful action with regard to Iran in the United Nations
Security Council, Russia has provided Iran with nuclear
assistance, and sold and delivered to Iran advanced
conventional weapons and ballistic missile material. Entering
into a close nuclear technology partnership with Russia would
signal U.S. approval of these activities and does not promote
U.S. objectives with regard to Iran.
Section 7 of this bill prevents the United States from
entering into a nuclear cooperation agreement or undertaking
transactions pursuant to such an agreement with Russia unless
the President has certified that Russia has suspended all
nuclear, conventional weapon, and ballistic missile assistance
to Iran; or, that Iran has verifiably dismantled all nuclear
programs. This is an appropriate response to Russia's
cooperation with Iran.
In addition to the overwhelming disapproval of the nuclear
cooperation plan expressed in the House of Representatives and
Senate Finance Committee, Congresswoman Ileana Ros-Lehtinen,
the ranking member of the House Foreign Affairs Committee,
along with several other House members, recently sent a letter
to President Bush asking him to withdraw the 123 Agreement,
citing Russian assistance to rogue states and ``Russia's
continuing sale of advanced conventional weapons to Iran.'' The
letter further suggests a contradiction in the Administration's
request for a waiver of sanctions required under the Iran,
North Korea, Syria Sanctions Act. Pursuant to the provision of
the Act, the President is required to certify to Congress that
the Russian government has acted sufficiently to prevent the
proliferation of weapons of mass destruction and the enabling
technology. Such a certification has never been made since the
Act's passage in 2000.
Congressman John Dingell, Chairman of the House Energy and
Commerce Committee, and Congressman Stupak have also requested
that the GAO investigate whether the Administration's
classified and unclassified assessment--known as an NPAS--that
a 123 Agreement with Russia would be consistent with the non-
proliferation program, policies, and objectives of the United
States is fully supported in light of Russia's nuclear
cooperation and weapons proliferation to Iran.
Several arguments have been put forward in an effort to
prop up the 123 Agreement. Proponents of the 123 Agreement
assert that withholding approval of the proposed cooperation
plan will undercut the disarmament and non-proliferation plans
and objectives of the United States, by interfering with the
Nunn-Lugar Cooperative Threat Reduction program. But, programs
funded by ``Nunn-Lugar'' are not dependent in any way on the
approval of the Russia 123 Agreement. Those programs are
functioning today, without the Agreement, and will continue to
function, regardless of the 123 Agreement's fate.
Nor will withholding U.S. approval of the 123 Agreement
endanger independent Russian proposals, such as the creation of
an International Enrichment Center to provide nuclear fuel to
developing nations. This project is completely unrelated to the
approval of the 123 Agreement.
Some also argue that Russia is our partner in addressing
Iran's threatening behavior and that withholding support for
the 123 Agreement will make Russia less likely to support U.S.
objectives with regard to Iran. However, the documented
cooperation between Russia and Iran clearly does not represent
the actions and commitment of a strong partner. A nuclear-armed
Iran is not in Russia's interest, and the U.S. should not act
as if compelled to make a ``down payment'' on Russia's will
good by approving a nuclear agreement that country very much
desires.
It is incumbent upon Russia to join the rest of the
international community and use its close ties with Tehran to
foster meaningful dialogue and bring Iran within compliance of
the U.N. Security Council's resolutions. A nuclear-armed Iran
is not in Russia's interest. It is illogical to suggest--as
some proponents of the 123 Agreement do--that Russia would
expand its cooperation with Iran simply due to a foreign policy
disagreement with the United States.
The U.S. should not accept partial cooperation as
sufficient, especially cooperation that does not rise above the
level of demarches and diplomatic niceties. Rather, we should
reserve our assets and accolades for those nations that
sincerely avail themselves in pursuit of a more peaceful world.
While Russia has supported some efforts to restrain and
penalize Iran's destabilizing behavior, it has also profited
from it. The United States should work with Russia to end
military assistance to Iran before entering into a nuclear
cooperation deal. Section 7 merely codifies that commonsense
policy.
Jon Kyl.
ADDITIONAL VIEWS OF SENATOR SMITH
The Chairman's mark, which builds on legislation (S. 970)
that Senator Durbin and I wrote, is an important step in the
advancement of a diplomatic solution to prevent Iran's
development of a closed nuclear cycle.
The United States, in conjunction with our European
partners, is solidly committed to preventing nuclear
proliferation. In the Middle East, our success in achieving
this goal is critical.
If Iran is allowed to perfect a closed nuclear cycle and
build nuclear armaments, it will not be long before other
regional powers follow suit. In addition, Iran's hostility to
Israel's existence and bellicose rhetoric make the long-term
destabilizing influence of a nuclear Iran intolerable. The
world urgently needs intensified diplomacy, consisting of
carrots and targeted sticks, to encourage Iran to abandon its
nuclear ambitions.
I am confident that this legislation will be an important
part of that diplomacy, complimenting efforts already underway
to apply pressure to enablers and abettors of the regime. These
steps, which include the sanctioning of major Iranian banks and
senior officials involved with the nuclear program and
terrorism, have significantly increased the cost of nuclear
enrichment for Iran, without disproportionately harming the
Iranian people.
We have no grievance with the Iranian people, who live in
an autocracy and are isolated from much of the decision-making
by their leaders. Indeed, to help build ties with the Iranian
people, this legislation will authorize educational and
cultural exchange programs in the United States. These programs
will help counter the Iranian regime's propaganda and help
eventually draw a peaceful, democratic Iran into partnership
with the United States and the rest of the free world.
Iran is not building its nuclear program in a vacuum, and
the international community must be an integral part of the
sanctions process. Unfortunately, certain nations like Russia
are continuing to assist in Iranian nuclear and weapons
programs, while paying lip service to the need for
nonproliferation. In light of this fact, a key provision of
this legislation would ban Russia from obtaining a so-called
123 nuclear agreement with the United States until it halts
cooperation with Iran's nuclear, advanced weapons, and missile
programs, or until Iran dismantles its enrichment facilities.
We must make clear to Russia that it cannot continue to deal
lethal technologies to Iran and still reap the benefits of
civilian nuclear cooperation with the United States.
Key to the success of the diplomatic process is bold action
by the United Nations Security Council (UNSC), which to date
has adopted three sanctions resolutions in response to Iran's
continuing enrichment of uranium. I am pleased with the steps
taken so far, but much more needs to be done. To this end, the
UNSC should continue to take the lead in negotiating an end to
Iran's nuclear program.
I do support unilateral sanctions lightly. However, the
case before us in Iran is pressing and distinctive enough that
unilateral sanctions can be very useful. They can help buttress
UNSC sanctions resolutions, while choking off Iranian
activities in international banking and high technology. These
steps are critical to an engaged, international diplomatic
effort, and vital to a peaceful resolution of the current
impasse.
Gordon H. Smith.
