Wednesday, September 17, 2008

Senator Dodd Pushes Iran Sanctions Amendment to Defense Authorization Bill

On September 15, Senator Christopher Dodd (D-CT) went on the record to push for his bipartisan sanctions bill, the "Comprehensive Iran Sanctions, Accountability and Divestment Act of 2008," as an amendment to the Fiscal Year 2009 National Defense Authorization Act (S. 3001). Hat tip to Lara Friedman for sending along. Below are some the most relevant excerpts.

"We are considering, of course, the Defense authorization bill. This proposal, adopted and developed by the Committee on Banking, Housing, and Urban Affairs in conjunction with my Republican colleague and friend, RICHARD SHELBY of Alabama, former chairman of the committee, would impose tough new sanctions on the Government of Iran, to authorize investors to divest from companies active in Iran's energy sector and to combat the proliferation of black market weapons networks overseas...

"Let me be clear. Sanctions against the Government of Iran are not an end unto themselves but, rather, one means of driving a resolution of the problem of Iran's apparent nuclear ambitions. The Europeans' recent decision to impose additional financial sanctions on Iran is a very positive development that exerts further pressure to that end. The approach embodied in the bill I am talking about this afternoon is targeted and strategic, maximizing the economic leverage of the United States, our partners and allies in Europe and elsewhere, and international investors, while avoiding the risk of a more indiscriminate approach...

"Last year, the committee conducted a hearing on the effectiveness of Iran sanctions. Working with the administration, the Banking Committee acted swiftly to strengthen the U.S. trade/investment ban, and ultimately we saw enactment in October of the International Emergency Economic Powers Enhancement Act. This new law holds violators of U.S. sanctions law accountable, adding, I might add, jail time and severe fines against those investing in Iran or other state sponsors of terror...

"The Government Accountability Office then issued a report last December raising questions about whether our current sanctions regime against Iran furthers U.S. policy objectives and how they might be made more effective. Among other things, that report concluded that the ongoing illegal transshipment of sensitive dual-use technologies from often unwitting U.S. and other Western suppliers to countries such as Iran--sometimes through three or four levels of suppliers--is one very effective way around current U.S. sanctions...

"The missile tests that Iran conducted in July were provocative, and its persistent refusal to abide by United Nations Security Council demands--despite a host of sanctions already in place--is very troubling. Iran's behavior with respect to weapons proliferation, support for terrorism, destabilization of its neighbors, and threats against our allies and interests demands a very serious response...

"We only have a few weeks remaining in this legislative session. We will not return to actually legislate until late January of next year. I would hope we would find time, whether on this bill or some other vehicle, to enact, as I am confident we can, with a strong bipartisan vote, this Iran sanctions idea. This bill is one very important part of that response...

"First, the bill expands the definition of 'person' under the Iran Sanctions Act to include financial institutions, underwriters, guarantors, and other business entities and extends the applicability of sanctions to oil and gas pipelines and tankers. It imposes a broad ban on imports directly from Iran to the United States and exports from the United States to Iran of those few items still able to be shipped while exempting food and medicines to Iran, certain informational materials, and aids to navigation designed for safe operation of commercial aircraft.

"The bill also provides for a freezing of assets of those members of the diplomatic community or Iranian military who have been identified by the President of the United States as active in weapons proliferation or terrorist activity. The bill clarifies that U.S. entities that establish a subsidiary for the purpose of getting around U.S. sanctions laws can be held liable for the activities of their subsidiaries. The bill also increases funding to the Office of Terrorism and Financial Intelligence of the Treasury Department to ensure that the international financial system is not used by those who support terrorism or engage in proliferation-sensitive activities.

"Finally, this bill imposes new requirements that the President actually make a determination and report every 6 months to Congress regarding the sanctionability of certain eligible investments in Iran's energy sector. This is designed to address the problem of billions of dollars in oil and gas investment projects being subject to sanctions--over $27 billion in eligible oil and gas investments since 1999, according to the Congressional Research Service--but successive administrations refusing to make final determinations required by law, much less impose appropriate sanctions on entities involved in such projects, I might add, have raised some certain issues...

"In addition to expanding U.S. sanctions on the Government of Iran, this bill would also provide a simple formula for divestment from firms which invest significant amounts in Iran's energy sector with provisions patterned after the Sudan Accountability and Divestment Act that we all voted for earlier this year...

"The rationale for this is straightforward. Many of us believe Americans should be able to divest from energy firms doing business with the Iranian regime whose policies they abhor and which by their presence indirectly help to prop up that regime. They should be given the tools they need to make socially responsible decisions, and investors who choose to divest--States, large pension and mutual funds, and others--should be held harmless for these decisions. Likewise, firms which continue to do business in the energy sector in Iran should recognize the substantial risks involved in this decision and adjust their strategies accordingly...

"This bill is as much about enabling investors to manage risk as about having Congress set foreign policy. Make no mistake. Investing in Iran these days is risky business, and investors should be fully informed of those risks going in. This bill does not require divestment, it simply permits it, as with the Sudan legislation--if the investments in Iran's energy sector are substantial and if the divestment process is crafted consistent with the provisions of this bill...

"How would it work? First, the amendment authorizes States and localities to divest from companies involved in the energy sector in Iran and sets universal divestment standards. Secondly, the bill allows mutual fund and corporate pension fund managers to cut ties with companies involved in these key sectors and offers limited protection from lawsuits for those choosing to divest or not to invest in the first place, while preserving their normal fiduciary duties. Third, this bill allows State and local governments to divest their public pension funds from businesses invested in Iran's energy sector. Fourth, it establishes a new mechanism for disclosure for firms divesting their holdings in such entities and sunsets, I might add, the divestment mechanism when the President of the United States certifies that Iran has ceased its support for international terrorism and its support of weapons of mass destruction...

"Let's be very clear about what this amendment achieves in terms of divestment--and what it does not do. It does not outsource foreign policy to State and local governments or run afoul of the supremacy clause of the Constitution, as some have claimed. Rather, it protects the rights of investors to make socially responsible decisions--to refrain from holding assets that may serve to bolster the Government of Iran. It allows States and other investors to divest in a relatively uniform way, if they so choose, so they may avoid the complications of diverging approaches...

"Under this bill, States can act out of concern for the long-term financial and reputational risks posed by an affiliation with certain investments in the nation of Iran. Once identifying these specific risks, States are to inform the companies with a notice detailing such issues--not merely based on a foreign policy concern but on the State's assessment of the economic risks posed by investments in firms involved in certain energy-related business in Iran. It thus outlines a Federal divestment policy--a complicated and yet very clear path consistent with U.S. unilateral and multilateral sanctions already imposed, I might add--and authorizes investors to act consistently with that policy, again, if they so choose...

"Finally, and very importantly--unlike other legislation acted upon by Congress--the amendment I am offering provides new incentives for countries to strengthen their export control systems to stop the illegal diversion of sensitive and dual-use technology to countries such as Iran and imposes additional licensing requirements on those who refuse to cooperate..."

1 comment:

Reformed Patriot said...

This is stupid. Sanctions punish the people, the innocents, not the leaders. Won't work.