Foreign and Defense Policy

Congress caves on Iran Central Bank sanctions

Hill conferees filed the National Defense Authorization bill last night, which means the conference agreed upon final language. The bill has enjoyed its share of controversy over a detainee provision, but another viciously fought battle included a provision to sanction the Central Bank of Iran. You remember the Central Bank? The one the Obama administration was first going to sanction, then decided not to sanction? Senators Menendez and Kirk took every administration objection, wrapped it up into a fine amendment that would allow time to balance oil markets, work with our allies, and ensure that the CBI sanctions hit the intended target. They accommodated administration concerns, worked closely with State and Treasury on language, and then watched as Obama officials reneged on the deal and lobbied to defeat the amendment. Such was the disgust of the Democrat-controlled Senate for the president’s negotiating tactics, that the amendment passed 100-0. (Check out Menendez’s slap down of State’s Wendy Sherman and Treasury’s David Cohen here.)

Having failed to move the Senate, the administration took aim at the conference committee now meeting, working aggressively to water down CBI sanctions. Their changes, detailed by The Cable’s Josh Rogin here and here, do little more than parrot the language of CISADA, the Comprehensive Iran Sanctions and Divestment Act that passed in 2010, the provisions of which have been exercised once (against Belarus, that well-known Iran enabler) by Barack Obama.

In other words, instead of having to “prohibit” foreign banks that transact business with the CBI from dealing with the U.S. financial sector, the president would need only “impose strict conditions on” such dealings.  But what would constitute “strict conditions”? Defining this would be entirely at the administration’s discretion. Are there not already “strict conditions” on foreign bank dealings with the U.S. financial sector? Does Treasury let anyone do it? Of course not. Money launderers, drug traffickers, and all other manner of bad actors are already prohibited to have such dealings. So arguably under the administration-proposed language absolutely no additional action would be required of the administration. (Here, I disagree with Rogin’s piece today downplaying the scope of the changes.)

I hear some of the amendment’s supporters battled valiantly in conference to preserve the stricter language. They lost, and have gracefully been out claiming victory notwithstanding. Better still, I understand from House and Senate staff that part of the reason they lost is that the AIPAC, the nation’s largest pro-Israel lobbying group, sided with the administration and reassured members they were “fine” with the changes. (I’d be happy to be contradicted.)

Want the preceding three paras in short?

– Bipartisan Congress resolved to sanction Central Bank of Iran and its foreign business partners.

– Obama administration resolved not to sanction Central Bank of Iran or its foreign business partners.

– Largest lobbyist for the U.S.-Israel relationship resolved to join with Obama.

– Welcome to Washington.


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