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Senators weigh further measures on Iran sanctions

By Roberta Rampton

WASHINGTON (Reuters) - Leading U.S. lawmakers are considering adding measures to a new package of sanctions that would single out Iran's national oil and shipping companies and restrict its ability to tap into electronic banking services.

The broad package of measures were aimed at further constricting oil revenues that lawmakers say Tehran was using to develop nuclear weapons, and were designed to build on tough banking sanctions that became law on December 31.

Top U.S. intelligence chiefs told Congress on Tuesday that Iran was feeling the harsh effects of the economic sanctions and that Iran is capable of building a nuclear weapon but its leaders had not decided to do so.

Lawmakers on the Senate Banking Committee were considering a number of amendments and will vote on the measures on Thursday. The bill would require the administration to identify and sanction affiliates of Iran's Islamic Revolutionary Guard Corps, or IRGC.

Democratic Senator Robert Menendez will file an amendment that would require the Treasury Department within 60 days of passage to investigate the relationship between the Revolutionary Guard and two key players in Iran's oil trade: the National Iranian Tanker Company, and the National Iranian Oil Company.

The amendment would direct the administration to sanction banks that deal with the major oil company and shipper if they are found to be Revolutionary Guard entities, a Menendez aide said.

"We will continue adapting our efforts to counter the regime's workarounds and take every possible step to impose real sanctions on Iran's energy sector, the IRGC and its related entities," Menendez said in a statement.

Howard Berman, the top Democrat on the House Foreign Affairs Committee, will introduce a companion bill targeting the oil company and shipper in the House of Representatives.

"With Iran pursuing a menacing nuclear program while thumbing its nose at the international community, Tehran must be further isolated," Berman said in a statement.

At a Senate Intelligence Committee hearing, CIA Director David Petraeus said, "The sanctions have been biting much, much more literally in recent weeks than they have until this time."

He cited the fall in the value of Iran's currency, the rial, and said there have been "runs on the bank" as Iranians try to dump domestic currency and acquire other assets.

NO CHANGE IN IRAN's BEHAVIOUR

But Director of National Intelligence James Clapper said sanctions had not caused Iran's leaders to change their behavior or policies so far.

"We assess Iran is keeping open the option to develop nuclear weapons, in part by developing various nuclear capabilities that better position it to produce such weapons, should it choose to do so," Clapper said in written testimony. "We do not know, however, if Iran will eventually decide to build nuclear weapons."

A team from the U.N. nuclear watchdog, which arrived in Tehran on Saturday, has been holding talks with Iranian officials to try to resolve the dispute about Iran's nuclear program, which Tehran says is purely for peaceful purposes.

"Talks between Iran and the visiting team of inspectors from the International Atomic Energy Agency (IAEA) were constructive and ... the two sides agreed to continue the talks," the semi-official Fars news agency quoted an unnamed source as saying.

THE PROVERBIAL STRAW?

International oil traders are closely monitoring the new sanctions, which could provoke Tehran to act on its threat to shut the Strait of Hormuz, a key oil shipping lane.

The ideas in the new bill build on the banking measures passed last year, and will add to international pressures on the Tehran government, said George Lopez, an expert on sanctions at the University of Notre Dame in Indiana.

"The trick about sanctions is, which straws are going to be the ones that break the camel's back?" Lopez said.

The net impact on Iran is what is important to evaluate, said Gal Luft, head of the Institute for the Analysis of Global Security in Washington.

"If you look at each piece of legislation or sanction separately you'd say that it's not that great or not that perfect, but if you zoom out and look at the entire global effort its the first time you feel the international community is tightening the noose over this," Luft said.

BANKING MEASURES

The Obama administration is still determining how aggressively to implement the tough new banking sanctions enacted last year, measures cosponsored by Menendez and Republican Senator Mark Kirk.

Kirk had been working on a sanctions measure that would make it harder for Iranian banks to use SWIFT, the Society for Worldwide Interbank Financial Telecommunication, a Belgian cooperative that provides an electronic platform for banking transactions.

But Kirk suffered a stroke in December and is recovering from surgery. A Senate aide, who spoke to Reuters on the basis he not be identified by name, said he expected another senator would propose Kirk's amendment dealing with SWIFT.

"It behooves the people who run the architecture to say, 'You can't have access to it,'" the aide said.

SWIFT, overseen by a group of 10 major central banks, is a "neutral and apolitical" organization that complies with all sanctions laws, a spokeswoman said in a statement.

SYRIAN SANCTIONS IN PLAY

Other amendments will introduce sanctions on Syria, including penalties for individuals identified for human rights violations, and on companies that sell technology and weapons to Syria, two Senate aides said.

More than 5,000 people have been killed in a brutal crackdown on protesters in Syria, according to the United Nations.

Senators Kirsten Gillibrand and Charles Schumer introduced a Syrian sanctions package in January.

Another measure aimed at banning ships that have recently visited Iran from U.S. ports is unlikely to be introduced at the Senate Banking Committee, but may come into play during a later stage of the legislative process, a Senate aide said.

Much will depend on how aggressively the Obama administration implements the banking sanctions, the aide said.

The House passed two bills on December 14 that give the administration less flexibility in how it rolls out sanctions than the new Senate Banking package.

"If there's a sense the administration is really putting its full weight behind sanctions implementation, that may undercut some of the momentum behind efforts to take away waivers," the Senate aide said.

(Additional reporting by Timothy Gardner; editing by Cynthia Osterman and Mohammad Zargham)

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