The top Kurdish representative in Washington on Friday pushed back against Iraqi Prime Minister Nuri al-Maliki's attempt to encourage U.S. President Barack Obama to stop U.S. oil companies -- particularly ExxonMobil -- from investing in the Kurdish area of Iraq following Chevron's recent purchase of 80 percent of two blocks in the autonomous region.

The Kurdish representative, Qubad Talabani, the Kurdish Regional Government's representative in Washington and the son of Iraqi President Jalal Talabani, was responding to Maliki's claim that Obama had sided with Baghdad in the escalating dispute in a recent letter.

"We would like to confirm that the letter was positive and convincing and stresses its respect for the constitution and Iraqi laws, in the same manner as the Iraqi government is seeking," read a statement from Maliki's office on Thursday.

On Friday, in a short interview with The Cable, Qubad Talabani shot back: "Every U.S. company that is working in Kurdistan today is working under the Iraqi constitution, so the notion that Obama has sent a letter to Maliki supporting his position on Exxon is misleading because the U.S. reaffirmed their support for the Iraqi constitution, and expressing their support is not contradictory to ExxonMobil working in Kurdistan."

But the dispute is not simply a legal matter. Baghdad is concerned that the KRG's cooperation with oil companies threatens its authority, since Article 112 of Iraq's constitution states that the management of the country's oil and gas fields and Iraq's energy policy are responsibilities of the federal government.  "Firstly, the prime minister of Iraq should know that private U.S. companies ... don't act on the behalf of the U.S. government," Talabani said, "and they certainly don't take their orders from the U.S. government."

Baghdad banned ExxonMobil from bidding at a recent auction for exploration blocs after the company signed a 25-year exploration deal with the KRG last year. The KRG drew the ire of the Iraqi federal government earlier this month when it announced that it had exported some crude to Turkey, which gave the KRG refined product in return.

"This is an illegal and unconstitutional business that we will take the right decision against," a spokesman for Hussein al-Shahristani, Iraq's deputy prime minister for energy, said at the time. "The [Iraqi government's] oil ministry solely reserves the right to export crude oil, gas, or oil products to other countries."

American Enterprise Institute resident scholar Michael Rubin told The Cable on Monday that KRG president Massoud Barzani had also raised the issue with President Obama, which The Cable was unable to confirm.

"It's my understanding that Barzani walked away with the perspective that Obama was favoring Maliki's claims over Barzani's, so it seems already that the U.S. is siding with the Iraqi central government on this issue at least," he said. "We can't pressure Iraqis because we have no leverage left."

U.S. senators grilled Derek Mitchell, nominated by President Barack Obama on May 17 as the first U.S. ambassador to Burma in two decades, in a confirmation hearing Wednesday, but they used the session primarily to urge the administration to allow American investment in the country's oil and gas sectors.

Mitchell has served as special coordinator for Burma policy since last year, but democratic reforms and the election of opposition leader and Nobel Peace Prize winner Aung San Suu Kyi to parliament have prompted the Obama administration to step up its diplomatic engagement with the Burmese government.

Although the State Department has proposed a "sector by sector" plan to renewing private sector relations, the White House has not decided if it will lift sanctions on Burma's notoriously opaque and abusive energy industry.

"There's nothing I can say here definitively on this, because it is an ongoing internal, interagency discussion," Mitchell told the Senate Foreign Relations Committee. "But ... we are not looking to exclude any sectors from this."

Senator James Inhofe (R-OK), addressing "rumors" that the administration plans to "exclude oil firms from new rules allowing U.S. investment in the country," argued that such a policy would be detrimental to U.S. companies as foreign firms continue to sign oil and gas exploration agreements with Burma.

"This or any other ‘carve-out strategy' would be a strategic mistake," he said. "I believe that U.S. companies including the oil and gas companies can play a positive role in the effort by demonstrating high standards or responsibility, responsible business conduct, and transparency -- including respect for human rights in Burma."

Suu Kyi, on the other hand, is not as optimistic, and cautioned foreign firms against partnering with the state-owned Myanmar Oil and Gas Enterprise earlier this month during a speech in Geneva.

In January, Burma's Energy Ministry estimated its natural gas reserves at 22.5 trillion cubic feet, and the international bidding process for 25 offshore oil and gas blocks is scheduled to take place within two to three months.

Canada is upset that Washington special-interest groups are thwarting the Keystone XL pipeline, Canadian Foreign Minister John Baird told The Cable, forcing the country to move forward to find other customers for its oil.

"There's a great deal of frustration, less with the administration and more that the future prosperity of our country could lie in the hands of some radical environmentalists and special interests," Baird said in a Thursday interview in Washington. "That causes us great concern, so we want to look to diversify our markets, whether that be with Japan, Korea, or China, which has expressed a great interest."

U.S. President Barack Obama rejected TransCanada's permit application to build the pipeline in January after being compelled to issue a quick decision on the application by congressional legislation. He had received pressure from environmental groups, which had organized protests around the country opposing the construction of the pipeline.

No decision is expected on the pipeline this year, although Obama did announce last month that he intends to approve the southern piece of the pipeline soon. On Wednesday, Nebraska lawmakers passed a bill to re-launch a review of the pipeline route.

But Ottawa isn't waiting around for the United States to make a decision. The Canadia government is proceeding to build its "Northern Gateway" pipeline that would end in British Columbia, where the oil could be shipped directly to East Asia.

"It was certainly driven home to the energy sector in Canada that being captive to a special interest can have huge consequences on the future prosperity of our country. That's certainly known and accepted in a way that it wasn't last fall," Baird said.

Canada also knows how to deal with environmental groups, said Baird. The Canadian government has eliminated environmental impact studies for 90 percent of projects and has sped up the approval process, he said.

According to Baird, the United States is losing jobs due to the delay of the pipeline approval in Washington. But in a way, Canada stands to benefit from the impasse.

"Oil sands oil currently sells at a discount because we are a captive market, and if we could diversify that market, that discount could end," said Baird.

"If you look at all the oil around the world, there's precious little of it that is found in stable economies and stable democracies, and we want to share that resource with our closest partner," he said. "We're going to work hard to see the project approved, hopefully early next year."

Baird came to Washington for the G-8 foreign minister's meeting, which focused on the crises in Iran, North Korea, and Syria. Canada supports humanitarian and medical aid to the Syrian people but not arms for the Syrian opposition, Baird said. He also said there's no talk right now within NATO about establishing buffer zones inside Syria using NATO assets.

After Syrian troops fired over the Turkish border this week, Turkish Prime Minister Recep Tayyip Erdogan suggested that Turkey might invoke NATO Article 5, which provides for common defense of any threatened NATO country. Baird said the red line was if Syrian troops actually enter Turkey.

"There will be strong international support for Turkey if Syrian forces cross the border," he said.  "Canada is a member of NATO, and if Syria wants to conduct military operations in a NATO country, they will get a strong reaction."

He didn't clarify what that strong reaction might entail.

Baird also shared news of a bet he made Thursday with Secretary of State Hillary Clinton over the NHL playoff series between the Ottawa Senators and the New York Rangers. If the Senators win, Clinton must wear their jersey. If the Rangers win, Baird will sport a Rangers sweater.

"After the Ottawa Senators win, she'll look great in red," he said, noting that in Canada, unlike in the United States, red is the liberal color.

Senate Majority Leader Harry Reid (D-NV) is trying to pass a new Iran sanctions bill through the Senate without any amendments or debate in a legislative move many see as designed to prevent both Republicans and Democrats from adding even more sanctions to the legislation.

Reid announced on the Senate floor Tuesday morning that he wanted to bring up the Johnson-Shelby Iran Sanctions, Accountability and Human Rights Act of 2012, a new set of sanctions that would punish anyone who provides Iran with equipment or technology that facilitates censorship or the suppression of human rights, including weapons, rubber bullets, tear gas, and other riot control equipment -- as well as jamming, monitoring, and surveillance equipment. It also calls on the Obama administration to develop a more robust Internet freedom strategy for Iran and speed related assistance to pro-democracy activists in the country.

The legislation, named for Senate Banking Committee heads Tim Johnson (D-SD) and Richard Shelby (R-AL), would formally establish that U.S. policy is intended to prevent Iran from obtaining a nuclear weapon, and would require the administration to report extensively and repeatedly on its efforts to increase diplomatic and financial pressure on the Iranian regime.

But here's the rub: Reid wants to bring up the bill for passage by unanimous consent, meaning there would be no debate and no amendments offered. The bill could be passed by a simple voice vote if nobody objects, but Reid said the Republicans won't let it happen.

"I'm going to ask consent soon to moving forward on this unanimously reported bill out the Banking Committee. Unfortunately, I have been told that my Republican colleagues will object to moving forward with these new sanctions because they want to offer additional amendments," Reid said on the Senate floor Tuesday morning.

"I have Democrats who want to offer additional amendments also, but we don't have the time to slow down passage of this legislation," he added. "When we put this away, we're not going to be finished with Iran. ... But in an effort to get sanctions in place now, Democrats have agreed to streamline the process and refrain from offering their amendments. We can't afford to slow down the process."

Senate aides from both parties told The Cable that Reid's office is working behind the scenes to prevent more amendments that would strengthen the sanctions in ways the administration and Reid are resisting. The Cable has obtained the text and a detailed summary of one lengthy amendment that would add several new punitive measures to the bill.

The amendment isn't signed but it appears to come from the office of Sen. Mark Kirk (R-IL) because it contains expanded sanctions against all Iranian banks that matches legislation Kirk had already been working on. An aide to Kirk declined to comment on the amendment.

The summary of the proposed amendment includes a direct rebuttal to Reid's argument that the Johnson-Shelby bill should be passed quickly and that there will be plenty of other chances to sanction Iran after that.

"As Iran continues inching closer to ‘red lines' surrounding its illicit nuclear weapons program, S. 2101 will likely serve as the last legislative vehicle to impose further economic sanctions against the Islamic Republic until December," the summary reads. "Therefore, as long as opportunities exist to incorporate new ideas and creative sanctions into the legislation, we should seize upon those opportunities in overwhelming bipartisan fashion. In this way, we keep our promise to the American people and support the President's stated objective to exhaust every available diplomatic option."

The proposed amendment would expand sanctions on the Central Bank of Iran to include all Iranian banks and would threaten sanctions on any international firms that facilitate those banks' transactions, including the EU-based international transactions facilitator SWIFT and Clearstream, a firm that works with SWIFT to process worldwide money exchanges. Swift has already taken some actions to cut off Iran's Central Bank.

The amendment would also target the Iranian insurance industry, expand sanctions against the Iranian energy sector, target Iran's high-tech and telecommunications sectors, and try to narrow the conditions under which the administration can exempt third countries who are still buying oil from Iran from existing sanctions. The State Department exempted 11 countries from Iran sanctions last week and has yet to make a determination on 12 others.

There are plenty of other potential amendments out there as well. For example, a bill ruling out containment of a nuclear Iran led by Sens. Lindsey Graham (R-SC), Joe Lieberman (I-CT), and Bob Casey (D-PA), could also become an amendment.

By calling for unanimous consent on the Johnson-Shelby bill today, Reid is trying to portray the GOP as objecting to quick passage of Iran sanctions. It's likely that after he files for unanimous consent today and Senate Minority Leader Mitch McConnell (R-KY) objects, the two will retreat behind closed doors and negotiate a compromise way forward. A similar dynamic played out over the last round of sanctions when Kirk and Sen. Robert Menendez (D-NJ) wanted to sanction the Iranian Central Bank over the administration's objections.

"Sooner or later -- and most likely it will be sooner -- both sides are going to sit down together and figure out a way forward that everyone can live with -- reflecting the overwhelming bipartisan consensus that exists in support of additional Iran sanctions," one senior Senate aide told The Cable.

"Hopefully calm will prevail on all sides after today and the Majority Leader will authorize Chairman Johnson to negotiate with key Democrats and Republicans on the contents of a manager's amendment that includes everyone's best ideas," another senior Senate aide said. "In the end, the president says the window of diplomacy is shrinking and we owe it to the American people to consider every available non-military option."

UPDATE: In a short interview, Sen. Joe Lieberman (I-CT) said he does want to offer an amendment to the Johnson-Shelby bill and does not want to see it go through the senate via unanimous consent.

"Senator Graham and I are the lead sponsors of a bipartisan resolution that says containment is not an acceptable policy against Iran. With regard to the bill coming out of the banking committee, we're having a discussion with Sen. Reid about when to take it up and how many amendments to allow," Lieberman said.

"We are a little bit concerned. I'd really prefer to have a bipartisan agreement with a limited number of amendments on both sides. I think that's Sen. McConnell's position. So I'm going to talk to Sen. Reid and try to work that out."

Senate Minority Whip Jon Kyl (R-AZ) said this afternoon that Republicans will continue to object to moving forward on the bill until Kirk's amendment gets a hearing.

"I just wanted to say that Senator Kirk is doing a lot of homework but he's not here, would like to add an amendment -- a change to the proposal and therefore, would hope that we could work out something with the leader so that we could accommodate Senator Kirk's desire in that regard," Kyl said.

Late Tuesday afternoon, Sen. Rand Paul (R-KY) filed the formal objection to unanimous consent on the Johnson-Shelby bill, due to his desire to be able to offer an amendment of his own.

On Thursday, the Senate Banking Committee will officially start work on a new sanctions bill against Iran, and senators are set to add even more sanctions to the bill as it goes through the legislative process -- including measures that directly target President Mahmoud Ahmadinejad and Supreme Leader Ayatollah Ali Khamenei.

The Banking Committee will mark up the Johnson-Shelby Iran Sanctions, Accountability and Human Rights Act of 2012, named after committee heads Sens. Tim Johnson (D-SD) and Richard Shelby (R-AL), who will lead Thursday's proceedings. The bill will pile on more punitive measures against Iran's energy, shipping, and mining sectors, while punishing a broader range of Iranian government officials for their involvement in human rights violations.

President Barack Obama's administration is still working to implement the last round of Iran sanctions that was signed into law, which included the Menendez-Kirk sanctions on the Central Bank of Iran that were added to the defense authorization bill in December by a 100-0 vote. But the Senate has no intention of giving the administration a breather, and Thursday's mark-up is the beginning of a new and aggressive push to tighten the noose on Tehran and further damage the Iranian economy.

"Iran's continuing defiance of its international legal obligations and refusal to come clean on its nuclear program underscore the need to further isolate Iran and its leaders," Johnson said in statement about the bill.

The bill would sanction anyone who provides Iran with equipment or technology that facilitates censorship or the suppression of human rights, including weapons, rubber bullets, tear gas, and other riot control equipment -- as well as jamming, monitoring, and surveillance equipment. It also calls on the administration to develop a more robust Internet freedom strategy for Iran and speed related assistance to pro-democracy activists in the country.

The legislation would also formally establish that U.S. policy is intended to prevent Iran from obtaining a nuclear weapon, and would require the administration to report extensively and repeatedly on its efforts to increase diplomatic and financial pressure on the Iranian regime.

Johnson and Shelby's bill expands sanctions to cover companies involved in joint ventures with Iran that aid the country's energy sector, targets any Iranian joint ventures involving uranium mining, authorizes the administration to target corporate executives of sanctioned firms, and requires U.S. companies to report to the SEC business they have with any Iranian firms that could fall under sanctions.

The Banking Committee bill is a scaled-down version of the Iran, Syria, North Korea Sanctions Consolidation Act, sponsored by Sens. Robert Menendez (D-NJ), Jon Kyl (R-AZ), Joe Lieberman (I-CT), Mark Kirk (R-IL), Kirsten Gillibrand (D-NY), Bob Casey (D-PA), and Scott Brown (R-MA). The Syria and North Korea provisions in that bill were left out of the Banking Committee's version so there wouldn't be any jurisdictional confusion between the Banking Committee and the Foreign Relations Committee.

Several senators are set to offer amendments on Thursday to strengthen the Johnson-Shelby bill even further. Although negotiations are still ongoing, a list of the amendments in the queue as of Wednesday afternoon was obtained by The Cable.

Among the amendments that could be considered in committee on Thursday is an amendment by Menendez, offered on behalf of himself and Kirk (who is in Chicago recovering from a stroke) that would impose immigration restrictions on Ahmadinejad, Khamenei, and a host of other senior Iranian government officials. The amendment would also trigger visa restrictions on Ahmadinejad and Khamenei, although those restrictions could be waived for U.N. meetings in New York.

A separate amendment by Menendez and Sen. Roger Wicker (R-MS), also offered on behalf of Kirk, would sanction banks with officers on the board of the Society for Worldwide Interbank Financial Telecommunications (SWIFT), the organization that handles the bulk of international electronic bank transfers, if SWIFT doesn't stop processing transactions for Iranian banks.

Another Menendez amendment would require the Treasury Department to determine whether the Iranian National Oil Company and the Iranian National Tanker Company are tied to the Islamic Revolutionary Guard Corps. If they are, those two companies would then be sanctioned as well, which could wreak further havoc on Iran's economy.

"This is a reminder that there are still more stones left unturned and there are still more ways to increase the pressure on an already extraordinarily pressured Iranian economy," a senior Senate aide told The Cable. "In bipartisan fashion, the Senate is moving to do just that."

President Barack Obama's administration is working on the details of how it will implement crippling new sanctions against Iran, and the two senators who wrote the legislation warned the White House today not to water down the measures.

"We understand that the administration is drafting rules to guide the implementation of the law and we hereby seek to convey the legislative intent underlying certain terms and phrases in the amendment and to ensure that the positive developments that have occurred as a result of the amendment are buttressed  by the administrative rules," wrote Sens. Robert Menendez (D-NJ) and Mark Kirk (R-IL) in a letter today to Treasury Secretary Timothy Geithner, who traveled personally to Japan and China this month to discuss the issue.

The State Department has sent teams to several countries urging them to comply with the new measures imposed by the Menendez-Kirk amendment, but the administration's recent enthusiasm for the sanctions is at odds with their attempts to water down the sanctions language while it was going through Congress. The law would punish any country or bank that does business with the Central Bank of Iran (CBI), or with Iran's state-controlled oil sector.

That's why Kirk and Menendez, along with their allies, are now worried that the Obama administration will try to implement the rules in such a way that will allow some countries that refuse to stop doing business with Iran to wiggle off the hook, by delaying implementation for months or claiming that other countries' adherence is more robust than it really is.

Obama, for his part, has hailed his administration's success in establishing a broad-based coalition aimed at isolating Iran.

"When I came into office, what we had was a situation in which the world was divided, Iran was unified, it was on the move in the region. And because of effective diplomacy, unprecedented pressure with respect to sanctions, our ability to get countries like Russia and China -- that had previously balked at any serious pressure on Iran -- to work with us, Iran now faces a unified world community, Iran is isolated, its standing in the region is diminished. It is feeling enormous economic pressure," the president told Time in an interview released today.

The Menendez-Kirk letter list several concerns about the forthcoming rules, which could be unveiled as early as next week. Their two main worries are that the administration will allow countries to avoid being penalized by saying they have achieved "significant reductions" in their dealing with Iran, and that Obama will postpone implementation of the sanctions on national security grounds.

The implementation rules will define exactly what the term "significant reductions" means. Menendez and Kirk want the administration to use the same definition as was used for the last round of Iran sanctions, as dictated by the Comprehensive Iran Sanction, Accountability, and Divestment Act of 2010 (CISADA), to avoid any confusion.

"To ascribe more variable terminology to the definition of ‘significantly reduced' would diminish the ability of countries to understand and comply with the amendment," the senators wrote. "An unevenly applied interpretation would also call into question the seriousness of the sanctions policy and send mixed signals to both Iran and our allies."

The senators' other main concern is that Obama will avail himself of the "national security waiver" found in the law to postpone implementing the new sanctions altogether for another 120 days. If he doesn't invoke this waiver, sanctions against countries that do business with the CBI could take hold Feb. 29. If Obama uses the waiver, he won't have to sanction any countries until late June, which tracks with the timeline the law specifies for the imposition of the oil-related sanctions.

The senators also don't think Obama should be able to waive all the sanctions with one stroke of the pen. They want him to have to waive sanctions for each country on a case-by-case basis. That's one of the things the forthcoming rules will address.

"We would welcome an opportunity to discuss these points with you prior to the publication of the final rule for the Menendez-Kirk amendment," the senators wrote -- a nice way to complain to the administration that they are not being properly consulted.

A senior Senate aide who works on the issue was more direct with The Cable.

"There's been little to no consultation or communication on this rule," the aide said. "There is growing concern that the administration may be moving toward a broad and non-specific definition for ‘significant reduction,' and the intention of the authors is that every bank that is in violation of the law would need its own national security waiver in order for the president to exempt them."

The actual rule writing is done at Treasury's Office of Foreign Assets Control (OFAC), run by Adam Szubin.

"The administration is hard at work drafting the regulations implementing the legislation.  We are already using this law, in concert with our other efforts, to reduce Iran's access to oil revenue, both by working with our partners to significantly reduce their imports of Iranian crude and by impeding the CBI's ability to receive payment for whatever oil Iran is able to sell," a Treasury Department spokesman told The Cable. "We will continue our intensive engagement to ensure that the maximum amount of pressure is exerted by the international community against Iran's illicit nuclear program."

House Armed Services ranking Democrat Adam Smith (D-WA) told The Cable today that claims he is trying to "water down" Iran sanctions legislation inside secret conference negotiations is "utter and complete bullshit."

Smith reached out to The Cable today to refute claims made by a senior GOP aide in our story yesterday that he and Senate Armed Services Committee Chairman Carl Levin (D-MI) were pushing for changes to the Kirk-Menendez Iran sanctions amendment that would weaken its penalties on the Central Bank of Iran (CBI) and any foreign banks that do business with it. The administration has been pushing for changes to the amendment that would weaken the sanctions, and give the administration more flexibility in implementing them.

The Kirk-Menendez amendment was added to the fiscal 2012 defense authorization bill last week by a 100-0 vote in the Senate. House and Senate conferees are meeting behind closed doors this week to hash out a compromise version of the bill, which includes negotiations on the Kirk-Menendez language. Whatever emerges from the secret conference will be voted on by both chambers next week and sent to President Barack Obama for his signature.

A senior GOP aide told The Cable on Thursday that Smith and Levin were advocating inside the secret conference for the changes the administration wants. Smith said flatly today he may be seeking changes in the amendment, but is not trying to "weaken" the sanctions.

"It is not accurate to say we are trying to water it down," Smith said, declining to get into specifics about what changes he is seeking.

"Different people have different views on what is stronger than something than something else, but this notion that Menendez and Kirk got it absolutely 100 percent perfectly right, and that there's no point discussing anything else that can be done to it, doesn't make any sense to me," Smith said.

"It's not a matter of weaker or stronger, it's a matter of making sure we get the language right, in order to put us in a position to put the maximum amount of pressure on Iran. That's what we're trying to do."

The secret nature of the negotiations has contributed to the confusion of what's going on with the Iran sanctions language. Adding to the problem is that, once the conferees reach a final decision, it will be virtually impossible to go back and alter the language because that would open up the entire defense bill again and there's no time to do that if Congress wants to pass the bill this year.

Sen. Mark Kirk (R-IL) and Robert Menendez (D-NJ), who are both upset at the administration over its handling of the sanctions negotiations, could have kept total control over the amendment by not adding it to the defense bill in the first place, which is managed by the Armed Services Committee and therefore somewhat out of their control. But they needed to attach the amendment to a piece of "must pass" legislation in order to see their ideas sent to Obama quickly and without a real possibility of a veto.

Smith was careful in our interview to explain that while the secret process is managed by him, Levin, House Armed Services chairman Buck McKeon (R-CA), and Senate Armed Services ranking Republican John McCain (R-AZ), the negotiations would take the views of other lawmakers into consideration as well.

"We're certainly not going to just leave it up to the four of us to figure out how to work this," Smith said. "But we are trying to make sure it gets in the bill, gets signed, and gets into force as soon as we can do it."

House Foreign Affairs ranking Democrat Howard Berman (D-CA), who announced yesterday that he would definitely not be the one carrying the administration's water on the issue, is one of the other key voices within the conference.

"I will not, and Congress should not, give into entreaties from the administration or elsewhere ... to dilute our approach to sanctions on the Central Bank of Iran's petroleum transactions," Berman said to applause at a conference on Thursday sponsored by the Foundation for the Defense of Democracies, a conservative policy and research organization. "The Kirk-Menendez amendment is a good amendment."

Menendez also spokes at the FDD conference and doubled down on his push for the stronger measures.

"In the case of Iran I've argued that we have no choice but to impose the most robust sanctions possible because we will NEVER permit Iran to have a nuclear weapon and the timeline for acting is now - NOT when we are facing no other choice than military action," Menendez said.

"Last week, the U.S. Senate unanimously voted to support this option... The time to act is now." 

Levin's office declined to comment on the secret negotiations.

Thirty-seven Republican senators have co-sponsored a new bill aimed at forcing the Obama administration to move forward with the Keystone XL U.S.-Canada oil pipeline project.

"Jobs will be created right away and billions of dollars in investment will be unleashed through legislation introduced to permit the $7 billion Keystone XL pipeline, the largest infrastructure project ready in the United States, to commence construction," said Sen. Dick Lugar (R-IN), the lead sponsor of the "North American Energy Security Act," introduced Wednesday, in a release. "This is no time for delay."

Lugar is leading the drive to move the project forward along with Sens. John Hoeven (R-ND) and David Vitter (R-LA).

The White House announced a delay in moving forward with the project on Nov. 10, saying that it needed time to explore alternative routes for the pipeline, which would bring crude oil from Canadian oil sands deposits to refineries in the southern United States. The delay announcement came right in the middle of the State Department's own review of the project. In a statement, State said it was particularly sensitive to concerns about running the pipeline through the environmentally sensitive Sand Hills region of Nebraska.

The main builder of the pipeline, TransCanada Keystone Pipeline, LP, applied for a permit to build the pipeline in 2008. The State Department is in charge of doing the Environmental Impact Study on the project, but has been criticized for outsourcing that work to a company called Cardno Entrix, which has deep financial ties to TransCanada.

Despite that, the pipeline's environmental impact review is ongoing, and the 37 GOP senators want the permit issued within the next 60 days. They are accusing the White House of delaying the project for political reasons.

"President Obama has the opportunity of creating 20,000 new jobs NOW. Incredibly, he has delayed a decision until after the 2012 election apparently in fear of offending a part of his political base and even risking the ire of construction unions who support the pipeline," Lugar said.

Specifically, the bill would require the Secretary of State to issue the permit within 60 days unless the president determines it is not in the national interest. The legislation would also require the permit to contain provisions for environmental protection and would specify that the state of Nebraska would have the right to make sure the pipeline route does not impact the Sands Hills area.

Lugar is promising to press for quick consideration of the bill in the Senate Foreign Relations Committee.

The other sponsors are: Lisa Murkowski (R-AK), Mitch McConnell (R-KY), Mike Johanns (R-NE), Johnny Isakson (R-GA), John Cornyn (R-TX), Roger Wicker (R-MS), Pat Roberts (R-KS), John Barrasso (R-WY), Dan Coats (R-IN), Marco Rubio (R-FL), Jim Inhofe (R-OK), Jerry Moran (R-KS), John Thune (R-SD), Ron Johnson (R-WI), Mike Crapo (R-ID), Lindsey Graham (R-SC), Roy Blunt (R-MO), Jeff Sessions (R-AL), Mike Enzi (R-WY), Lamar Alexander (R-TN), Kay Bailey Hutchison (R-TX), Jim Risch (R-ID), Saxby Chambliss (R-GA), Mark Kirk (R-IL), Rob Portman (R-OH), Richard Burr (R-NC), Richard Shelby (R-AL), John Boozman (R-AR), Tom Coburn (R-OK), Mike Lee (R-UT), Thad Cochran (R-MS), Chuck Grassley (R-IA), Dean Heller (R-NV), and Bob Corker (R-TN).

One day after the Senate unveiled its wide ranging new Iran sanctions legislation and on the same day 10,000 AIPAC supporters are on the Hill, the Obama administration announced it would enforce penalties on seven companies doing business with Iran.

Outgoing Deputy Secretary of State Jim Steinberg briefed the press on Tuesday on the administration's move to sanction seven companies under the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA), passed and signed into law last July. For those keeping count, that's a total of nine sanctioned firms since the law has been in place. The companies are: Petrochemical Commercial Company International (PCCI), UK and Iran; Royal Oyster Group, UAE; Speedy Ship, UAE, Iran; Tanker Pacific, Singapore; Ofer Brothers Group, Israel; Associated Shipbroking, Monaco; and Petroleos de Venezuela, sometimes known as PDVSA, in Venezuela.

All of the companies have been involved in the supply of refined petroleum products to Iran, Steinberg said.

"In its struggle to secure the resources it needs for its energy sector, Iran repeatedly has resorted to deceptive practices to evade sanctions... Today's actions add further pressure on Iran to comply with its international obligations," he said. "By imposing these sanctions, we're sending a clear message to companies around the world: Those who continue to irresponsibly support Iran's energy sector or help facilitate Iran's efforts to evade U.S. sanctions will face significant consequences."

Not all the companies were sanctioned in all the same way. For example, PDVSA will no longer have access to U.S. government contracts and U.S. Export-Import Bank financing and technology licenses, but the company can still sell oil to the United States and their subsidiaries are exempt from the sanctions.

Many in Congress are increasingly unhappy with the Obama administration for failing to enforce penalties on companies from countries who are not part of the sanctions team that do business with Iran. CISADA directs the administration to punish all these companies. Last October, the Government Accountability Office (GAO) released a report that identified 16 companies as having sold petroleum products to Iran between Jan. 1, 2009, and June 30, 2010. Of those 16, the GAO reported that five have shown no signs of curtailing business with Iran. Three of those companies are based in China.

But no Chinese companies have been sanctioned by the Obama administration to date for aiding Iran's energy sector.

"I worry that the Obama administration has given Chinese banks and companies a get out of jail free card when it comes to sanctions law and they should not," Sen. Mark Kirk (R-IL) said Monday at the AIPAC conference.

Steinberg also noted that the administration has separately decided to impose sactions on 16 more foreign firms and individuals for their misbehavior on missile programs or WMD under the Iran, North Korea, and Syria Nonproliferation Act (INKSNA), three of which are from China.

Initial reaction to the administration's Tuesday announcement was mixed, with some praise and some skepticism that the new sanctions won't go far enough to transform the intent of the legislation into results.

"This sanction is a good first step and shows the importance of deeds, not only words. This step should send ripples of fear throughout the energy sector that Iran sanctions will be enforced," said Mark Dubowitz, executive director and head of the Iran Energy Program at the Foundation for the Defense of Democracies.

But multiple Senate aides told The Cable that they would continue to press the administration to enforce energy industry sanctions against third-party countries such as China and Russia.

"The question is, how does this appear to the international community? Do they look at these sanctions and say that the Americans aren't serious about stopping what's going on in the market? Sadly, I think the answer is yes," said one senior GOP Senate aide.

"It's always good when they sanction somebody, but the devil is in the details."

For the third time in two years, hundreds of Chinese officials are meeting with hundreds of their U.S. counterparts to discuss dozens of bilateral topics in dozens of meetings. After the first day of the two-day event, there aren't any new bilateral agreements to announce, and officials say there aren't any expected soon.

"Now more than ever, with two years of dialogues behind us, success depends on our ability to translate good words into concrete actions on the issues that matter most to our people. So as we begin this third round, we will keep that goal in clear focus," Secretary of State Hillary Clinton said in her Monday morning remarks at the opening of the U.S.-China Strategic and Economic Dialogue, which is being held at various locations in downtown Washington.

She praised the new high level participation of senior officials from China's People's Liberation Army and rattled off a long list of issues that would be discussed, including: military-to-military relations, the situation in the Middle East, the need to rebalance the global economy, Iran sanctions, the North Korean nuclear crisis, and human rights.

Vice President Joseph Biden delivered the strongest message on Chinese human rights practices in his Monday morning remarks, when he said, "We have vigorous disagreement in the area of human rights."

"We've noted our concerns about the recent crackdown in China, including attacks, arrests and the disappearance of journalists, lawyers, bloggers and artists," Biden said. "I recognize that some in China see our advocacy [on] human rights as an intrusion and Lord only knows what else.  But President Obama and I believe strongly, as does the secretary, that protecting fundamental rights and freedoms such as those enshrined in China's international commitments, as well as in China's own constitution, is the best way to promote long-term stability and prosperity of any society."

Jeffrey Bader, the recently departed senior director for Asia at the National Security Council, wrote in a Brookings Institution policy brief that the dialogue "was not conceived as a mechanism to deal with bilateral crises or to produce specific ‘deliverables,' but to develop a richer, more intensive dialogue between senior officials on the two sides than would be possible in the usual quick in-and-out visits, and to break down bureaucratic stovepipes among agencies, particularly on the Chinese side, not accustomed to coordinating effectively with each other."

On Sunday, Clinton awarded Bader the Secretary's Distinguished Service Award, standing alongside Chinese State Councilor Dai Bingguo.

Critics of the Obama administration's China policy see the event as yet another example of the administration placing style over substance, and raising expectations of progress in the U.S.-China relationship without delivering results.

"By far the most important economic issue for America and China is the related imbalances in our economies," wrote the Heritage Foundation's Derek Scissors. "The U.S. recognized this several years ago and has repeatedly raised the matter. Result: Both economies are now more imbalanced than when the dialogue began. The main reason is simple: Neither country wants to bear the pain of rebalancing. Instead, they take to telling the other side why it should rebalance."

A senior administration official, speaking to reporters after the conclusion of the first day's meetings, said that the primary discussion of tough economic issues will be held on Tuesday.

"Tomorrow the focus is on how the U.S. and China can rebalance our economies so we can strengthen our recoveries. Monetary and exchange rate policies are certainly be a focus of those discussions," the official said. But he warned not expect any major announcements. "[The Chinese currency] is not moving enough and no one's satisfied, but it's appreciated more than 5 percent against the dollar [over the last year]," he noted.

Undersecretary of State for Economic, Energy, and Agricultural Affairs Robert Hormats took the Chinese to task for their policy of giving regulatory, financial, and legislative support to state-owned enterprises.

"The biggest challenge in addressing these issues effectively is forging a common understanding that state-controlled competition is not competition, and that competitiveness cannot be bestowed by decree. The trade distortions created by the ‘China Model' are disadvantageous to our U.S. companies trying to compete for opportunities around the world, and a direct threat to U.S. jobs and competitiveness," Hormats said.

And Deputy Secretary of State James Steinberg told an audience at the Center for Strategic and International Studies on Monday afternoon that climate change, specifically short-term climate change forces, was a major topic of discussion between Energy Secretary Stephen Chu and his Chinese counterparts.

As for the military component of the talks, Assistant Secretary of State Kurt Campbell told reporters last week that the United States intends to engage "not just traditional players in the Foreign Ministry but also other players in the Chinese government, including the military."

Dan Blumenthal, a former China desk officer at the Pentagon and now a senior fellow at the American Enterprise Institute, said that while increased military dialogue and the building of relationships is good, the administration must not depend on such dialogue to halt the growing tension in the bilateral security relationship.

"The Chinese are moving very cautiously, the political leadership in China is very adverse to making any bold decisions, and the PLA has very little interest in talking to us about anything of substance," he said. "The summits matter less than what we are doing on the ground in response to what China is doing."

The State Department has found a way to save energy, save money, and rehabilitate federal prisoners all in one fell swoop. Soon, a portion of the energy that keeps the lights on in Foggy Bottom will come from solar panels built by prison inmates in New Jersey

"Yesterday, the Department of State had a signing ceremony that basically contracted the State Department with Baltimore's Constellation Energy, to enter into an agreement to procure renewable electricity from Constellation Energy through the Federal Prison Industry's contracting expertise," said Marguerite Coffey, director of the State Department's Office of Management Policy, Rightsizing and Innovation. "It was a very, very well attended event."

Coffey, who is also executive secretary of the department's "Greening Council," said the goal was to advance President Barack Obama's pledge to reduce federal greenhouse gas emissions 28 percent by 2020.

Bloomberg Government (subscription required) broke the news of the deal on Thursday afternoon. (Full disclosure: the journalist has a personal relationship with The Cable reporter.)

The project will speed development of a 17.5-megawatt wind farm in Pennsylvania and a 5-megawatt solar project in New Jersey. There will be 10 State Department facilities partially powered by the new renewable sources, including the State Department's headquarters on C Street. The total energy purchased will make up 65 to 70 percent of the energy needs of those 10 facilities.

The State Department has signed a 20-year contract with Constellation Energy, and the renewable sources will comprise about 45 percent of the energy being purchased. State is partnering with Federal Prison Industries, a corporation wholly owned by the federal government, on the contract. The contract is between State and Constellation but FPI managed the competition. 

No new funds need to be appropriated for the project. The deal is an "energy savings performance contract," so the company figures out how much the government will save, and State pays them that amount each year until the costs of developing the project are paid off.

"This innovative agreement serves as a model for federal agency energy management with a cost-effective, public-private effort that will create jobs through the development of clean energy resources," said Mayo Shattuck, chairman, president and CEO of Constellation Energy, in a press release about the deal. "We especially appreciate this opportunity to work with the State Department on an energy contract that supports President Obama's clean energy goals for the nation."

Will Congress follow State's cost-cutting, energy-saving example and start buying renewable power created through prison labor?

The State Department has been stepping up both its rhetorical and punitive actions against Iran, but the question still remains whether the administration will go as far as to sanction companies based in countries where relations are delicate, especially China.

Last week, the United States announced two steps to increase pressure on Iran: President Obama signed an executive order on Sept. 29 targeting eight Iranian individuals for serious human rights abuses, and the State Department announced on Sept. 30 that it was imposing sanctions on the Switzerland-based Naftiran Intertrade Company (NICO) due to its involvement in the Iranian petroleum sector. These actions are based on the Iran sanctions legislation passed overwhelmingly by Congress and signed into law by President Obama last June.

On Monday, the Government Accountability Office (GAO) released a new report that identified 16 companies as having sold petroleum products to Iran between Jan. 1, 2009, and June 30, 2010. Of those 16, the GAO reported that five have shown no signs of curtailing business with Iran. Three of those companies are based in China, one in Singapore, and one in the UAE.

There are some positive signs, however, that international pressure is having an effect on companies' willingness to do business in Iran. Several firms -- hailing from Switzerland, the Netherlands, France, India, and the United Kingdom -- told the GAO that they are halting their refined petroleum business with Iran.

But leading senators aren't convinced that the holdouts are planning to follow suit. They are pressing the Obama administration to use the new sanctions law to punish those who won't go along -- especially if they are from China.

"The GAO report released today provides encouraging evidence that the comprehensive sanctions legislation passed by Congress earlier this year is indeed persuading many companies to stop selling gasoline and other refined petroleum products to Iran. We applaud those firms that have taken this responsible and important step," said Sens. Joseph Lieberman (I-CT), Susan Collins (R-ME), and Jon Kyl (R-AZ) joint statement. Lieberman and Collins had requested the GAO report in July.

However, the success of sanctions legislation has only made it "even more imperative" that the Obama administration pressure countries that have maintained their ties in Iran, the senators stated. "We are particularly concerned that the majority of the companies that GAO identifies as still selling gasoline to Iran are in China. We urge the Administration to complete its own investigations swiftly and enforce the sanctions law, comprehensively and aggressively, against any violators," the statement read.

Deputy Secretary of State Jim Steinberg told reporters last week that the State Department was looking at additional firms' business in Iran and would consider more direct sanctions through a two-step process that takes up to 180 days. But he added that the administration was first trying to negotiate with foreign governments to stop the companies' activities in advance of imposing penalties.

"We are following the process outlined in the statute," said Steinberg. "If we find credible evidence [of firms violating the sanctions], then we go to the next stage, which is to conduct an investigation ... and then we would make a decision," Steinberg said.

One of the main concerns on Capitol Hill is that, as countries pull out from Iran, other countries will take over contracts, thereby nullifying the effect of the sanctions and enriching themselves at other countries' expense -- a practice known as "backfilling."

The administration and Congress worked hard to convince Japan and South Korea to impose unilateral measures against Iran, which they did, but there's particular concern that China will simply come in and take over those contracts.

Kyl and Sen. Chuck Schumer (D-NY) sent a letter to Secretary of State Hillary Clinton last week on this very issue, pointing out reports that China National Petroleum Company (CNPC) replaced the Japanese firm Inpex and agreed to invest around $2 billion to develop Iran's South Azadegan oil fields last year.

"The Administration, by continuing to ignore blatant violations of our sanctions laws by Chinese companies, has undermined our sanctions regime on Iran.  It has sent the message to our friends and allies -- many of which have taken the difficult steps to reduce their economic ties with Iran -- that others will be let off the hook," Kyl said Sept. 30.

"If President Obama genuinely believes that a nuclear-armed Iran is not acceptable, he must stand by those words and apply the authority Congress has given him to punish all who are violating U.S. sanctions laws, particularly China," said Kyl. "Time is of the essence." 

Steinberg addressed the issue of backfilling in his briefing, saying that such activity would provoke actions under the sanctions legislation. "We've made clear to all our international partners that we are strongly discouraging substitution. And of course, were there to be substitution that came within the ambit of the act, it would raise questions under the act," he said.

Bob Einhorn¸ State's senior advisor on Iran and North Korea sanctions, is the man responsible for delivering that message and he traveled to Beijing last week to press the Chinese not to undermine the sanctions. It's not clear yet if he was successful. 

In a July 29 hearing, Einhorn referenced a previous GAO report that identified 41 foreign firms with a petroleum interest in Iran. "There are a number of entities that are very problematic. I have to say that a number of them have been engaged in sanctionable activity," he said in testimony to the House Oversight and Government Reform committee.

Complicating matters are the persistent rumors that China may have secured some type of immunity from additional sanctions as part of their agreement to support U.N. Security Council Resolution 1929, which established relatively benign sanctions against Iran as punishment for its continued pursuit of nuclear weapons capability.

Undersecretary of State William Burns said at an Oct. 1 hearing of the Senate Foreign Relations Committee that the State Department had competed an internal review of the companies noted in the GAO report and would make more determinations soon, but he cautioned not to expect too many companies to be singled out for punishment.

"There are probably -- there are a number of cases, less than 10, in which it appears that there may have been violations of the Iran Sanctions Act. Most of those appear to involve activities that have stopped, in other words, involving companies that have pulled out of business in Iran, but there are a couple that appear to be ongoing," he said.

Capitol Hill observers have been encouraged by the administration's recent moves -- but are still not convinced they constitute enough of a commitment to increasing pressure on Iran. Staffers say that the administration's new forceful tone and rhetoric are a marked improvement, even if they are only fulfilling the actions required by the sanctions legislation.

What's clear is that the administration is not yet finished implementing sanctions against firms doing business with Iran, and Congress will be pressing it not to back down from punishing companies from countries that may take retaliatory measures.

"Many in Congress are worried that the administration will fall for Iran's latest bid to buy a reprieve from sanctions by appearing interested in negotiations," said one senior GOP senate aide. "Congress will not let up on the pressure on the administration to go after Iran and those who are supporting it, namely, the Chinese."

If the Kyrgyz opposition is able to maintain control after toppling the government, the Pentagon and State Department may have to renegotiate the U.S.-Kyrgyz agreement on a crucial U.S. air base there, experts warn.

It's only been a few months since the now-deposed Kyrgyz president, Kurmanbak Bakiyev, signed a new deal upping the rent on the Air Force Transit Center at Manas, which the U.S. depends on for critical supplies en route to Afghanistan.

Last February, there was a vote in the Kyrgyz parliament to end the arrangement, egged on by a Russia wary of the growing U.S. military presence in its near abroad. The man who led the opposition to the base in the legislature was former parliamentary speaker and opposition leader Omurbek Tekebaev, who now seems to be in control of the country, after being arrested and then released on Wednesday.

"We have to probably renegotiate the Manas basing agreement, because it was the opposition that pressured Bakiyev into renegotiating in the first place," said Alexandros Petersen, senior fellow with the Eurasia Center at the Atlantic Council. "The leading opposition figures are not anti-American or more pro-Russian than anyone else in Kyrgyzstan, but because they led the drive to raise the rents they might have to reopen negotiations for political reasons."

And where there is a negotiation in Central Asia, there is a U.S.-Russia angle to worry about as well.

"This could be a relatively friendly negotiation, but the Russians could very well take the opportunity to meddle again," Petersen said.

Although Russia would have an interest in getting back at Bakiyev for finally striking a deal with the U.S., Prime Minister Vladimir Putin has condemned the violence and denied any Russian role in today's events.

Meanwhile, it's still "business as usual" at Manas, according to a U.S. military spokesman.

"As of right now the air base is still open, the unrest has not impact operations on the base," said Shawn Turner, Pentagon public affairs officer. "It's getting a little tense."

Turner said he had no information that Bakiyev, who took over from Askar Akayev during the 2005 "Tulip Revolution," was holing up at the U.S. base, despite some rumors in the capital city of Bishkek to that effect.

"Folks at Manas tell us that business as usual and if he was there, that would be something that we would be aware of," Turner said.

Petersen said he was hearing Bakiyev has taken refuge in his home turf of Osh, a city in southern Kyrgyzstan where he still has a power base. If he hasn't actually left the country, that could indicate the power struggle isn't over, he added.

The broader implication for the international community is the realization that the era of popular revolutions in Eurasia toppling unpopular government is still ongoing, and even democratic governments that don't live up to their ideals are vulnerable.

Although this latest unrest was sparked by the government's decision to raise utility prices by 200 percent, Bakiyev has been moving toward cronyism and corruption for some time, Petersen said.

"Color revolutions are not dead in this part of the world," he said, noting that what's going on in Kyrgyzstan has implications for Ukraine and Georgia. "If a color revolution goes authoritarian, you can have another revolution right on top of it."