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."

Seven Republican senators are demanding that the Obama administration take tougher measures to punish banks still doing business in Iran, and they are threatening to stall the nomination of a top Treasury Department official unless they get their way.

The dispute between the White House and Congress revolves around implementation of the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010, the wide-ranging law signed into law last year. The Treasury Department issued a draft rule last week that lays out how it intends to implement a key provision of the law, which deals with Iran's banking partners in countries around the world. And that rule raised the ire of seven GOP senators, who expected Treasury to enforce the law much more stringently.

The key provision, section 104(e), directs the administration to punish any international financial institutions still doing business with Iran by cutting them off from the U.S. financial system.

"We were extremely unhappy with the draft rule to implement section 104(e) of CISADA publish by the Treasury Department last week," wrote Sens. Jon Kyl (R-AZ), Mark Kirk (R-IL), Roger Wicker (R-MS), David Vitter (R-LA), Jerry Moran (R-KS), Mike Crapo (R-ID), and Mike Johanns (R-NE), in a previously unreported letter sent Tuesday, and obtained by The Cable.

The letter was addressed to David Cohen, the acting undersecretary for terrorism and financial intelligence at the Treasury Department. Cohen took over for Stuart Levey, the previous sanctions chief at Treasury, who moved on to the Council on Foreign Relations last month after more than 4 years on the job.

The senators are threatening to hold up Cohen's nomination if their demands regarding enforcement of the sanctions provisions aren't met. Cohen had his confirmation hearing before the Senate Banking Committee on Tuesday and, afterwards, Kirk sent Treasury a list of follow-up questions he says must be answered before he'll allow Cohen's nomination to move forward.

"The acting undersecretary's response to our letter and questions for the record will weigh heavily in any confirmation decision," Kirk told The Cable.

Kirk also identified 44 international financial institutions servicing Iranian banks and 18 U.S. institutions that are working with those who do business inside Iran. He got this list from a 2010 report entitled "Iran's Dirty Banking", which sourced the information to the Banker's Almanac.

Kirk wants Treasury to require all U.S. banks to certify that any foreign banks they deal with aren't dealing with Iran. He also wants those foreign banks to certify that any banks they are dealing with aren't doing business with Iran. But Treasury's current plan calls for banks to provide such information only if and when the Obama administration asks for it.

"The object is to make sure we are doing anything and everything we can to drive Iranian business out of our banking system and this is how to do it," one senior GOP senate aide said.

"Large American banks and foreign banks that are operating here have not been hauled before Congress and have not been forced to tell the people and shareholders why they have not complied with the law," said another senior GOP aide.

Specifically, the aide said that the senators who signed the letter want Treasury to publish a final rule on implementation of the provision that requires audits of all banks' interactions with Iran on an ongoing basis. If that happens, the Cohen nomination can go through.

All of the senators who signed the letter, except for Kyl, are on the banking committee.

In his Tuesday testimony, Cohen defended the Treasury Department's efforts to tighten the noose around Iran's banking sector, including the passing of U.N. Security Council Resolution 1929 and subsequent successful efforts to convince European and northeast Asian countries to drop their Iranian banking ties.

Since 2006, Treasury has sanctioned 20 Iranian state-owned banks involved in facilitating Iran's nuclear program for penalties, and officials have traveled the world to try to convince foreign governments to take similar actions.

Cohen also said that sanctions against foreign owned banks that are working with Iran aren't necessarily the best tool in all cases, and indicated that there are more penalty decisions coming soon, such as the designation of more third country banks.

"The first best option is to get them to stop. Our second best option is to apply sanctions. And without getting too much into the details of any particular investigation that we're conducting, I can tell you that we are, I would say, close to a decision point on several institutions," he testified.

Matthew Levitt, a former deputy assistant secretary for intelligence and analysis at the Treasury Department and now a senior fellow at the Washington Institute for Near East Policy, said that Treasury was not against congressionally mandated sanctions, but believes they should only be used after all efforts to persuade foreign banks to shape up fail.

"What you have here is a struggle between two branches of government trying to get the same job done, but using two different paths to the same end," he said. "In some instances, it may be, you will get more compliance if you don't hit them with the hammer."

Levitt also defended the Treasury's efforts to put pressure on Iran's financial activities. "It's almost silly for anyone to claim the Treasury Department has been soft on Iran," he said.

President Barack Obama and Israeli President Shimon Peres discussed how the Israeli-Palestinian peace process fits into the wave of democratization sweeping through the Arab world during a working lunch and then a 40 minute one-on-one meeting on Tuesday..

"We had an extensive discussion about what's happened in the Middle East," Obama said at a press conference after the meetings. "I think he and I both share a belief that this is both a challenge and an opportunity; that with the winds of change blowing through the Arab world, it's more urgent than ever that we try to seize the opportunity to create a peaceful solution between the Palestinians and the Israelis."

At the working lunch, Obama was joined by Secretary of State Hillary Clinton, National Security Advisor Tom Donilon, NSC Chief of Staff Brooke Anderson, NSC Senior Director Dennis Ross, incoming U.S. Ambassador to Israel Dan Shapiro, Special Envoy for Middle East Peace George Mitchell, and NSC Senior Director Puneet Talwar.

Both presidents expressed the opinion that bringing the Arab-Israeli conflict to a resolution would help the United States and Israel support democratic change in the Middle East.

"We see it as a clash between generations, a clash between those who want democracy and those who want to go backwards," an Israel official who was present at the lunch told The Cable. "One of the ways to make sure the right side wins is if there could be progress in the peace process."

The most immediate issue for Israel how to set good relations with the next government in Egypt. Obama said the two presidents discussed ways for both countries to support Egypt's economic development as a means of supporting the Egyptian youth. Peres believes restarting the Israeli-Palestinian peace process would also help Israel navigate its changing relationship with Egypt.

"Peres' message is that Palestinians and Israel now have a common interest to get to negotiations, because both sides want Egypt to continue to support the peace process," the Israel official said.

But Obama, following the breakdown of the direct negotiations he and Clinton worked so hard to push forward in 2010, warned Peres that he would only try again if he first saw increased commitment from both parties.

"Obama said he's willing to help, he's willing to push forward, but... he wants to see that a serious effort is being made and then he will add his weight," the official explained.

Obama and Peres also addressed the issue of Iran at their meetings. Peres noted that dealing with Iran is also a moral issue, because the Islamic Republic heads the anti-democratic camp in the region. The two presidents also agreed on continuing cooperation on missile defense against the Iranian threat and the necessity of maintaining economic sanctions on Tehran. .

According to the Israeli official, Peres told Obama that Israel is increasingly concerned about the flow of Russian strategic weaponry into the region and said that Israel wants to purchase an additional 20 F-35 fighter jets.

U.S. officials at the lunch raised the touchy issue of continued Israeli settlement building, but Peres didn't give any ground.

"Look, our policy hasn't changed," the official said, referring to Peres's position. "We have our differences with the administration but this has been our policy all along. We don't agree on everything."

Peres also asked Obama to consider clemency for convicted Israeli spy Jonathan Pollard, and he reminded the U.S. president that he has an open invitation to visit Israel whenever he wants.

Obama acknowledged both points but gave "no sort of reply one way or the other," the official said.

The wide-ranging sanctions law passed by Congress and signed into law by President Barack Obama last July calls for the administration to punish companies from third-party countries that are still doing business in Iran. However, U.S. senators still aren't sure whether the administration will follow through with this punishment, especially when it comes to companies in China.

A bipartisan group of 10 U.S. senators, led by Sens. Jon Kyl (R-KY) and Robert Menendez (D-NJ), wrote to Secretary of State Hillary Clinton on Thursday to demand an update on the State Department's investigation into these companies' ongoing business with the Iranian regime. Their letter was subsequently obtained by The Cable. Deputy Secretary of State James Steinberg announced that State's investigation began on Sept. 29, which means that law requires the results to arrive by March 29, the senators wrote.

"It appears that Chinese firms in the energy and banking sectors have conducted significant activity in violation of U.S. law," the senators stated. "We cannot afford to create the impression that China will be given free rein to conduct economic activity in Iran when more responsible nations have chosen to follow the course we have asked of them. We are sure you agree."

The State Department's Bob Einhorn is briefing senators on Capitol Hill on this very issue on Friday, a senior GOP Senate aide told The Cable.

In remarks at the Carnegie Endowment for International Peace on Wednesday, Einhorn addressed the issue directly, saying that "we continue to have concerns about the transfer of proliferation-sensitive equipment and materials to Iran by Chinese companies, there is substantial evidence that Beijing has taken a cautious, go-slow approach toward its energy cooperation with Iran."

That explanation won't be enough to satisfy the senators' demands for more active confrontation if Chinese companies are indeed flouting sanctions.

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 -- a practice known as "backfilling."

For example, the administration and Congress worked hard to convince Japan and South Korea to impose unilateral measures against Iran. However, there's particular concern that China firms will simply come in and take over those contracts.

Kyl and Sen. Chuck Schumer (D-NY) sent a letter to Clinton last October on this very issue, noting 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.

One week later, the Government Accountability Office (GAO) released a report that identified 16 companies that 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.

Other lawmakers who have pressed the administration to enforce Iran sanctions against China include Sens. Joe Lieberman (I-CT), Susan Collins (R-ME), Mark Kirk (R-IL), and Rep. Howard Berman (D-CA).

"Clearly, Congress -- on both sides of the aisle -- is losing patience and expects the administration to act," said Josh Block, a senior fellow at the Progressive Policy Institute and former spokesman for AIPAC. "If not, what kind of message are we sending to these companies in China and Venezuela and Turkey and elsewhere -- and their governments -- that are helping Iran break international isolation?"

The U.S. intelligence community has completed and is circulating a new National Intelligence Estimate (NIE) on Iran's nuclear weapons program that walks back the conclusion of the 2007 NIE, which stated that Iran had halted work on its covert nuclear weapons program.

Intelligence officials briefed executive branch policymakers on the revised NIE last week. The document is being shared with members of Congress and their staff this week, an administration official and several Capitol Hill sources told The Cable. This is in advance of an early March meeting of the International Atomic Energy Agency's Board of Governors, where there may be another resolution on Iran's nuclear program, the official said.

The 2007 NIE was attacked in public due to its conclusion: "We judge with high confidence that in fall 2003, Tehran halted its nuclear weapons program." The new estimate might not directly contradict that judgment, Hill sources report, but could say that while the intelligence community has not determined that Iran has made the strategic decision to build a nuclear weapon, it is working on the components of such a device.

Several sources said they are being told there will be no declassified version of the new NIE, and that only those cleared to read the full 2007 NIE (pdf) will be able to see the new version.

"It does exist," House Intelligence Committee chairman Mike Rogers (R-MI) said in an interview with The Cable. Rogers said the administration was right to take its time to revise the 2007 NIE before releasing the updated version. "Intelligence is a fluid thing, sometimes you get great stuff and sometimes you don't get great stuff to make good conclusions. I think they were prudent in what they've done."

House Foreign Affairs ranking Democrat Howard Berman (D-CA) told The Cable he had heard the new NIE would walk back the controversial conclusions of the 2007 version, but that he hadn't read it yet. Regardless, he said, the 2007 Iran NIE was now obsolete and discredited.

"Nobody had been paying attention to the older NIE. A few people on the outside focused on it because they didn't want us to go down the sanctions route but neither the administration nor the Congress paid it much attention," Berman said. "I thought the NIE estimate then was a faulty one because it focused on some aspects of weaponization -- even as Iran was continuing to enrich."

Revelations that Iran had a secret uranium enrichment facility at Qom, which occurred after the release of the 2007 NIE, were further proof that the Iranian regime was pursing nuclear weapons, Berman said. Regardless, the Obama administration has disregarded the 2007 Iran NIE, he said.

"For a year and a half the administration has been convinced that Iran has been pursuing a nuclear weapon. That's what they whole sanctions push is based on," Berman said. "There can be no serious doubt that Iran wants to have a nuclear weapons capability."

Sen. Mark Kirk (R-IL), a former intelligence officer for the U.S. Navy, told The Cable, "The 2007 NIE was a mistake," and this document appears to be more realistic. He urged the intelligence community to take a less technical and more comprehensive look at the Iranian leadership's actions when making such judgments.

"My hope is that the current leaders of the intelligence community look not just at technical details and also comment regularly on Iran's leaders," Kirk said. "In Intelligence 101 we are taught to measure both capability and intent politically, and the intent here on the part of the Iranian regime is pretty clear."

Several lawmakers refused to discuss the new NIE because it was classified or because they hadn't read it yet. Senate Armed Services Committee ranking Republican John McCain (R-AZ) told The Cable he had been briefed on the new NIE, but declined to comment on its contents. Senate Intelligence Committee chairwoman Dianne Feinstein (D-CA) told The Cable she hadn't yet seen the new NIE but planned to review it soon.

Senate Armed Services Committee Chairman Carl Levin (D-MI), who supported the conclusions in the 2007 NIE, contended that the old estimate was misconstrued as an attempt by its authors to head off an attack against Iran by the Bush administration.

"I think it was interpreted incorrectly," Levin told The Cable.

The NIE is compiled by the National Intelligence Council, but rollout and classification decisions are ultimately made by Director of National Intelligence James Clapper.

Just before Chinese President Hu Jintao's arrival to Washington, two leading senators accused China of violating sanctions against Iran and sent a warning to President Barack Obama that Congress will go after Chinese companies if the abuses don't stop.

"We appreciate China's decision to support U.N. Security Council Resolution 1929, as well as China's backing of prior U.N. sanctions against Iran. However, we believe that China's record on sanctions enforcement and nonproliferation is inadequate and disappointing," Sens. Joseph Lieberman (I-CT) and Mark Kirk (R-IL) wrote to President Obama on Jan. 14 in a previously unreported letter.

The senators cited numerous reports that China is supplying crucial materials to aid Iran's nuclear and missile programs and alleged that Beijing continues to give monetary and material support to Iran's energy sectors, including the delivery of refined petroleum products, which could provoke penalties under U.S. laws passed by Congress, including the Comprehensive Iran Sanctions Accountability and Divestment Act that Obama signed into law in July, 2010.

The senators specifically named the state-owned China National Petroleum Corporation (CNPC) and the China Petroleum and Chemical Corporation (SINOPEC) as firms that could come under U.S. penalties.

"We urge you to warn President Hu that the U.S. will be forced to sanction these companies if they do not quickly suspend their ties with Iran," the senators wrote.

Last October, 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.

Japan and South Korea are among the countries that have scaled back their dealings in Iran in response to U.S. pressure. But analysts fear that Chinese corporations could move to backfill the space left in Iran by countries that are now cooperating with international and U.S. sanctions measures.

Also today, one of the key authors of the bill, former House Foreign Affairs Committee chairman Howard Berman (D-CA), also called on Obama to press China to enforce energy sanctions on Iran.

"A key area of concern for the United States is the threat posed by a nuclear-armed Iran, a threat that would also jeopardize China's long-term security," Berman said in a statement. "As President Obama sits down with President Hu this week, securing greater cooperation from the Chinese government in stopping Iran's nuclear weapons program must be at the top of the agenda."

China is currently Iran's largest trade partner, its largest oil purchaser and its largest foreign investor. China-Iran trade is currently around $30 billion per year and Iranian officials have predicted it could reach $50 billion over the next five years.

The P5+1 talks in Geneva have only just begun, but a bipartisan group of senators is already calling on the Obama administration to resist Iranian attempts at stalling, keep ratcheting up pressure as talks go on, and tell Iran they don’t have the right to enrich uranium for the foreseeable future.

Secretary of State Hillary Clinton said last week in Bahrain that Iran does have the right to a domestic uranium enrichment program for civilian purposes, if and when they prove to the international community they can do so transparently and responsibly.

But in a letter (PDF) to President Barack Obama to be delivered on Monday -- but obtained in advance by The Cable -- Sens. Joe Lieberman (I-CT), Jon Kyl (R-AZ),  Kirstin Gillibrand (D-NY), Bob Casey (D-PA), and Mark Kirk (R-IL) said that the administration should make clear to Iran that domestic enrichment is not an option.

“We believe that it is critical that the United States and our partners make clear that, given the government of Iran’s pattern of deception and non-cooperation, its government cannot be permitted to maintain any enrichment or reprocessing activities on its territory for the foreseeable future,” the senators wrote. “We would strongly oppose any proposal for a diplomatic endgame in which Iran is permitted to continue these activities in any form.”

The senators also told Obama they want the administration to make clear to Iran that sanctions and other pressures will increase during the negotiations. They also wrote that the administration should not be fooled into accepting “confidence building measures” as substitutes for real negotiations.

Overall, the letter sets down a marker to Obama to remind him that, as the administration heads down the engagement track with Iran once again, Congress will be watching and waiting to criticize any perceived weakness or concession. The negotiations may be taking place in Geneva, but the Obama team has to always keep one eye on Capitol Hill.

MANAMA, Bahrain—U.S. Secretary of State Hillary Clinton tried to speak with Iranian Foreign Minister Manouchehr Mottaki twice on Friday, pursuing him both inside and outside the gala dinner here at the Ritz Carlton in Manama. But Mottaki deliberately avoided contact with her both times.

"If he comes to the dinner, I'll probably see him. But he doesn't talk to me," Clinton told The Cable in our exclusive interview just hours before the event.

Turns out she was right. Everybody at the opening dinner for the 2010 IISS Manama Security Dialogue, where Clinton gave the speech, was watching to see if she and Mottaki would trade words. After all, they were seated only five seats apart. Clinton went out on a limb twice to try to make it happen, but the end result was only an unintelligible mutter from the Iranian leader in the general direction of the secretary.

Clinton's first attempt came just as the dinner ended. All the leaders sitting at the head table were shaking each other's hands. Mottaki was shaking hands with Jordan's King Abdullah II when Clinton called out to him.

"As I was leaving and they were telling me, ‘Hurry up, you have to get to the plane,' I got up to leave and he was sitting several seats down from me and he was shaking people's hands, and he saw me and he stopped and began to turn away," Clinton told reporters on the plane ride home.

"And I said, ‘Hello, minister!' And he just turned away," said Clinton, adding that Mottaki seemed to mutter something in Farsi but was clearly trying to avoid her.

In his Saturday morning press conference, Mottaki had a different take on the interaction.

"Some people said that last night at the dinner Hillary Clinton said hello to me as I was greeting the king of Jordan," he said. "According to the Islamic tradition, there is a necessity to respond... The people of this region are very famous for being polite."

But that wasn't Clinton's only try. We're told by a senior member of the U.S. delegation that as Clinton's huge team moved to the door, Mottaki kept his delegation back to avoid having the two delegations converge at the door at the same time.

The next attempt by Clinton came outside the conference space, in the driveway while both leaders were waiting for their motorcades to pull up. Again, Clinton called out to Mottaki with a greeting and again, Mottaki refused to respond.

There's a lot of buzz about this game of cat and mouse between Clinton and Mottaki here at the conference. Most observers said that Mottaki simply was not interested in making any news about a warm interaction with Clinton ahead of the negotiations. It simply would not play well for him domestically.

Several attendees speculated that Mottaki is resisting interacting with Clinton at least in part because she is a woman. Mottaki's behavior at the press conference confirmed that he is distinctly less interested in dealing with women face to face.

But if Mottaki thinks he has gotten away with successfully avoiding any direct contact with the U.S. delegation, he is dead wrong. And the funny thing is, he probably doesn't even know it.

After Clinton left town, the delegation heads sat down for lunch Saturday at a local Japanese restaurant. Two witnesses confirmed that as part of the opening greetings, Mottaki shook hands with Assistant Secretary of Defense Alexander Vershbow. Both witnesses said they were sure Mottaki had no idea at the time that he had just shaken hands with a U.S. government official.

MANAMA, Bahrain – Secretary of State Hillary Clinton ate dinner on Friday only five seats away from Iranian Foreign Minister Manouchehr Mottaki. And although Clinton and Mottaki didn’t speak to each other, or even shake hands, Clinton’s speech had a distinctly warmer tone toward Tehran -- only three days before the next meeting between Iran and the P5+1 countries in Geneva regarding Tehran’s nuclear program.

Addressing the Iranian delegation directly during her opening address to the 2010 IISS Manama Security Dialogue, Clinton said, “In Geneva next week, the P5+1 will meet with representatives from your nation, the first such meeting since October of 2009. We hope that out of this meeting, entered into in good faith, we will see a constructive engagement with respect to your nuclear program. Nearly 2 years ago, President Obama extended to your government a sincere offer of dialogue. We are still committed to this dialogue.”

Clinton then spoke about Iran’s right to have a peaceful nuclear program, focusing on the possible end state if negotiations go well -- rather than harping on the international community’s long list of complaints regarding Iranian behavior.

“The position of the international community is clear. You have the right to a peaceful nuclear program, but with that right comes a reasonable responsibility, that you follow the treaty you signed and fully address the international community’s concerns about your nuclear activity,” she said. “We urge you to make that choice … we urge you to restore the confidence of the international community and live up to your international obligations.”

Clinton went on to praise Iran as the home of one of the world’s greatest civilizations, while noting that the latest IAEA report showed that Iran has not yet made clear it intends to pursue a peaceful resolution to the controversy over its nuclear program.

“We continue to make this offer of engagement with respect for your sovereignty and with regard for your interests, but also with an iron clad commitment to defending global security and the world’s interest in a peaceful and prosperous Gulf region,” she said.

When asked at the conference what Clinton expected to come out of next week’s talks in Geneva, Clinton said, “I believe that is largely in the hands of the Iranians.”

In an interview Wednesday with the BBC’s Kim Ghattas, Clinton said that Iran was entitled to enrich its own uranium, after it had satisfied international concerns.

"We've told them that they are entitled to the peaceful use of civil nuclear energy, but they haven't yet restored the confidence of the international community to the extent where the international community would feel comfortable allowing them to enrich," Clinton told the BBC. "They can enrich uranium at some future date once they have demonstrated that they can do so in a responsible manner in accordance with international obligations."

Experts in the audience said that Clinton’s remarks about Iran’s right to enrich uranium didn’t mark a change in policy, but noted that her focus on Iran’s sovereign rights and mention of enrichment did mark a new tone ahead of the negotiations in Geneva.

“This has been policy since at least 2008, when the P5+1 put a package proposal to Iran that asked for a suspension of enrichment until Iran restored confidence,” said Mark Fitzpatrick, director of the IISS non-proliferation and disarmament program. “She wasn’t breaking any new ground in terms of the position, but in tone is was totally positive, setting the right mood music for the Geneva talks beginning Monday.”

Mottaki was seated next to, and seemed to get along famously with, Swedish Foreign Minister Carl Bildt.

On a February trip to the Middle East, Senate Foreign Relations Committee chairman John Kerry (D-MA) told Qatari leaders that the Golan Heights should be returned to Syria, that a Palestinian capital should be established in East Jerusalem as part of the Arab-Israeli peace process, and that he was "shocked" by what he saw on a visit to Gaza.

Kerry discussed the Israeli-Palestinian peace process in a visit to Qatar during separate meetings with Prime Minister Hamad bin Jassim Al Thani and the Emir of Qatar, Hamad bin Khalifa, as revealed by the disclosure of diplomatic cables by the website WikiLeaks.

The emir told Kerry to focus on Syria as the path toward resolution of the Arab-Israeli conflict. Kerry agreed with the emir that Syrian President Bashar al-Assad is a man who wants change but pointed out that his arming of Hezbollah and interference in Lebanese politics were unhelpful. Kerry said that Assad "needs to make a bolder move and take risks" for peace, and that he should be "more statesman-like." Kerry also agreed with the emir that the Golan Heights should be given back to Syria at some point.

"The Chairman added that Netanyahu also needs to compromise and work the return of the Golan Heights into a formula for peace," the diplomatic cable reported.

As for the peace process, Kerry defended the Obama administration's drive to use indirect proximity talks (which were only being discussed at that time) as a stepping stone to direct talks between the Israelis and the Palestinians. He said the two sides should first agree on the amount of land to be swapped and then work on borders, followed by settlements.

Kerry also said that final agreement would have to include a Palestinian state with a capital in East Jerusalem.

"Any negotiation has its limits, added Senator Kerry, and we know for the Palestinians that control of Al-Aqsa mosque and the establishment of some kind of capital for the Palestinians in East Jerusalem are not negotiable," the cable stated, summarizing the meeting with the emir. "For the Israelis, the Senator continued, Israel's character as a Jewish state is not open for negotiation. The non-militarization of an eventual Palestinian state and its borders can nonetheless be resolved through negotiation."

In a separate meeting the day before with the prime minister, Kerry resisted the Qatari leader's assertion that Hamas was ready to accept the existence of the State of Israel, but he agreed that urgent action was needed to rebuild Gaza.

According to the leaked diplomatic cable, the prime minister told Kerry, "We need to broker a quick reconciliation between Hamas and Fatah and move forward quickly on rebuilding Gaza… Senator Kerry asserted that HBJ [Prime Minister Hamad bin Jassim Al Thani] was preaching to the converted and told the PM he was ‘shocked by what I saw in Gaza.'"

In a telling exchange at the end of his meeting with the emir, the Qatari ruler gave Kerry some advice for dealing with the Iranian government.

"The Amir closed the meeting by offering that based on 30 years of experience with the Iranians, they will give you 100 words. Trust only one of the 100," the cable said.

Now that the Republicans are projected to take control of the House, we here at The Cable would like to introduce you to the next head of the House Foreign Affairs Committee, Florida Congresswoman Ileana Ros-Lehtinen.

Ros-Lehtinen has been a force on the committee for years as the vocal, passionate, sometimes combative ranking Republican. A Cuban-American lawmaker from a heavily Jewish district, Ros-Lehtinen has staked out firm positions on several issues that stand in contrast to now outgoing chairman Howard Berman (D-CA). Her ascendancy as chairwoman will change the tone and agenda of the committee and will pose new challenges for the Obama administration's efforts to advance its foreign-policy agenda.

Over the mid to long term, Ros-Lehtinen is poised to thwart Obama's efforts to move toward repealing sanctions on Fidel Castro and resist any White House attempts to pressure Israeli Prime Minister Benjamin Netanyahu. She isn't likely to move Berman's foreign-aid reform bill through the committee and she is likely to seek cuts in the foreign-aid budget in her authorization bill.

But most significantly, gone will be the days when the committee deferred to the administration on the order of foreign-policy priorities. The committee will also stop taking the administration's word when it comes to matters of policy oversight.

For example, although Berman and Ros-Lehtinen agreed on the need to push tough sanctions on Iran, Berman delayed action on the bill to allow Obama's engagement effort to play out. Ros-Lehtinen might not be so accommodating.

"The Berman people were ahead of the Obama team on a number of things, but they deferred to the administration on timing. You are going to see more aggressiveness, to push an agenda and not to defer to the administration," said a Republican congressional aide.

We're also told that there's no love lost between the staffs of Berman and Ros-Lehtinen. Ros-Lehtinen's staff is said to be very disciplined and at the same time aggressive. They are not easy to negotiate with, according to our sources, and very effective at achieving their aims.

In the near term, Ros-Lehtinen could cause complications for the administration's foreign policy in a number of ways. She is a Russia skeptic, and wants more investigation into the civilian nuclear agreement with Russia that is currently before the Congress. Congress probably won't move to block this deal, but Ros-Lehtinen is sure to schedule hearings to pick apart future deals planned with Jordan, South Korea, and Vietnam.

Ros-Lehtinen will be pushing the administration to strictly enforce new sanctions law against Iran. If the mere threat of penalties under the law doesn't entice large international companies to leave Iran, she will call for the administration to start punishing those companies, even if they are from China or Russia.

Immediately after the election, Ros-Lehtinen will be leading a bipartisan congressional effort to demand more information about the administration's planned sale of $60 billion worth of arms to Saudi Arabia, the largest arms sale in U.S. history.

In a previously unreported letter, obtained exclusively by The Cable, Ros-Lehtinen joined with Berman to demand that Secretary of State Hillary Clinton and Defense Secretary Robert Gates answer several outstanding questions about the deal.

"We are writing to raise concerns and pose a number of strategic questions about the impact such sales would have on the national security interests of the United States and our allies," they wrote. The Obama administration defends the deal as vital, and Israel raised few objections.

"There are a lot of questions to be answered on this," a GOP House aide said. "If Israel doesn't strongly object that doesn't mean it's not problematic."

If the GOP is able to exert more control over foreign policy, that will also impact how foreign leaders and foreign governments interact with the United States. Foreign countries will have to pay more attention to Congress, and may further discount President Obama's ability to deliver.

"Gridlock has some implications of its own," said Heather Conley, senior fellow and director of the Europe program at the Center for Strategic and International Studies. "We're sending a message to international leaders that they will have to work both sides of Pennsylvania Avenue."

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."

President Obama, in a private conference call Wednesday, told an audience of Jewish leaders to discount non-constructive statements made by Israeli and Palestinian leaders as Middle East peace talks move forward, saying that such remarks are all part of the negotiating game.

The groups represented on the call were from across the Jewish religious spectrum: They included the orthodox Rabbinical Council of America, the conservative Rabbinical Assembly, the reform Central Conference of American Rabbis, and the reconstructionist Rabbinical Association.

Obama implored the rabbis on the call to publicly support the talks, and to try to rally their own people to support the negotiations. The call was timed in advance of the start of the Jewish high holy days, when the Rabbis see the largest turnout of the year among their congregants. Along those lines, he asked them to discount statements by Israeli Prime Minister Benjamin Netanyahu or Palestinian Authority President Mahmoud Abbas when they say things in public that make the talks seem doomed. That's mainly for the local television cameras, Obama said.

"I guarantee you over the next four months, six months, a year, in any given week there's going to be something said by someone in the Palestinian Authority that makes your blood boil and makes you think we can't do this," Obama said, according to a recording of the call provided to The Cable. "We're going to have to work through those things."

He emphasized that he would give the same message to Arab groups, regarding statements by the Israeli government they might find objectionable.

"What you're going to see over the next several months is that at any given moment, either President Abbas or Prime Minister Netanyahu may end up saying certain things for domestic consumption, for their constituencies and so forth, that may not be as reflective of that spirit of compromise we would like to see. Well, that's the nature of these talks," Obama said.

Obama referred directly to statements made by both leaders this week that seemed to show an unbridgeable gap over whether Israel must extend its 10-month partial settlement construction freeze, which expires on Sept. 26. The next round of the talks, to be held in Sharm el Sheikh and Jerusalem next week, will be the last official round before the deadline.

"There is going to be an immediate set of difficulties surrounding the existing moratorium on settlements," Obama admitted, pointing out the public positions of the two leaders.

"On one hand, you have Prime Minister Netanyahu saying ‘there's no way I can extend it.' There's President Abbas saying ‘this has to be extended for these talks to be effective," Obama said. He maintained that there was a compromise to be struck.

"I am absolutely convinced that both sides want to make this work and both sides are going to be willing to make some difficult concessions," Obama said. He did not specify what a potential compromise would look like.

Overall, Obama told the rabbis that he believed both Netanyahu and Abbas were serious about peace and said the first round of talks last week in Washington exceeded his expectations.

"I am stunned at how cordial and constructive the talks were," he said.

But Obama's main message on the call was a plea to the rabbis to actively support the talks, or at least not to actively undermine them.

He asked the religious leaders to help him promote the talks among Jewish communities both in American and Israel, and "to give these talks a chance and not look for a reason why they won't succeed."

Regarding interfaith relations in the United States and the treatment of Muslim Americans in particular, Obama again asked the rabbis for help. "It is very important for leaders in the Jewish [community] to speak from a deep moral authority in making sure that those Muslim-Americans trying to practice their faith in this country can do so without fear or intimidation," he said.

He did not mention the Park 51 Community Center project by name.

On Iran, Obama argued that the sanctions announced by the United Nations, the United States, the European Union, Japan, South Korea, and others were having an effect on the regime in Tehran.

"Every assessment that we've seen so far is that the degree of international coordination that's being implied in enforcing these sanctions is unprecedented and the Iranian regime has been shocked by our success," Obama said. He said the Israeli assessment matched his own.

While the peace talks and the Iran threat are not necessarily linked, Obama told the rabbis that resolving Israel's disputes with its neighboring Arab states would increase Iran's isolation.

Obama also delivered a message of urgency regarding the peace talks.  "If that window closes, it's going to be hard to reopen for years to come," he said. "We're not going to get that many more opportunities."Obama wished all the rabbis "L'shana Tovah," which means Happy New Year in Hebrew, and "Todah Rabah," which means thank you.

"With you I hope and pray this year will be a year of health and happiness, joy and justice, and ultimately perhaps a year of peace," he said.

Kansas Sen. Sam Brownback is calling on Secretary of State Hillary Clinton to publicly denounce the impending trial of a journalist and blogger facing execution at the hands of the Iranian regime.

The journalist, Shiva Nazar Ahari, who has been imprisoned in Tehran's notorious Evin Prison since December, goes on trial Sept. 4 for crimes such as "anti-regime propaganda," "acts contrary to national security through participation in gatherings," and "enmity against God." The last charge can carry a death sentence.

Her activism and defense of political prisoners, which included acting as the spokesman for the Committee of Human Rights Reporters, has raised the ire of the Iranian government for years. Conservative writers have been calling on President Obama to personally call for her release.

"I am urging you and President Obama to press the Iranian regime for the immediate release of Ms. Ahari ... It is crucial for the United States to advocate for brave Iranian citizens like Ms. Ahari, and I hope you will do all you can to secure her release." Brownback wrote to Clinton Aug. 31. "Obviously, time is of the essence."

According to the State Department's 2009 Human Rights Report on Iran, authorities arrested Ahari and two of her colleagues from the Committee for Human Rights Reporters on Dec. 20 as they were headed to Qom for the funeral of Grand Ayatollah Hossein Ali Montazeri, who had been one of the leading spiritual figures behind Iran's reform movement.

"According to human rights organizations, authorities arrested seven of the nine leaders of the organization during the year and pressured the group to close its Web site," the report said.

Clinton did call for Ahari's release in June, on the one year anniversary of the highly disputed Iranian presidential election that sparked a wave of violence and suppression. She also called on Iran to release human rights defenders Narges Mohammadi, Emad Baghi, Kouhyar Goudarzi, Bahareh Hedayat, Milad Asadi, and Mahboubeh Karami, as well as the three American hikers who have been detained without charge for over a year and a missing former FBI agent, Robert Levinson, who disappeared in Iran in 2007.

The State Department has been stepping up its public advocacy on behalf of imprisoned Iranians lately. Clinton gave her first public condemnation of the detention of Baha'i faith leaders last month. None of the political prisoners or hikers has, as of yet, been released.