The Cable

State Department sanctions Belarus firm for doing business with Iran; GOP not satisfied

The State Department announced on Tuesday that it has decided to apply the recently passed Iran sanctions legislation to the Belarusian company Belorusneft. But GOP senators monitoring the implementation of the law said the move was marginal and unsatisfactory.

The action prevents Belorusneft, a subsidiary of the government-owned conglomerate Belneftekhim, from seeking any loans or doing any business in U.S. financial markets. The sanction was implemented under the Iran Sanctions Act (ISA) of 1996 as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010. In a press release, the State Department focused on Belorusneft's 2007 $500 million contract with the NaftIran Intertrade Company (NICO), which is also being punished under U.S. sanctions.

"Since President Barack Obama signed CISADA into law on July 1, 2010, Iran's ability to attract new investment to develop its oil and natural gas resources, and to produce or import refined petroleum products, has been severely limited," the release said. "The State Department's direct engagement with companies and governments to enforce CISADA is raising the pressure on the Government of Iran."

State Department spokesman Mark Toner said on Wednesday that, in practical terms, the action prohibits Belorusneft from seeking assistance from the Export-Import Bank of the United States, obtaining U.S. government export licenses, obtaining private U.S. bank loans exceeding $10 million, and securing any procurement contracts with the U.S. government.

Belarusneft, the largest oil company in Belarus, hasn't actually tried to apply for any of those things, but Toner explained that the new announcement "also sends a message to our partners in Europe as well that this is a company that we've decided to sanction. And I'm sure they have access or would seek access into European markets." Toner didn't say if State was pushing the EU to follow suit.

Three senior senators who have been intimately involved in the Iran sanctions law and its implementation immediately shot off a letter to Secretary of State Hillary Clinton, obtained by The Cable, criticizing today's announcement as too weak.

"We are writing to express our disappointment with today's announcement that the administration designated only one additional entity for violating U.S. sanctions with regard to Iran," wrote Sens. Jon Kyl (R-AZ), Mark Kirk (R-IL), and Joe Lieberman (I-CT). "We do not believe this represents full compliance with the sanctions regime put in place by Congress."

These senators have long been calling for the administration to penalize companies that hail from other countries, especially China.

"It appears that Chinese firms in the energy and banking sectors have conducted significant activity in violation of U.S. law," ten senators wrote to Clinton on March 10. "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 briefed senators on Capitol Hill on this very issue on March 11, but a senior GOP senate aide told The Cable that the meeting was disappointing.  

The GOP senate offices in question see today's designation as marginal, especially as the parent company, Belneftekhim, was already sanctioned by the U.S. government in 2007 through Executive Order 13405, which targeted firms connected to President Alexander Lukashenko for human rights violations, and three other subsidiaries were sanctioned in 2008.

"It's a complete disappointment," one senior GOP aide told The Cable. "You would have thought they had already found a way to only designate the lowest hanging fruit when they sanctioned NICO. Alas, they found a lower hanging fruit."

A different senior GOP aide said the move sends the signal that the Obama administration only has the willingness to punish Iranian companies such as NICO and companies from other states that doesn't have close or critical relations with, such as Belarus.

"While the administration is patting itself on the back for its empty action today with Belarus, we can hear the sighs of relief coming from Tehran, Beijing, Ankara and Geneva where bankers, gasoline traders, and oil and natural gas financiers just realized that the Obama administration isn't serious about stopping Iran's nuclear weapons program," the aide said.

Mark Dubowitz, executive director and head of the Iran Energy Program at the Foundation for the Defense of Democracies, told The Cable  that today's announcement "is a step in the right direction for both human rights and national security, but it's only a small and incremental one."

"The administration should be praised for moving against the energy lifeblood of both Belarus and Iran, two regimes which savagely repress their own people," he said. "But this was only a borderline meaningful designation since Belneftekhim and three other subsidiaries are already subject to designations. While a designation against this fourth subsidiary is helpful, the time for incrementalism is long past as Iran drives towards a nuclear weapon."

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