The Cable

Steinberg: No need for another Iran sanctions bill

The Obama administration will expand sanctions on Iran and countries that do business with it, but new congressional legislation is unnecessary, according to Deputy Secretary of State Jim Steinberg.

The House and Senate have each unveiled a bill that would tighten existing sanctions, compel the administration to enforce penalties already on the books, and levy a host of new sanctions against members of Iran's regime and companies that aid Iran's energy, banking, or arms sectors. The bills are a follow-up to the Comprehensive Iran Sanctions, Accountability and Divestment Act (CISADA) that Congress passed and President Barack Obama signed in July 2010.

Lawmakers are increasingly frustrated that the administration has decided not to use CISADA to penalize many companies from third-party countries such as China that are believed to be violating the sanctions, while only punishing a couple of firms from countries such as Belarus. The new bills are meant to force action on Chinese companies. But Steinberg said that the administration doesn't support another round of sanctions legislation and will proceed with enforcement on its own timeline.

"We think we have powerful tools, and we've welcomed CISADA and we think CISADA is a powerful tool, and what we've seen, not just with China but with everybody, is that the availability of that has caused countries and companies to stop doing things that they might otherwise do," Steinberg told The Cable in a June 6 interview on the sidelines of the Shangri-La Security Dialogue in Singapore.

Steinberg fundamentally disagreed with senators who believe that China has not been adhering to the sanctions and allowing its companies to backfill the business in Iran left open by the departure of firms from U.S. allies such as Japan and South Korea.

"I think the [Chinese] record has been reasonably good in terms of what they've done. It's not perfect, and we continue to work with them, we continue to keep some actions of theirs under investigation and review," he said.

"I think people -- if one would have asked two years ago, for example, on dealing with Iran, how much we would be in sync with China -- I think they would be amazed how well this has worked, both in terms of the formal stuff in the Security Council, but also in the P5+1," said Steinberg.  "The Chinese have been fully on board, they haven't undercut it, they've been very clear and consistent with the need for Iran to meet their obligations and they've worked as a partner with us on that. They've been very restrained in their political and economic engagement with Iran."

Will the administration ever sanction Chinese companies for doing business in Iran, which, according to the Government Accountability Office, continues to this day?

"It depends what they do," Steinberg said. "As we've said to the Congress and to everybody, in the first best instance what we want is to see countries do it voluntarily, and we've seen a number of cases where we've raised issues of concern with China, and we've had some progress."

The lawmakers who spent months drafting the new sanctions legislation and who are planning to push it through Congress this summer fundamentally disagree with Steinberg's reading of Chinese behavior.

 "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 at last month's AIPAC conference in Washington.

In a Tuesday interview with The Cable, Kirk said that the Senate bill has strong leadership from both parties, including lead sponsors Jon Kyl (R-AZ), Robert Menendez (D-NJ), Joe Lieberman (I-CT), and many others.

"The hollowness of the administration's enforcement is evident when you compare how much the U.S. and Iranian economies grew last year. Because Ahmadinejad's economic growth was faster than Obama's, that underscores our concern that the results are meager at best," Kirk said.

"We have overwhelming bipartisan consensus here and in the House as well, so I would say to Secretary Steinberg, prepare for incoming legislation."

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