The Cable

Kerry supports joining Magnitsky with Jackson-Vanik repeal

Senate Foreign Relations Committee Chairman John Kerry (D-MA) said this week that he supports joining replacing longstanding human rights sanctions on Russia with new human rights sanctions on Russian officials.

Yesterday, we reported that Sen. Richard Lugar (R-IN) came out this week for passing the Sergei Magnitsky Rule of Law Accountability Act of 2011 together with repealing the 1974 Jackson-Vanik law and granting Russia Permanent Normal Trade Relations (PNTR) status. At the March 27 SFRC business meeting, Kerry also endorsed the idea of combining the Magnitsky Act with the PNTR bill and a repeal of the Jackson Vanik law, according to a transcript of the meeting obtained by The Cable today.

At the meeting, Kerry agreed to bring up the Magnitsky bill for committee approval at the next SFRC business meeting in April, according to the transcript. Sen. Ben Cardin (D-MD), the main sponsor of the Magnitsky bill, called for the Magnitsky bill and the PNTR bill to be joined on the Senate floor, after the PNTR bill emerges from Sen. Max Baucus's Finance Committee.

"I think the best opportunity for [the Magnitsky bill's] enactment will be in conjunction with PNTR with Russia," Cardin said. "And we have been working with the leadership on both sides of the aisle in both chambers to see how we can do this in the most constructive way.

"I agree with you. I think that is the only way.  I think it is the way to move forward," Kerry said. "In good faith, senator, we will move as rapidly as we can, hopefully the minute we're back, but certainly shortly thereafter. I also want to check with Senator Baucus and try to get a sense from Senator Reid about the schedule on the floor for the PNTR and how we proceed.

"But we will join it altogether," Kerry said. "And as I say to you, you've been persistent and tenacious on it, and the time has come."

Lugar told Kerry that he got the sense from his staff that the administration was "very tentative" about moving forward on the Magnitsky bill, so Lugar wanted to make sure the committee was moving expeditiously on the issue.

"And so I simply wanted to indicate that we take this seriously, that this is the time now for them to come to the table as opposed to pushing it off, because it seems to me maybe they might become more serious," Lugar said.

"Fair enough," Kerry replied.

The Cable

Obama says there’s enough oil in the world to cut off Iran

President Barack Obama issued a determination Friday that there are enough sources of oil around the world to allow all Iran's customers to stop buying its crude.

The decision was required by a section of the latest defense authorization bill, which included new sanctions against the Central Bank of Iran and any other country that does business with Iran. Countries can be exempted from those sanctions if they "significantly reduce" their oil business with Iran, and the president was required to decide if the world oil market could absorb that demand before the sanctions could be fully implemented.

"[A]fter carefully considering the report submitted to the Congress by the Energy Information Administration on February 29, 2012, and other relevant information, and given current global economic conditions, increased production by certain countries, the level of spare capacity, and the existence of strategic reserves, among other factors, I determine, pursuant to section 1245(d)(4)(B) and (C) of the National Defense Authorization Act for Fiscal Year 2012, Pub1ic Law 112-81, that there is a sufficient supply of petroleum and petroleum products from countries other than Iran to permit a significant reduction in the volume of petroleum andpetroleum products purchased from Iran by or through foreign financial institutions," Obama wrote in a Friday memorandum.

"I will closely monitor this situation to assure that the market can continue to accommodate a reduction in purchases of petroleum and petroleum products from Iran."

The State Department exempted 11 countries from the Central Bank sanctions earlier this month and has until June 28 to decide whether to sanction the other 12 countries that buy crude oil from Iran, a list that includes China, India, South Korea, and Turkey. This determination allows that process to continue moving forward.

Today's determination was not a surprise. A Feb. 29 report from the Energy Information Agency stated that Saudi Arabia was pumping more oil than usual but also found that spare capacity in the oil market was modest by historical standards. Energy Secretary Steven Chu seemed to preview the determination March 1 when he said, "There is spare capacity and we believe -- we'll see -- but I think there is sufficient spare capacity."

In a conference call with reporters Friday afternoon, two senior administration officials touted the administration's effort to use the sanctions to persuade other countries to wean themselves off of Iranian oil and said the administration expected South Korea to move away from Iranian oil purchases soon and Turkey announced related moves today.

"It's our belief that these sanctions are having a significant impact on the Iranian government and the Iranian economy and that therefore they present the strongest pressure we've placed to date to effect Iran's political calculus about pursuit of nuclear program, particularly as we move toward P5+1 negotiations," one senior administration official said.

The official neglected to mention that the administration publicly opposed the legislation that created the sanctions, written by Sens. Robert Menendez (D-NJ) and Mark Kirk (R-IL), which was added to the defense authorization bill over administration objections and passed by the Senate by a vote of 100-0.

In a statement Friday, Menendez praised Obama's determination.

 "Today, we put on notice all nations that continue to import petroleum or petroleum products from Iran that they have 3 months to significantly reduce those purchases or risk the imposition of sanctions on their financial institutions," Menendez said. "It is my opinion that most countries will significantly reduce their purchases by the June 28 deadline -- either because of the sanctions or because they share the U.S., EU, and IAEA's grave concerns about Iran's verified effort to acquire nuclear weapons capability."

The Cable asked the officials whether they supported the Johnson-Shelby Iran Sanctions, Accountability and Human Rights Act of 2012, which Senate Majority Leader Harry Reid (D-NV) tried to speed through the Senate this week without any debate or amendments.

"We're not just taking a position on that particular bill at this point," the official said.

We then asked whether the administration had a position on the right of senators to offer amendments to the Johnson-Shelby bill, in light of Reid's position that there is simply no time to offer amendments to the legislation.

"We've not made any specific determinations with regard to that amendment," the official said.

We didn't ask about any specific amendment, but it's possible the official was referring to a new amendment from the office of Kirk, which 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 announced it would stop processing transactions with Iran's Central Bank earlier this month.

Kirk's new 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.

"We welcome the president's determination and applaud the administration's faithful implementation of the Menendez-Kirk amendment," a Kirk spokesperson told The Cable. "To build on this momentum, we hope the Senate will consider amendments to the pending Iran sanctions bill that would continue to increase the economic pressure on the Iranian regime."