The Cable

Hawks Looking to Sanction Iran Face Opposition From U.S. Businesses

U.S. lawmakers pushing to ramp up sanctions against Iran over its nuclear program will face opposition from trade groups, which are arguing that the Obama administration's zeal for using financial tools to punish other countries -- most recently Russia -- is hurting American companies.

After the United States imposed new penalties on Moscow on Wednesday, the business lobby was quick to respond.

"The U.S. is fundamentally extending sanctions in increasingly unilateral ways that will undermine U.S. commercial engagement and reduce the effectiveness of the measures imposed," Linda Dempsey, the National Association of Manufacturers' vice president for international economic affairs, said in a statement. U.S. companies are also worried that foreign businesses will be wary of working with American firms, for fear of future penalties and restrictions.

"American business is concerned about how these sanctions will be seen long term by the rest of the world, and that's where we do a lot of our business," a U.S. Chamber of Commerce executive said.

On Wednesday, July 16, Barack Obama's administration sanctioned four major Russian banks and energy companies -- Washington's toughest response yet to Moscow's support of separatists in Ukraine. The European Union's sanctions have been far more limited, a measure of how aggressively the United States is using the tool relative to other countries.

The National Association of Manufacturers and the Chamber of Commerce oppose new sanctions on Iran if those sanctions are not broadly embraced by America's allies. "When the U.S. government imposes unilateral economic sanctions, what happens is foreign competitors fill the void, they backfill, and the country that's being targeted doesn't feel the economic pain that the sanctions were intended to produce," Dempsey said in an interview this week.

Yet despite this opposition, some lawmakers are already gunning to punish Tehran with more sanctions. As the July 20 deadline for an interim deal on Iran's nuclear program nears, Obama is considering extending the negotiations, which are aimed at dismantling the country's nuclear program. But he may have a hard time getting Congress to go along. A broadly supported sanctions bill nearly passed the Senate in January. And now top House leaders are pushing to raise the stakes again.

"[M]y hope is that the Administration will finally engage in robust discussions with Congress about preparing additional sanctions against Iran," Rep. Ed Royce (R-Calif.), chairman of the House Foreign Affairs Committee, said in a statement Tuesday. In the Senate, key leaders are also issuing demands that could make the deal harder to close.

At the same time, trade groups and other opponents are urging Congress to consider what the restrictions cost American companies. A report issued Tuesday by the National Iranian American Council argues that the U.S. economy lost at least $135 billion in trade revenue because of sanctions between 1995 and 2012.

Richard Sawaya, the head of USA*Engage, said the effectiveness of new Iran sanctions and the business community's willingness to go along with them quietly will depend on whether other countries agree to them as well. A parade of European trade delegations streaming through Tehran since the interim deal took effect has sparked concerns that American companies will be left behind when Iran is finally open for business again.

"To the degree that the EU says 'no mas' and is willing to do business with probably the most attractive untapped market on the planet, then they won't work," Sawaya said in an interview Tuesday. His organization was created by the National Foreign Trade Council in 1997 with the sole purpose of opposing unilateral U.S. sanctions.

Before the latest round of Russia sanctions, the Chamber of Commerce and the National Association of Manufacturers had campaigned against them in newspaper ads and blog posts. And trade groups have mounted opposition to Iran sanctions in the past. Before Congress massively restricted Tehran's ability to sell oil and use the international financial system in 2010, the manufacturers association and the Chamber of Commerce wrote a letter to congressional leaders warning that the measures could cost the U.S. economy at least $25 billion a year.

But then, as in the latest round against Moscow, the groups were unable to stop the 2010 Comprehensive Iran Sanctions, Accountability, and Divestment Act. Complaints about new Iran sanctions could also fall on deaf ears again.

"Business groups' opposition to sanctions has never stopped Congress from passing sanctions," Sawaya said.

Photo by Mark Wilson/ Getty Images

The Cable

Israel Launches Ground Invasion in Gaza

This story has been updated.

The Israeli military launched a ground invasion into the Gaza Strip on Thursday, marking a dramatic escalation of the 10-day air war between Hamas and Jerusalem.

The purpose of the ground offensive, according to a statement by the Israeli government, is to destroy the tunnels connecting Gaza to Israel that enable Hamas fighters to attack Israeli citizens. "[The operation] will deal significant damage to the infrastructure of Hamas and other terrorist organisations in the Gaza Strip," Israeli Prime Minister Benjamin Netanyahu and Defense Minister Moshe Ya'alon said in a statement.

A spokesperson for Netanyahu said in a separate statement that military forces had been told "to be prepared for an expansion of the ground action" if the prime minister orders it. Earlier on Thursday, July 17, defense forces said they thwarted an attempted attack on Israeli citizens by Hamas fighters using the tunnels. The spokesperson said that Israel launched the ground offensive after Hamas "rejected" an Egyptian cease-fire proposal and continued to fire rockets at Israeli cities.

"Hamas also did not honor the humanitarian ceasefire initiated by the [United Nations] and continued firing at Israeli cities during the lull," the spokesperson said. "In light of Hamas' criminal and relentless aggression, as well as the dangerous attempt to infiltrate Israeli territory, Israel must act to defend its citizens." The spokesperson said the ground assault would continue until the Israeli military restores "quiet to Israel's citizens for a prolonged period, while inflicting a significant blow to the infrastructures of Hamas and the other terrorist organizations."

According to dispatches from journalists and Palestinians in Gaza, the announcement of the ground assault coincided with a heavy barrage of artillery fire from Israeli troops in the north combined with bombing offensives from gunboats and fighter jets.

The launch of the operation came after 13 Hamas militants attempted to carry out an attack in southern Israel on Thursday morning by traveling through a tunnel connecting Gaza to Israel. According to the Israeli military, eight of the attackers were killed; Hamas claimed responsibility for the assault.

After 10 days of fighting, at least 231 Palestinians have been killed and more than 1,500 have been hundred injured. One Israeli has been killed in a rocket-fire attack.

Earlier in the day, Palestinian Authority President Mahmoud Abbas and Arab League Secretary-General Nabil El-Araby conducted cease-fire talks in Cairo. The session was also attended by an Israeli delegation, but it left after several hours of discussions.

For the time being, Arab diplomats in New York were waiting to see whether talks in Egypt on a cease-fire progress before deciding whether to turn to the U.N. Security Council for help in stopping the fighting. "There is intense effort being made by President Abbas in Cairo in trying to finalize what would be a cease-fire," said one Arab diplomat. "That's where all the efforts are for the moment."

Colum Lynch contributed reporting.

Photo via Getty Images