Last week, the U.S. Congress overwhelmingly approved updated Iran sanctions legislation, significantly expanding the scope of existing U.S. sanctions against Iran, and in particular, its petroleum industry. The bill's major impact is to include under the U.S. sanctions regime companies and other institutions that provide goods or services to Iran's petroleum industry, as well as those that export gasoline to Iran. It also expands the list of possible penalties that the U.S. president can impose, including a prohibition on any transfers of funds through U.S. financial institutions. The new legislation, if utilized judiciously in conjunction with multilateral sanctions imposed by the United Nations and the European Union, could begin to put real economic and diplomatic pressure on Iran to resume negotiations over its nuclear program.
The new sanctions bill directs the president to penalize any individual or organization that provides Iran with goods, services, or technology worth $1 million or more for the development or maintenance of Iran's petroleum sector. The bill likewise requires sanctions for any person or group that provides $1 million or more worth of gasoline to Iran. According to the U.S. Energy Information Administration, Iran imported approximately 130,000 barrels of gasoline per day in 2009, more than a quarter of its total gasoline consumption. Lastly, the bill makes the insuring of any goods or services related to Iran's ability to refine or import gasoline an activity subject to sanctions.
The original 1996 legislation that the new bill modifies provides six different sanctions measures, and directs the president to apply at least two to any violator: a ban on assistance from the Export-Import Bank of the United States, a prohibition on U.S. exports, a ban on loans from U.S. institutions, penalties related to dealing with the Federal Reserve, a ban on U.S. government contracts with the sanctioned organization, and restrictions on imports. The 2010 legislation provides three additional penalties: a prohibition on foreign exchange activities and on financial transactions generally under the jurisdiction of the United States, and a ban on property transactions in the United States. The president is directed to apply at least three of the nine penalties.