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Reuters: UPDATE 1-Iran sanctions bill passes first US Congress test

Tue Jun 26, 2007 2:40 PM ET
By Carol Giacomo, Diplomatic Correspondent
(Adds detail, quotes, background paragraphs 4-5,9-10,12-end)

WASHINGTON, June 26 (Reuters) – President George W. Bush would be forced to sanction oil and gas companies doing business with Iran under legislation that cleared a first hurdle on Tuesday by winning overwhelming approval from a congressional committee.

The bill was approved 37 to 1 by the U.S. House of Representatives International Relations Committee.

It also would eliminate some tax breaks for companies investing in Iran, decrease U.S. contributions to the World Bank if the bank invests in Iran and bar a nuclear cooperation agreement with Russia if Moscow continues to assist Tehran’s nuclear program.

To become U.S. law, the measure still must be approved by the full House and also by the U.S. Senate.

But the near-unanimous vote of the House panel underscores the determination of some lawmakers who see tough sanctions as the only diplomatic tool with a chance of forestalling military action by persuading Iran to halt its nuclear activities.

“My legislation will increase exponentially the economic pressure on Iran and empower our diplomatic efforts by strengthening the Iran Sanctions Act,” said Rep. Tom Lantos, the committee chairman.

“It will put an end to the administration’s ability to waive sanctions against foreign companies which invest in Iran’s energy industry,” the California Democrat said.

Iran is defying U.N. Security Council demands to halt uranium enrichment. Washington says Tehran’s nuclear program is aimed at building bombs; Tehran says it is designed only to produce electricity.

ALIENATE ALLIES?

Lawmakers dismissed administration officials’ contention that sanctioning European and other firms would alienate allies who have been working with Washington to gradually ratchet up pressure on Iran in the U.N. Security Council.

“Foreign investment in Iran equals money for terrorism and attacks on American troops,” said Democratic Rep. Gary Ackerman of New York, referring to U.S. charges that Iran is backing insurgents in Iraq.

Companies and government agencies in three dozen countries had struck more than $153 billion in deals with Iran since 2000, the independent American Enterprise Institute said recently. The investment could offer important leverage to persuade Tehran to abandon its nuclear program, analysts said.

Congress gave U.S. presidents authority to sanction foreign companies doing business with Iranian energy in the 1996 Iran-Libya Sanctions Act. But the sanctions were never invoked, allowing “corporate barons running giant oil companies” to do business in Iran with impunity, Lantos said.

The bill, building on existing law, would require that sanctioned companies at a minimum be barred from doing business with the U.S. government and affect subsidiaries and principal executive officers as well as parent firms.

It would reimpose a total ban on Iranian imports, reversing a “goodwill gesture” by former President Bill Clinton that allowed in carpets and certain other products.

It would also prohibit the export of civil aviation equipment to Iran, which would make it hard for the administration to fulfill its commitment to incentives offered by the United States, Britain, France and Germany last year as an inducement to halt enrichment.

The bill would require the president to determine whether the Iranian Revolutionary Guard Corps should be designated a foreign terrorist organization.

The U.N. Security Council has passed two resolutions imposing sanctions on Iran and some members are discussing a third resolution that could raise the pressure even more.

© Reuters 2007. All rights reserved.

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