Iran News ...


6/26/03

US Congressional Hearing on ILSA Pressures EU to Sanction Iran

By Raha Rafii
National Iranian American Council

Washington, DC, June 25, 2003. The Middle East and Central Asia Subcommittee held a hearing on the implementation of the Iran-Libya Sanctions Act (ILSA) which was first passed by Congress in August 1996 and reauthorized on August 3, 2001. The bill limits investment in the oil sectors of Iran and Libya, in order to prevent siphoning of revenue towards funding state-sponsored terrorist organizations and expediting the development of weapons of mass destruction (WMD). The panel focused on increasing security threats from Iran, particularly with Iran's progress towards acquiring nuclear weapons and long-range missiles. The panelists underscored that ILSA was to be seen in the broader context of combating global terrorism, to be used in conjunction with other methods as part of a coordinated package.

The Honorable Ileana Ros-Lehtinen, who chaired the subcommittee, asserted that foreign investment in both countries provides them with resources to fund terrorist organizations and the ability to develop WMDs. Calling Iran "the most active state sponsor of terrorism" with links to Hizballah, Hamas, and, to a lesser degree, al-Qaeda, she cited this description as "proof of why Iran is deserving of inclusion in President Bush's 'Axis of Evil.'" The aim of ILSA, as clarified by Patrick Clawson, Deputy Director of the Washington Institute for Near East Policy, was not to sanction foreign firms that invest in Iran but to deny Iran the funds to support terrorism and develop WMDs by limiting the development of Iran's petroleum industry.

Philo Dibble, Deputy Assistant Secretary of the Bureau of Near Eastern Affairs in the US Department of State, noted that, "unlike some countries," the US did not differentiate between Iranian hardliners and reformers, stating that "the government as a whole must be held responsible for its actions," namely that of non-cooperation with the safeguard obligations of the IAEA, harboring of senior al-Qaeda members, human rights violations, and meddling in Iraq's political process.

The focus of the hearing was the significant linkage between foreign investment in Iran and the regime's funding of terrorist groups and development of WMDs. Ros-Lehtinen asserted that "Iran's terrorism must be paid for, and that could not be done without the sale of oil and natural gas that is abundant in that country." Roger W. Robinson, CEO and President of Conflict Securities Advisory Group, Inc., noted that of the roughly 375 publicly traded companies trading in terrorist-sponsoring states, excluding Cuba, over 200 of such firms have links to Iran, offering "critical commercial infrastructure" for the Iranian government.

As Robinson stated, "it is common for these firms to be required to partner with state-owned enterprises in these countries to ensure that the government can access advanced technology, equipment, and expertise, as well as maintain control over associated revenue flows," most notable when such business transactions run, "at minimum, tens of billions of dollars."

Views on the effectiveness of ILSA in achieving its goals were varied. Though Ros-Lehtinen observed that "by aiming for [terrorists'] largest donors-the state sponsors-we are making a bigger dent in the financial infrastructure of the global terrorist network," she noted the deterrent effect of ILSA had been lost because of its primary utilization as "a vague and unfulfilled threat" rather than any actual application.

Anna Borg, Deputy Assistant Secretary of the Bureau of Economic and Business Affairs in the US Department of State, conceded that "we have not succeeded in stopping petroleum-sector investment," yet noted that some analysts attributed the slowing rate of oil and gas development in Iran to the sanctions, rendering ILSA at least somewhat effective. Borg also asserted that ILSA "further enhanced the level of cooperation from other countries in countering WMD and terrorism threats" from Iran, a sentiment echoed by Dibble, who asserted that the firmer stance adopted by the EU and Russia toward "the growing threat of Iran's covert nuclear weapons program" was a result of US efforts. However, though Clawson acknowledged the effects of US efforts he gave more credit to what he described as the Iranian government's own incompetence, corruption, and inefficiency to reducing foreign investment.

The panelists focused on obtaining the cooperation of the EU, a significant source of foreign investment in Iran, in order to bolster the effectiveness of ILSA. The testimony of Charles Ries, Principal Deputy Assistant Secretary of the Bureau of European and Eurasian Affairs in the US Department of State, noted that though the US and EU both shared strong concerns over Iran's pursuit of WMD, support of terrorist organizations, and poor human rights record, they differ on the process by which to "curb objectionable behavior." He observed that though the EU's policy of engagement has yet to produce any real change in Iranian behavior, the narrowing gap between their two differing approaches since the passing of ILSA is promising, as typified by the May 1998 US-EU joint declaration of cooperation in non-proliferation and counter-terrorism.

Ros-Lehtinen was more openly critical of the EU's policy of "constructive engagement," stating that "it is difficult to understand how, on the one hand, our European allies can so fervently wish to be part of the Middle East Roadmap, yet provide the resources, through ongoing investment in Iran, to Hamas and other forces seeking to obstruct and destroy the peace process." Dibble, in accord with Ries, asserted that the US was making progress in obtaining international support to pressure Iran and Libya to end their policies of state-sponsorship of terrorism.

Clawson stated that a priority for US policy should be insisting Europe, and if possible, Japan, jointly undertake economic actions to halt Iranian proliferation and terrorism. While he conceded that economic sanctions are "imperfect instruments" against Iranian proliferation and sponsorship of terrorism, Clawson stated that they would still be more effective than multilateral diplomacy, engagement with the Islamic government, regime change, or preemptive military action since "economic problems are high on the mind of Iran's leaders" and "the youth protests threatening their rule are fueled by poor prospects for the young."

In the Q&A section, Clawson reiterated the significance of the Iranian regime's own incompetence in slowing down economic growth in response to Berman's concern of whether waivers granted by the US to companies for otherwise "sanctionable" activities encouraged investment in state sponsors of terrorism.

Brad Sherman (D-CA 27th), author of the Iran Freedom and Democracy Support Act, asked whether companies would continue to invest in Iran with the threat of renewed US economic sanctions, to which Robinson replied that though sanctions "will cast a substantiated pall on investment appetite," they would by no means end investment because of the high risk appetites of European and Asian companies. In response to further inquiries, both Robinson and Borg asserted the difficulty of quantifying actual investment in Iran.


NIAC's mission is to promote Iranian-American participation in civic life. Iranians-Americans deserve to make informed decisions on matters that affect them, and NIAC aims to facilitate this by bringing transparency to these debates. Our intent is to report on policy conferences and pieces of legislation as objectively as possible. NIAC, itself, as an organization, has no position on these debates. Our function is to provide Iranian-Americans with the necessary knowledge and tools to be able to participate in decision-making according to their own views.

The National Iranian American Council is a Washington, DC-based non-profit educational organization promoting Iranian-American participation in American civic and political life. For more information, please visit www.niacouncil.org, email NIAC at info@niacouncil.org or send a fax to 202-518-6187. NIAC is a 501 (c)3 non-profit organization. All donations to NIAC are tax-deductible.

... Payvand News - 6/26/03 ... --



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