President Says He Will Ban Trade With Iran

President Clinton, hoping to strike a blow at a rogue state, announced tough new sanctions against Iran on Sunday that ban all U.S. investment in and trade with the Mideast nation.

The President said the step, which will prohibit all U.S. exports to Iran and halt any trading by American companies in Iranian oil, “makes clear our unrelenting determination to do all that we can to arrest the behavior and ambitions of a nation that ranks at the top of the world’s ’10 Most Wanted’ list”--both as a sponsor of international terrorism and as a potential nuclear threat.

At the same time, Clinton urged Russia to undo an agreement to sell nuclear technology to Tehran, calling it “profoundly disturbing.” The President said he will pursue the matter with Russian President Boris N. Yeltsin during a summit in Moscow this month.

In a speech to the World Jewish Congress in New York, Clinton said he will sign an executive order to carry out the Iranian embargo later this week under the authorization of the Emergency Powers Act.

“To do nothing more as Iran continues its pursuit of nuclear weapons would be disastrous,” he said. “And to stand pat in the face of overwhelming evidence of Tehran’s support for terrorists would threaten to darken the dawn of peace between Israel and her neighbors.”

With the Oklahoma City bombing clearly in mind, the President announced his intentions hours after attending a ceremony for 6,000 Holocaust survivors in which he urged Americans to “stand against new forms of organized evil.”

He contended that his Administration already had taken “broad and swift measures to fight terrorism here and abroad . . . working with other nations to unravel the networks of terror and hunt down those who threaten our people.”

“But as the tragedy of Oklahoma City has shown,” he said, “there are stronger steps that we can--and must--take.”

The new sanctions, designed to go into effect 30 days after the executive order is signed, are nearly as tough as the sweeping trade embargo imposed on Iran during the 1979-81 hostage ordeal.

They may have limited impact on Iran, however, because it is expected to easily find trade alternatives in Europe and Asia. Ironically, the effect of the sanctions will undoubtedly be felt in the United States.

U.S. companies made $326 million from export trade to Iran last year, down from $616 million in 1993 and $750 million in 1992.

Foreign subsidiaries of U.S. oil companies bought and resold overseas more than 20% of Iran’s oil exports. Those exports provide Iran with up to $4 billion in income annually, although profits for the 12 U.S. companies involved are in the millions of dollars, not billions, U.S. officials said.

The officials acknowledged that several thousand U.S. jobs may be at stake. Fuel prices also may go up slightly for a short time as companies adjust to the change, although any higher prices are not expected to last, Administration officials said.

Although the White House generally downplayed the effect on U.S. companies, Clinton said, “I have determined that, if we are to succeed in getting other countries to make sacrifices in order to change Iran’s behavior, we too must be willing to sacrifice.”

Anticipating the U.S. move, Iranian President Hashemi Rafsanjani recently called American policies against his country “half-baked” and said that a trade ban on Iran, with its “huge resources and an extensive network of foreign relations,” would fail.

The President’s decision to enact the embargo follows an intensive, two-month policy review and comes as a result of pressures both foreign and domestic rather than because of any recent actions by Iran.

Since 1992, the United States has gradually tightened its squeeze on Iran. It won agreement among the Group of Seven industrialized countries to ban arm sales to Iran and restrict nuclear technology. It persuaded U.S. allies to delay rescheduling Iran’s mounting foreign debt and to limit extension of some trade credits.

“We have acted over the past two years unilaterally and multilaterally to try to contain Iran’s behavior, but its behavior has not improved. It has only gotten worse,” a senior U.S. official said Sunday.

The Administration is particularly concerned about Tehran’s sponsorship of extremist groups and its attempts to sabotage the U.S.-backed Mideast peace process. Iran also has intensified its efforts to acquire weapons of mass destruction, including a nuclear capability, the official added.

The United States hopes its latest steps will encourage allies to follow suit. After the executive order is signed, the Administration will renew its efforts to persuade European and Asian allies to join the embargo. Some governments were briefed on the plan over the weekend.

But allied cooperation is unlikely. The economically troubled governments of Europe are not in a position to impose sweeping trade embargoes against a country with which they do significant business. Most allies also believe that pressure through existing business and diplomatic ties would be more effective in moderating Iran’s behavior.

Since the end of the hostage ordeal, when the U.S. Embassy in Tehran was seized and 52 Americans were held 444 days, virtually all major U.S. allies, including Britain, have developed significant business with Tehran. Iran’s top five trading partners, including Japan and Germany, are all U.S. allies.

The Administration also hopes that the executive order will preempt proposed new legislation against Iran. Congress was expected to vote soon on two bills introduced by Sen. Alfonse M. D’Amato (R-N.Y.) that go much further than the embargo.

One bill also would prohibit trade with any foreign company that does business with Iran, and amounts to a second-party boycott.

Despite serious differences, Administration officials said their approach deals with the “essence” of the D’Amato bills and said they will consult with congressional leaders on Capitol Hill this week.