Senate Votes to Extend Sanctions on Iran and Libya

The Senate voted Wednesday to extend for five years a law that authorizes penalties against foreign firms investing in Libyan or Iranian energy projects--a victory for the families of victims of terrorist attacks sponsored by those countries, and a defeat for oil companies.

The House was expected to follow suit today, renewing the Iran and Libya Sanctions Act, and strengthening the sanctions against Libya. Existing sanctions, which expire Aug. 5, may be applied against foreign companies that invest more than $20 million a year in Iran’s energy sector and $40 million in Libya’s. The new bill applies the more stringent $20 million limit to Libya.

The sanctions are aimed at foreign companies doing business in the two countries, but they also target foreign affiliates of U.S. firms. American companies are prevented from doing business in Iran and Libya by executive order.

Under the act, the president can impose a variety of sanctions on offending companies, including blocking them from exporting goods to the U.S., selling items to the U.S. government or obtaining more than $10 million a year in U.S. bank loans.

The House was scheduled to vote on the legislation a week ago, but the bill was yanked after a dispute with the White House. The Bush administration, which has been heavily lobbied in recent months by energy industry groups opposed to the sanctions, had sought to shorten the extension to two years.

The White House budget office on Wednesday reiterated its preference for a two-year extension but said it would not oppose the legislation.

“Sanctions should be reviewed frequently to assess their effectiveness and continued suitability,” the Office of Management and Budget said in a statement.

No sanctions have actually been imposed since the law took effect in 1996. Oil industry lobbyists argue that the legislation has not been effective, noting that both Libya and Iran continue to be linked to international terrorist groups.

“If the original five-year sanction period has not been effective in allaying the fears about these governments, why do we believe an extra five years will be effective?” said Rep. Ron Paul (R-Texas) in a floor debate on the bill.

But proponents point to a decline in international oil investment in Iran since the law was enacted. Since 1996, Iran has promoted more than 50 foreign investment opportunities in its energy sector but has landed only eight contracts.

“Support for extension remains strong because Iran continues to threaten our national security by developing weapons of mass destruction and by supporting radical groups that support terrorism,” said Rep. Benjamin A. Gilman (R-N.Y.), the bill’s sponsor and a senior member of the House International Relations Committee. The Senate approved the measure 96 to 2.

As for Libya, relatives of Pan Am 103 victims want to keep pressure on Libyan leader Moammar Kadafi to take responsibility for the 1988 airline bombing that killed 270 people.