U.S. Panel Backs New Policy on Iran

As Congress moved Thursday to extend sanctions on Iran, a blue-ribbon panel of former top U.S. policymakers called for ending the economic embargoes that have characterized tensions between the United States and the Islamic Republic for more than two decades.

Lifting sanctions would almost certainly have the widest impact on Iran’s rich energy industry--and the United States’ growing appetite. Iran is the second-largest oil exporter in the Organization of Petroleum Exporting Countries and has the world’s second-largest gas reserves. However, it also needs major investment to maintain production and develop new fields.

“Iran has an important role to play in meeting growing U.S. and worldwide energy demands,” says the panel, which was brought together by the Atlantic Council, a nonpartisan network of leaders in foreign policy. Rather than punishing companies--domestic or foreign--that invest in Iran’s energy sector, the U.S. should be encouraging contacts and development “so that Iran can reach its full capacity,” the panel’s report adds.

The panel, made up of top officials from the Nixon, Ford, Carter, Bush, Reagan and Clinton administrations, supports a policy shift because of changing global needs, economic realities, policies of allies and Iran’s evolving political environment.

“Whatever effect sanctions initially had, their value is declining largely because they were imposed unilaterally and because Iran has now found alternative investors and suppliers,” the report says.

Sanctions will have “little discernible effect” on Iranian policy and behavior toward the United States, it concludes.

The panel is co-chaired by Brent Scowcroft, national security advisor to the administration of former President George Bush; retired Rep. Lee H. Hamilton, former chairman of the House International Relations Committee; and James R. Schlesinger, secretary of defense during the Nixon and Ford administrations and secretary of energy in the Carter administration. The 62-member panel also includes two former hostages held captive for 444 days after the 1979 seizure of the U.S. Embassy in Tehran.

While recognizing that the issue of renewing formal diplomatic relations is caught up in Iran’s internal power struggle between moderates and conservatives, the panel nevertheless calls for a new approach in dealing with a country that the current Bush administration calls a rogue regime and one of the reasons to develop a missile defense system.

“The current stalemate between the United States and Iran, while emotionally satisfying to many Americans, does not serve overall U.S. interests well. It hinders the achievement of several key U.S. geopolitical interests,” including energy security, regional stability, and the broader and evolving relationships between the United States and China, Russia, the Persian Gulf states and the Caspian basin, the report warns.

The U.S. should not back down on its long-standing position critical of Iran’s development of weapons of mass destruction, support of extremism and opposition to the Mideast peace process. Yet the panel suggests that commercial contacts would be “the most promising area of potential U.S. engagement with Iran.”

But Congress has signaled its strong disagreement. With the support of 74 senators, a bill extending the Iran-Libya Sanctions Act, or ILSA, for another five years was introduced Thursday by Sens. Charles E. Schumer (D-N.Y.) and Gordon Smith (R-Ore.).

The act, just one of the embargoes enacted since the embassy takeover, imposes broad sanctions on foreign businesses that invest more than $20 million in the petroleum sectors of Iran or Libya, which are both on the State Department’s list of nations that sponsor terrorism. ILSA, enacted in 1996, is designed to limit either country’s ability to fund extremist activities.

“Maintaining a strong sanctions policy sends an unambiguous message of ‘zero tolerance’ to those who would use terror as a diplomatic tool,” Schumer said Thursday. “While I applaud President Bush for searching for answers to our energy problems, relaxing sanctions will not help increase U.S. oil supplies one iota.”

Schumer went one step further and suggested that a strong case could be made to tighten sanctions because Iran remains the top supporter of terrorism aimed at the U.S. and its allies, while Libya has rejected Western calls to take responsibility for the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland.

Opponents of renewing ILSA have argued that U.S. companies are losing out on important business in developing oil and gas facilities in Iran as well as a key source of energy. U.S. officials have conceded that sanctions have cost hundreds of millions of dollars in lost income and tens of thousands of jobs.

During the last couple of years, the U.S. has opted not to impose sanctions on European companies that signed gas field development deals with Iran, which has made clear in the past that it would like to do business with U.S. companies.

In April, however, Bush said he did not envision lifting the sanctions “any time soon.”