Senate bill aims to toughen Iran sanctions

WASHINGTON — A bipartisan group of senators introduced legislation Wednesday that would sharply toughen U.S. economic sanctions on Iran despite administration calls for Congress to delay penalties that could disrupt diplomacy aimed at resolving the dispute over Iran’s nuclear program.

Advocates say the Senate proposal could, at least in theory, block Iran from accessing about one-third of the foreign exchange reserves it relies on to pay for government programs, to finance trade and to prop up its currency.

The lawmakers aim to combine the Senate measure with legislation pending in the House that would move the United States toward a full trade embargo against Iran in an effort to force it to comply with Western demands.

The U.S. has imposed a near-total commercial, economic and financial embargo on Cuba since 1962, but that has not changed the island’s policies. Enforcing an embargo on Iran, which has a far more developed and more diverse economy, may be a much greater challenge.

The United States and its allies already have imposed sanctions on Iran’s nuclear and missile programs, its oil and gas industry, insurance and banking, financial sectors and other parts of the economy.

Advocates for tighter sanctions say new U.S. legislation is needed to block Iran from using the huge reserves of euros it holds in foreign banks. The measure would sanction international banks that facilitate trade with Iran in euros or other non-local currencies.

International negotiations to curb Iran’s nuclear program have not progressed, and “the time has come for the Senate to take action to close this loophole,” the senators said in a statement.

Supporters include Sens. Mark Steven Kirk (R-Ill.), Joe D. Manchin III (D-W.Va.) Susan Collins (R-Maine), Bill Nelson (D-Fla.) and John Cornyn (R-Texas).

Caitlin Hayden, spokeswoman for the National Security Council, said the administration is studying the bill. But she emphasized that a “comprehensive and unrelenting sanctions program” has increasingly severed Iran from the global financial system, driven down the value of its currency and led companies around the world to end their business with Tehran.

Secretary of State John F. Kerry implored Congress last month not to add more sanctions because they could become an issue in Iran’s presidential race, which is underway.

“We don’t need to spin this up at this time.... You need to leave us the window to try to work the diplomatic channel,” Kerry told the Senate Foreign Relations Committee.

Analysts said the measure could force Democrats in Congress to decide between breaking with the White House to appear tough on Iran or giving the administration policy more time in hope of producing results.

“There will be some riptides in the Democratic Party over this,” said Cliff Kupchan, an Iran specialist at the Eurasia Group consulting firm and a former State Department official.

But Kupchan said the proposal is likely to win broad congressional support. He noted that the White House has failed to halt most lawmakers’ sanctions bills, though it sometimes has watered them down.

Mark Dubowitz, executive director of the Foundation for Defense of Democracies, a pro-sanctions advocacy group, said the new legislation was “a strike at the regime’s economic lifeblood because it’s going at their bank accounts.”

Previous sanctions have cut Iran’s oil exports in half, yet the country still sold $60 billion worth of oil last year, its fourth biggest sales year on record, Dubowitz noted. He said the country’s total foreign exchange reserves are estimated at $60 billion to $100 billion.

paul.richter@latimes.com