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Deal-Breaking New Iran Sanctions Postponed

After an intense week of public and behind-the-scenes diplomacy, the Obama Administration has convinced key U.S. Senators to hold off on introducing new sanctions that would have broken the interim agreement reached last month between the P5+1 and Iran, and destroyed chances for a permanent agreement.  In return, the Treasury Department announced that five international firms were added to the existing sanctions lists for hiding cash flows to Iran.

Among the firms cited in the announcement by Assistant Secretary of Treasury for Enforcement, David S. Cohen, were two Singapore companies—Mid Oil Asia and Singa Tankers.  An Iranian company, Eyvaz Technic Manufacturing Company, was named for illegally obtaining key parts for Iran’s nuclear and missile programs.

The timing of the Treasury Department announcement was an obvious concession to Congressional hawks who have been threatening to bust the Geneva negotiations with new sanctions that would further shut off Iranian oil exports.  They were announced by Cohen on Dec. 12 just moments before he and Assistant Secretary of State Wendy Sherman were scheduled to appear before the Senate Banking Committee.  On Dec. 10, Secretary of State John Kerry and Secretary of Treasury Jack Lew had given a closed-door briefing before the entire Senate, warning that new sanctions would be a “deal breaker” and that the United States would be blamed for the collapse of the talks.  Immediately afterwards, Kerry came under strong bipartisan attack for being too soft on Iran.

During a meeting in Tehran with Russian Foreign Minister Sergei Lavrov, the Iranian Foreign Minister Javad Zarif had confirmed that any new American sanctions would be considered a violation of the interim agreement and would kill the final status talks before they even got started.  In an interview with Time magazine, he said if there are new sanctions, the deal will be “dead.”

At the Senate Banking hearings, Dec. 12th, Chairman Sen. Tim Johnson, a powerful senior member of the Democratic Party, announced that he would not allow new sanctions to be introduced into the Senate before the initial six months of talks were completed or until there was clear evidence that Iran had violated the interim agreements.  The same day, Senator Robert Menendez, Chairman of the Senate Foreign Relations Committee, announced that he, too, would go along with the White House demands to hold off on new sanctions.  Menendez had been working with Republican Senator Mark Kirk on drafting new sanctions.  Instead, the two Senators are likely to introduce a resolution spelling out specific conditions for a final agreement, but not until the Senate returns early in January from the holiday recess.  Two other leading Senators who had been threatening to support new sanctions, Mike Crapo and Bob Corker—both Republicans—joined their colleagues in backing off from the sanctions threats.

Behind the scenes, the Administration diplomacy was even more intense.  Treasury Secretary Lew met with 100 top bankers and corporate CEOs, warning against any premature efforts to secure business deals with Iran.  He addressed the American Jewish Distribution Committee and pledged that the military option was still on the table if Iran in any way violated the interim agreement or failed to accept tough terms in a final deal.  President Obama, on December 8, addressed the Brookings Institution’s Saban Center and warned that new sanctions at this time of sensitive negotiations would result in the U.S. being blamed for the failure of the diplomacy.

General Martin Dempsey, Chairman of the Joint Chiefs of Staff, General Raymond Odierno, the U.S. Army Chief of Staff, and General Mark Welsh all weighed in this week against sanctions and in support of even broader negotiations with Iran, including on Syria and Afghanistan.

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