Controversial Waiver Provisions in the New Iran Sanctions Bill

Reps. Howard Berman (D-Calif.) and Rep. Ros-Lehtinen (R-Fla.)

By Alfred Nurja

As we approach the one year anniversary of the CISADA Act , the U.S. Congress is considering new Iran sanctions legislation. Chairman of the House Foreign Affairs Committee Rep Ros-Lehtinen (R-Fla.), Democratic ranking member Howard Berman (D-Calif.) and a number of other House Members have introduced a new bill in the House, entitled Iran Threat Reduction Act. (H.R. 1905). The Senate is expected to soon follow suit with a bill of its own.

While making sense of these measures and walking through their implications will require more time, here is what the press release announcing the bill said:

“U.S.policy towards Iran has offered a lot of bark, but not enough bite. This new bipartisan legislation would bring to bear the full weight of the U.S. by seeking to close the loopholes in existing energy and financial sanctions laws, while increasing the type and number of sanctions to be imposed.”

“The bill strengthens sanctions on efforts by the regime to circumvent existing law, adds new sanctions, such as denying visas to individuals who engage inIran’s energy sector. The bill eliminates some waivers, resulting in a mandate to impose sanctions on those who provide the Iranian regime with the materials, technologies, and other assistance to pursue its nuclear, chemical, biological, and missile programs. The bill also creates a new higher standard for waiver of energy sanctions by requiring the President, before waiving, to notify Congress and certify that failure to waive would pose an unusual and extraordinary threat to the national security interests of the U.S.”

Contrary to what the sponsors of the legislation intend to achieve, however, there is a risk that a number of provisions, and those related to presidential waivers as currently worded in particular, may weaken the sanctions regime.  Instead of closing the loopholes,  the legislation’s limits on Administration flexibility could actually widen them by negatively affecting relations with states that are key players in ensuring their enforcement.

Understanding the role that waivers play in the sanctions legislation requires some knowledge of the overall nature of the sanctions that Iran faces due to its failure to address international concerns over its nuclear program.

Iran has been subject to increasing international pressure and sanctions ever since the IAEA referred Iran’s nuclear file to the UN Security Council in 2006. There are currently four rounds of UN Security Council approved sanctions that primarily target Iran’s sensitive proliferation and missile related activities. Since the summer of 2010, responding to Iran’s failure to engage seriously in negotiations, the European Union and other western allies have introduced additional sanctions that targetIran’s energy and financial sector. The United States, because of its long-standing grievances with the Iranian government, has since the early 80s already had a robust sanctions regime in place that largely prohibits any entity under U.S. jurisdiction from engaging in any trade or investment with Iran.

In addition to these measures, the United States is the only country that since the mid-90s has introduced legislation which has an extraterritorial application — that is, it targets foreign-based entities and companies (often based in allied countries) that engage in U.S. proscribed activities such as investments of more than 20 million USD in one year in Iran’s energy sector” or transfer or WMD and advanced conventional weapons or technology to Iran. Once a foreign based company is found in violation of these provisions, the President is required to employ three or more of the current nine types of sanctions available against them. Under the proposed legislation, the President would be required to impose at least five of these measures. Sanctions include cutting off companies from U.S. gov. procurement contracts, credit lines, market access, etc.

The U.S. extraterritorial legislation by its nature has generated controversy  for extending the application of U.S. law over territory and persons that are subject to their own national authorities and has given rise to potential legal disputes . To mitigate against such an outcome as well as prevent a harmful impact on relations with partners, successive U.S. administrations have insisted on and secured waiver provisions.

Under current CISADA legislation in force since last summer, the President can waive such sanctions if it certifies to Congress that doing so is “necessary” to the national interest. These provisions raised the bar from previous legislation that required certifying that doing so was “important” toU.S. national interest.  Under the new bill, however, the bar on energy related sanctions is raised significantly further. As currently worded, the President would be required to certify to Congress that not waiving the sanctions “would pose an unusual and extraordinary threat to the vital national security interest of theUnited States.”

Raising the bar to such a level, however, would be a mistake as it would largely eliminate the utility that waivers are intended to play in sanctions legislation.  The Executive is the branch of government equipped with the capability and responsibility to execute foreign policy.  As Congress has recognized since the mid-90s, the provisions related to waivers exist to give the administration the flexibility required to effectively enforce sanctions and achieve the purpose for which they were introduced — that is compelling Iran to address concerns over the nature of its nuclear program.  Congress should hold the Administration up to that task by preserving in the Bill the tools it needs to enforce the policy.

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