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Obama Seeks to Halt New Sanctions Amid Iran Deal Scrutiny

Photographer: Andrew Harrer/Bloomberg

President Barack Obama said, “Now is not the time for new sanctions.” Close

President Barack Obama said, “Now is not the time for new sanctions.”

Close
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Photographer: Andrew Harrer/Bloomberg

President Barack Obama said, “Now is not the time for new sanctions.”

President Barack Obama urged Congress to hold off on imposing new sanctions on Iran after the Islamic Republic agreed to curtail its nuclear activities starting Jan. 20 under a deal with world powers.

The agreement restricts Iran’s nuclear activities and imposes more intrusive inspections while starting a six- to 12-month timetable to reach a permanent accord. In return, Iran will benefit from sanctions relief, which the U.S. values at $6 billion to $7 billion over six months.

“It’s going to be difficult, it’s going to be challenging but ultimately this is how diplomacy should work,” Obama said yesterday at the White House after meeting with Spanish Prime Minister Mariano Rajoy.

The accord was reached after Iran and the so-called P5+1 countries -- China, France, Russia, the U.K. and the U.S., plus Germany -- arrived at an understanding over the weekend on how to implement a deal negotiated in November. There were no immediate signs that it would quell efforts in Congress to escalate pressure on Iran with further sanctions.

Iran has threatened to abandon talks if Congress votes to tighten economic restrictions, and Obama has vowed to veto additional sanctions while negotiations continue.

“Now is not the time for new sanctions,” Obama said.

House Majority Leader Eric Cantor, a Virginia Republican, said in a statement that the implementation deal “only furthers a deeply flawed agreement.” As many as 59 senators, most of them Republicans, have signed on in support of sanctions legislation by New Jersey Democrat Robert Menendez and Illinois Republican Mark Kirk.

Senate Supporters

At the same time, Senate Majority Leader Harry Reid, a Nevada Democrat, hasn’t indicated he intends to bring the sanctions measure to the floor for action, and the bill has been opposed by a number of Democratic committee chairmen -- including Carl Levin of Michigan, who heads the armed services panel and Dianne Feinstein of California, who leads the intelligence committee.

Sanctions constraining sales of Iranian oil remain in effect, and the U.S. hasn’t seen indications that major oil companies are violating them, an Obama administration official told reporters in Washington yesterday on condition that he not be identified discussing details of the sanctions regime.

Major companies including the U.K.’s Royal Dutch Shell Plc and BP Plc and France’s Total SA, have had partnerships with Iran. West Texas Intermediate crude for February delivery fell 1 percent to $91.80 a barrel yesterday on the New York Mercantile Exchange. Oil is down 6.7 percent so far this year.

Enriched Uranium

Under the accord, Iran is to immediately begin actions to eliminate within six months its entire stockpile of 20 percent enriched uranium, which could be most quickly processed to fuel nuclear weapons, according to one of three U.S. administration officials who briefed reporters Jan. 12 on the condition that they not be identified.

Iranian officials also agreed not to install or operate more advanced uranium centrifuges and to take steps to prevent use of current equipment for 20 percent enrichment, which will be verified as part of a tougher inspection regime by the International Atomic Energy Agency, one U.S. official said.

Negotiations on a permanent agreement will begin within a few weeks, Lebanese al-Mayadeen television reported, citing Iranian Deputy Foreign Minister Abbas Araghchi.

Obama has said he sees no more than a 50-50 chance those negotiations will succeed, while emphasizing it’s important to seek such a diplomatic solution before the possibility of military action.

Biden Dinner

Israeli Prime Minister Benjamin Netanyahu, who opposed the accord, said yesterday at the funeral for former Prime Minister Ariel Sharon that his country wouldn’t let Iran acquire nuclear weapons capability. Iran has asserted its program is for peaceful purposes, though the U.S., Israel and other nations say the Islamic Republic is seeking a weapons capability.

U.S. Vice President Joe Biden, who traveled to Israel to attend Sharon’s funeral, had a working dinner with Netanyahu after meeting earlier in the day with Israeli President Shimon Peres to discuss the Iran accord and continued efforts to broker an Israeli-Palestinian peace deal.

Netanyahu has publicly expressed concern that even limited concessions will undercut the broader sanctions regime and embolden Iran. Biden briefed Netanyahu afterward on the plan of action for Iran and sought to assure the prime minister that the U.S. is serious about sanctions, according to an Obama administration official familiar with the meeting.

‘Critical Moments’

During their four-hour dinner, Biden told Netanyahu that the administration opposes U.S. lawmakers’ efforts to adopt additional sanctions during negotiations, said the official, who asked not to be identified discussing the private conversation.

Earlier, at the state memorial service, Netanyahu said that while Sharon “greatly valued our partnership with our great ally, the United States,” he “also knew how to stand up resolutely for our vital interests at critical moments.” That principle remains in force now, and Israel “will act in every way to prevent Iran from attaining the capability to arm itself with nuclear weapons,” Netanyahu said at the Jerusalem ceremony outside Israel’s parliament, the Knesset.

Congressional critics such as Menendez and Cantor have objected that the deal permits Iran to continue enrichment up to 5 percent, a level for use in civilian power reactors that could be further enriched for weapons, and development of more advanced centrifuges.

Centrifuge Development

Centrifuge development was one of the last issues resolved. While Iran is able to continue work it has under way based on previous IAEA reports, it can’t develop or install newer technology, according to one U.S. official.

The P5+1 countries agreed to a series of steps to ease some sanctions while leaving in place the core energy and banking sanctions as well as those on Iran’s energy shipping and ports, according to a third U.S. official.

They will suspend sanctions on Iran’s petrochemical exports and imports of goods and services for its auto sector. The U.S. will also put on hold efforts to further reduce Iran’s exports of oil to the six nations still purchasing its crude, the official said. Under sanctions law that took effect in July 2012, the U.S. would otherwise have demanded more “significant reductions” in imports from Iran.

Iran’s oil exports, the country’s largest foreign-currency earner, plunged last year as U.S. and European Union sanctions meant that banks and insurers couldn’t handle Iranian sales of the fuel.

Gold Trade

Also, the nations will suspend sanctions on Iran’s imports and exports of gold and other precious metals, with some restrictions, and will expedite license applications for parts and services for its civil aviation industry. They will also take steps to facilitate financing of humanitarian trade through non-U.S. financial institutions, the official said.

Iran will get access to $4.2 billion in oil revenue held in foreign banks, to be released in monthly increments tied to its compliance with the commitment to eliminate the 20 percent enriched uranium stockpile, the official said.

Iran’s compliance will be monitored by the IAEA and the sanctions relief will be stopped and reversed if the country fails to meet its obligations, the first U.S. official said. At that point, he said, the administration would support moves by Congress to impose further sanctions.

The accord starts a six-month timetable to reach a final agreement. That period could be extended a further six months by mutual consent.

“As this agreement takes effect, we will be extraordinarily vigilant in our verification and monitoring of Iran’s actions,” U.S. Secretary of State John Kerry said Jan. 12.

To contact the reporters on this story: Terry Atlas in Washington at tatlas@bloomberg.net; Michael C. Bender in Washington at mbender10@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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