US House panel takes aim at Iran in foreign aid bill

WASHINGTON, June 23 Tue Jun 23, 2009 7:37pm EDT

WASHINGTON, June 23 (Reuters) - The House Appropriations Committee on Tuesday approved a $48.8 billion spending bill for U.S. foreign policy and aid efforts, and tried to apply more pressure on Iran after the violence that followed its disputed election results.

The legislation includes $2.7 billion in foreign aid for Afghanistan and $1.5 billion for Pakistan as they fight Taliban militants. It also provides $2.2 billion for Israel, a close U.S. ally, during the fiscal year 2010 which starts Oct. 1.

But the committee debate centered on trying to pressure Iran, where huge crowds of demonstrators have flooded the streets for days protesting that the re-election of Mahmoud Ahmadinejad was fraudulent, a charge he has denied.

Lawmakers adopted an amendment that would prohibit the U.S. Export-Import Bank from extending loans, credits or guarantees to companies that supply Iran with gasoline or help the country's domestic production.

"While students are murdered in the streets of Tehran, we should not use taxpayer money to bolster the Iranian economy," said Republican Representative Mark Kirk of Illinois.

Kirk estimated that Iran imports some 40 percent of its gasoline and almost all of it comes from Swiss firms Vitol and Glencore International [GLEN.UL], the Swiss and Dutch firm Trafigura, France's Total (TOTF.PA), BP (BP.L) and India's Reliance Industries (RELI.BO).

Some Democrats argued that lawmakers should avoid interfering with U.S. foreign policy on Iran because it could give the Tehran government an opening to blame the United States for meddling in its internal affairs.

"The smartest thing we can do right now is to stay out of the Iranian revolution so it is the Iranians' revolution not ours," said Democratic Representative Jim Moran.

He said the Export-Import Bank had already issued $900 million in loan guarantees for a Reliance Industries refinery, which would not be producing gasoline for Iran.

However, Kirk said the plant provides roughly one-third of Tehran's daily gas imports.

The Export-Import Bank loan amendment was attached to a must-pass annual spending bill, but the language could change or even be removed before it becomes law. (Editing by Chris Wilson)

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