U.S. lawmaker ready to push Iran fuel sanctions bill

WASHINGTON Wed Jul 22, 2009 1:23pm EDT

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WASHINGTON (Reuters) - If the Obama administration can't persuade the Iranian government to end its nuclear program, the chairman of the House Foreign Affairs Committee warned on Wednesday he will move forward with legislation this fall that seeks to cut off gasoline exports to Iran.

"The legislation would force companies in the energy sector to choose between doing business with Iran, or doing business with the United States," said Rep. Howard Berman, a California Democrat.

The United States and many of its allies are worried Iran wants to develop nuclear weapons, but Iran claims it just wants to generate electricity by nuclear power.

The bill would impose sanctions on foreign companies that export refined petroleum products, such as gasoline, to Iran or help maintain the country's domestic refining capacity. This would include companies that provide ships or shipping services to transport the fuel, underwrite the shipments and finance or broker the relevant gasoline cargoes.

"I view this bill as a 'sword of Damocles' over the Iranians -- a clear hint of what will happen if they do not engage seriously and move rapidly to suspend their uranium enrichment program," Berman said. "If engagement does not work, then I'm prepared to mark up the bill in committee early this fall."

Iran holds some of the world's biggest oil reserves, but it imports 40 percent of its gasoline to meet growing demand. Government subsidies there also help keep gasoline in Iran much cheaper than in other countries at around 43 cents a gallon.

"So this legislation -- if it becomes law -- would significantly increase economic pressure on Iran and hopefully persuade the regime to change is current course," Berman said.

Patrick Clawson, deputy director for research at the Washington Institute for Near East Policy, told the committee that Iran's economy will likely do poorly in the next few years and now "is a perfect moment" to impose additional sanctions on Iran.

"The sanctions will come at a time of looming economic hardship, and there is excellent reason to expect that Iranian public opinion will blame the economic problems on hardliners' isolation of Iran from the international community," he said.

However, moves to block Iran's imports of gasoline will not likely have much impact, according to Suzanne Maloney, Middle East expert at The Brookings Institution.

"They will be mitigated by Iran's porous borders and long history of smuggling petroleum products, and those with access to power are likely to retain access to fuel," she told the panel.

The full House of Representatives has already taken some action to cut off Iran's gasoline supplies.

Earlier this month, the chamber overwhelmingly included language in a spending bill that would prohibit the U.S. Export-Import Bank from providing credit, insurance or loan repayment guarantees to foreign companies that supply gasoline to Iran. The legislation has a good chance of also passing in the U.S. Senate, experts say.

(Reporting by Tom Doggett; Editing by Lisa Shumaker)

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