U.S. defends permits for Iran deals in sanctioned nations

WASHINGTON Fri Dec 24, 2010 9:12am EST

Iran's supporters shout during the FIVB Men's Volleyball World Championship first round match between Iran and Italy in Milan September 27, 2010. REUTERS/Alessandro Garofalo

Iran's supporters shout during the FIVB Men's Volleyball World Championship first round match between Iran and Italy in Milan September 27, 2010.

Credit: Reuters/Alessandro Garofalo

WASHINGTON (Reuters) - The Treasury Department on Thursday defended its issuance of special licenses for American companies to do business with Iran and other blacklisted nations, in response to a New York Times report on deals made despite sanctions and trade embargoes.

An examination by the newspaper found the Treasury Department's Office of Foreign Assets Control has made nearly 10,000 exceptions to U.S. sanctions rules over the past decade.

A Treasury official said the majority of the cases examined by The Times were approved under a law requiring the Treasury to license exports of agricultural and medical humanitarian aid to Iran and Sudan.

"These are not discretionary exceptions to U.S. sanctions made by Treasury," the official said, speaking on condition of anonymity.

"Because the U.S. has the toughest and most comprehensive sanctions against Iran, allowing for the exportation of food, medicine and medical devices is consistent with our objective of not hurting the Iranian people."

The Times said the 10-year-old law was so broadly written that allowable humanitarian aid has included cigarettes, chewing gum, weight-loss remedies, Louisiana hot sauce and sports rehabilitation equipment sold to the institute that trains Iran's Olympic athletes.

The paper said it found hundreds of licenses were approved because they were deemed to serve U.S. foreign policy goals. But the examination also found cases in which the foreign policy benefits were not clear, the article said.

It cited one instance in which a U.S. company was permitted to bid on a pipeline job that would have helped Iran sell natural gas to Europe.

The U.S. government has long banned American companies from investing in Iran's energy sector. After the United Nations imposed tougher energy and financial sanctions against Iran to curb its nuclear development program over the summer, similar bans have been imposed by Europe, Japan and South Korea.

Treasury officials have said the tougher sanctions -- which have effectively forced many financial services firms to choose between doing business with Iran or with the United States -- has imposed financial hardship on Iran's government.

The Treasury official said that in most of the decisions to allow U.S. firms to do business in a sanctioned country, the licenses were approved to allow them to wind down operations, extricate themselves from existing contracts or export educational material.

"All of these licensing decisions advance our national security and foreign policy goals," the official said. "In none of these cases were licenses issued to provide commercial benefit to designated entities."

The Treasury official also said that allowing U.S. companies to make food, agricultural products and medicine available to Iran is not diminishing the effect of the anti-nuclear sanctions.

(Reporting by JoAnne Allen and David Lawder; Editing by John O'Callaghan)