Senate panel approves tougher sanctions on Iran

WASHINGTON (Reuters) - A Senate panel on Wednesday approved legislation to strengthen U.S. sanctions on Iran in an effort to get that country to drop its nuclear program.

The Senate Finance Committee cleared the bill to expand trade and financial sanctions 19-2, and the House of Representatives passed similar legislation last year.

Washington believes Iran harbors ambitions to build an atomic bomb, while Tehran says its nuclear program is for peaceful energy purposes.

The measure would strengthen existing U.S. sanctions by tightening the trade ban on goods to and from Iran. For example, it would no longer allow the import of Iranian carpets, caviar, and nuts to the United States.

The bill also would expand financial sanctions on some Iranian individuals, and penalize U.S. companies if their foreign subsidiaries do business with Iran.

In provisions likely to displease the White House, both the House and Senate bills also would press Russia to stop helping Iran's nuclear program by barring the United States from entering into a civilian nuclear agreement with Moscow until that country suspends such assistance.

While President George W. Bush favors tougher international sanctions on Iran, he also wants the civilian nuclear accord with Moscow, and has sent such a pact to Congress. It will go into force later this year unless both chambers of Congress vote to block it.

Bush, along with many lawmakers, initially criticized Russia for delivering nuclear fuel to Iran. But he has recently taken the position that such a move shows Russia can be a dependable supplier so that Iran itself has no need to enrich uranium.

The way forward for Iran sanctions legislation in Congress also is unclear because at least one other proposal is pending in another Senate committee.

"The strong sanctions we've approved today will work to deter the Iranian government from producing a nuclear weapon," said the committee's chairman, Sen. Max Baucus, a Montana Democrat who earlier this week recast the measure based on a bill from Oregon Republican Sen. Gordon Smith.

(Reporting by Susan Cornwell, editing by Vicki Allen)