* Urge lawmakers not to ease proposed sanctions
* Want to penalize banks trading with Iran’s central bank
By Susan Cornwell
WASHINGTON, Dec 6 (Reuters) - The Obama administration is urging U.S. lawmakers to soften proposed sanctions targeting Iran’s central bank, Senator Mark Kirk said on Tuesday.
Kirk, a Republican, is the co-author along with Democratic Senator Robert Menendez of a proposal to penalize foreign financial institutions that do business with Iran’s central bank, the main conduit for its oil revenues.
The Senate approved the proposal last week 100-0 despite lobbying against it by Obama administration officials, who argued that threatening U.S. allies might not be the best way to get cooperation in action against Iran.
A similar measure is pending in the House of Representatives; both chambers must agree on the same version before it can become law.
Kirk said on Tuesday that the administration had written to some lawmakers’ offices and “proposed what they describe as technical fixes” to the Kirk-Menendez amendment.
But Kirk complained: “They are not technical fixes at all. They are meant to undermine the amendment.” He and Menendez have written to fellow lawmakers as well, urging them to “stick with” the Senate-passed proposal, Kirk said at an event on Iran’s nuclear program, sponsored by the conservative American Enterprise Institute think tank.
The United States and its western allies have supported multiple rounds of sanctions on Iran, seeking to persuade it to curtail its nuclear work. Washington suspects Tehran of using its civilian nuclear program to develop weapons, although Iran says its program is solely to produce electricity.
The Kirk-Menendez proposal would dissuade foreign banks from dealing with Iran’s central bank by threatening to cut them off from the U.S. financial system. The United States already bars its own banks from dealing with the Iranian central bank.
Last week, administration officials testified on Capitol Hill that they were indeed looking for more ways to sanction Iran’s central bank, but in a calibrated manner, to avoid roiling oil markets or antagonizing allies.
A senior Senate Republican aide said the document that the administration sent to lawmakers’ offices proposed lengthening, from 60 to 180 days, the grace period in the Kirk-Menendez proposal before sanctions would kick in for non-oil transactions with Iran’s central bank.
The administration also sought to “water down the penalties” on foreign banks that do business with Iran’s central bank, the Senate aide said. The administration favored imposing “strict conditions” on such foreign banks, rather than the all-out cutoff from the U.S. financial system that is in the Kirk-Menendez amendment.
Kirk charged that the Obama administration was simply trying to find “a way out for the administration, to say that a nuclear Iran is unacceptable, but to take no effective action against the central paymaster” of the country’s nuclear architecture.
The Kirk-Menendez proposal passed the Senate last Thursday as an amendment to a huge bill authorizing defense programs. A similar proposal to target Iran’s central bank has passed a House committee and the House is expected to vote on it soon.