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Iran's Nukes

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New Legislation Would Squeeze Iran and Gasoline Suppliers Vitol, Glencore, Trafigura, Total, Reliance Industries, and BP

April 27th 2009

Iran - Iran Nuclear Equipment

Six foreign oil companies may soon be squeezed over their supply of gasoline to Iran. The six are: Vitol, Glencore International, the Swiss/Dutch firm Trafigura, France's Total, British Petroleum and India's Reliance Industries.

On April 22, the House of Representatives introduced the bi-partisan Iran Diplomatic Enhancement Act as a means of compelling Iran to heed the warnings of the U.S. and its allies to cease its nuclear weaponization program. The bill would also impose heavy sanctions on the oil suppliers.

Said Congressman Mark Kirk (R-IL), “If we are serious about stopping the emergence of a nuclear Iran, our window for effective diplomacy is starting to close,” perhaps hinting at Congress’ frustration with Iran and its Islamist leadership. Kirk is also an intelligence officer in the Navy Reserve and has introduced similar legislation in the past.

“We should use every conceivable lever within reach to prevent Iran from becoming a nuclear power and to halt its support of international terrorism,” added Congressman Mark Sherman (D-CA), chair of the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade.  Sherman, a co-sponsor of the measure, added “Iran’s need to import a significant portion of its gasoline is among the best levers we have at our disposal.”

The bill introduced by the congressman and his co-signers identified six companies that Iran bought most of its gasoline from in the past year. The biggest supplier to Iran in March 2009 was Vitol, which delivered at least six brimming tankers.

Legislators agree that an area where sanctions could hurt the oil-rich Islamic Republic of Iran would be in gasoline imports. Iran, despite its world-class deposits of petroleum, is sorely lacking in processing facilities that can produce the heavily subsidized fuel used by Iranian motorists. Some 40 percent of Iran’s gasoline is imported.

Despite having refining capacity of 1.5 million barrels per day, Iran imports around 140,000 b/d of gasoline, most of which is shipped in 30,000-35,000 ton cargoes to the Persian Gulf port of Bandar Abbas. A naval blockade could stem the flow of gasoline to Iran but also risk an armed response from the Islamic Republic.

President Barack Obama mentioned during his electoral campaign the possibility of sanctioning Iran by cutting off its foreign gasoline supplies. In 2008, then-Senator Obama suggested “banning the export of refined petroleum to Iran,” and said such a restriction “starts changing their cost-benefit analysis” and “starts putting the squeeze on them.”

The recently proffered bill would sanction any company that provides any goods, services or technology for building refineries in Iran. Among the other companies that could be affected is Lloyd’s of London, which insures tanker that carry gasoline to Iran. Faced with a choice between doing business with the U.S. or with Iran, legislators are betting that most companies would side with the United States in crippling Iran's energy sector.

The bill would expand the criteria under which a company could face U.S. sanctions under a 1996 law targeting investments over more than 20 million dollars in Iran's oil and gas infrastructure. The earlier measure listed possible sanctions such the  denial of U.S. Export-Import Bank assistance, denial of export licenses, curbs on loans from U.S. financial institutions, or restrictions on US imports from the affected company.

A stern admonishment was recently issued by Secretary of State Hillary Clinton that the United States would impose harsh sanctions should Iran not halt its nuclear program. In response, Iranian Foreign Minister Manouchehr Mottaki merely reiterated his mantra that his country’s nuclear program is for peaceful purposes, adding, "My advice to Madam Clinton (is) to study about the peaceful activities of the Iranian nuclear program.”

The U.S and five allies suspect that Iran is conducting a weaponization program under the cover of civilian nuclear research. The six allies want Iran to halt its uranium enrichment. This process can produce fissionable material to be used for power plants or atomic weapons. According to a statement by Congressman Mark Kirk, Iran---even while it is a party to the Nuclear Non-Proliferation Treaty---is in violation of five U.N. Security Council resolutions ordering a halt to all uranium enrichment activities. The International Atomic Energy Agency (IAEA), as of January 31, 2009, asserted that Iran has produced more than 1,000 kilograms of low-enriched uranium hexafluoride, which is 30 percent higher than previous IAEA estimates and enough to make one nuclear bomb. 

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