AS SENATE MULLS NEW SANCTIONS AGAINST IRAN... SCHUMER: TO GIVE TEETH TO NEW AND EXISTING SANCTIONS AGAINST IRAN, DEPLOY MORE INSPECTORS OVERSEAS TO PREVENT U.S. EXPORTS FROM GETTING FUNNELED TO IRAN
GAO Study Found Countries Like Germany, Malaysia and UAE Undercut Sanctions By Buying US Goods, Then Transshipping Them To IranAt Hearing, Senator Says Commerce Department Has Too Few Agents Deployed To Police These Black Markets and Prevent Backdoor ShipmentsSchumer Also Endorses New Wave Of Sanctions Against Iran; Says 'We Should Continue Talks With Iran, But Not Trust Them'
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WASHINGTON, DC-U.S. Senator Charles E. Schumer (DNY) today pressed Obama administration officials responsible for enforcing existing sanctions against Iran to deploy more agents overseas to stop trading partners of the United States from funneling U.S. exports to Iran. Schumer said tougher enforcement measures are needed to ensure the success of existing economic sanctions against Iran, as well as new penalties contained in legislation that is fast emerging in the Senate.
"It's time for a new crackdown on Iran, but this new round of sanctions must come with tougher enforcement," Schumer said. "Our existing sanctions are undermined by trading partners who funnel our exports through a backdoor to Iran. We must close this loophole, and impose even tougher penalties on the Iranian regime and those who coddle it. "
Schumer endorsed the Senate's proposed new round of sanctions, which he said ought to be readied even as the Obama administration engages in direct talks with the Iranians.
"These negotiations should certainly continue, but they do not supplant the need for action by this Congress. Iran, when it is caught redhanded, has a habit of promising just enough to avoid a strong response from the international community. Not this time," Schumer said. "We should continue talks with the Iranians, but we should not trust them. The threat of new sanctions will only serve to strengthen the President's hand as we pursue a diplomatic solution.
The Senate Banking Committee, led by Chairman Christopher Dodd (DCT), is set to consider new sanctions shortly, following the disclosure last month of Iran's secret uraniumenrichment facility at Qom. Schumer is expected to be an original cosponsor of the emerging legislation.
That bill may include a measure proposed this summer by Schumer and Sen. Lindsey Graham (RSC) that would bar companies that sell sensitive technology to Iran from obtaining or renewing contracts with the U.S. government. The proposal was offered after it surfaced that two Western telecom companies, Siemens and Nokia, had provided Iran with sophisticated technology that the regime has used to monitor and censor its citizens.
Schumer is a cosponsor of another antiIran measure, authored by Sen. Evan Bayh (DIN), that may also end up in Dodd's new sanctions bill. That proposal would sanction foreign firms that sell gasoline and other refined petroleum products to Iran.
Schumer warned, however, that the effect of each of these tough, new measures would be undercut if the U.S. does not better enforce the penalties it imposes on Iran. A 2007 report by the Government Accountability Office cited trading partners in countries such as Germany, Malaysia, Singapore, the United Kingdom, and the United Arab Emirates (UAE) as frequently serving as "fronts" for Iran. These fronts provide Iran with a backdoor source for highly soughtafter US exports. The Treasury and Commerce Departments are responsible for preventing these schemes, in part by deploying inspectors to foreign countries. These agents are responsible for performing "postshipment verifications" that confirms that the buyer associated with a given transaction is, in fact, the "enduser" for the US goods at issue. This verification process, when followed, cuts down on transshipments to Iran.
But the GAO found that at many of these transshipment hotspots, too few agents are on duty. Transshipments of USorigin exports out of the UAE, in particular, was found to be a "considerable problem." But at the time of the report's issuance, the Treasury and the Commerce Departments each had only one inspection agent deployed to that country. Schumer said reinforcements must be dispatched to this and other locations across the globe to clamp down once and for all on Iran's ability to evade U.S. sanctions.
A copy of Schumer's opening statement at today's Senate hearing, as prepared for delivery, appears below.
Opening Statement by Senator Charles E. Schumer
Senate Banking Committee
October 6, 2009
Thank you, Mr. Chairman and Ranking Member Shelby.
And welcome to our esteemed witnesses who have agreed to testify at this important and timely hearing, including my colleagues Senator Bob Casey and Senator Sam Brownback.
Mr. Chairman, I would like to thank you for calling this hearing, and I commend you for putting forth a comprehensive plan to arm the administration with the tools they need to put a stop to Iran's rogue nuclear program.
I believe that when it comes to Iran, we should never take the military option off the table.
But I have long argued that economic sanctions are the preferred and most effective way to choke Iran's nuclear ambitions.
The Obama administration has recently begun direct diplomatic negotiations with Iran, and the first round of these talks did yield some important concessions from the Iranians last week. These negotiations should certainly continue, but they do not supplant the need for action by this Congress. Iran, when it is caught redhanded, has a habit of promising just enough to avoid a strong response from the international community. Not this time.
We should continue talks with the Iranians, but we should not trust them. The threat of new sanctions will only serve to strengthen the President's hand as we pursue a diplomatic solution.
By giving the administration the capability to impose crippling sanctions on Iran should they continue to pursue a nuclear weapons program, this Committee today is exploring a tough and smart plan to address the real threat Iran poses to the U.S. and our allies, particularly Israel.
First, Mr. Chairman, I want to commend you for including in that plan key provisions of the Iran Sanctions Enhancement Act of 2009, a bill introduced by Senator Bayh of which I am an original cosponsor.
This bill sanctions companies that export gasoline to Iran. The world knows that Iran does not currently have the refining capacity to meets its domestic gasoline needs and is dependent on imported gasoline. So now is the time to reduce Iran's energy supply if they fail to suspend their nuclear enrichment program as called for in several UN Security Council resolutions.
I am also glad that we will be strengthening export controls to stop the illegal export of sensitive technology to Iran. During the recent Iranian elections we witnessed the Iranian regime go as far as to block the internet and mobile phone communications of their own citizens.
That is why I and Senator Lindsey Graham introduced "The Reduce Iranian Cyber Suppression Act" or "RICA", a bipartisan bill that would bar companies that export sensitive communication technology to Iran from applying for or renewing procurement contracts with the United States Government. I look forward to working with you to make sure that the key provisions of this bill are also included in our plan.
Our comprehensive plan will also address the role that global financial institutions play in enabling Iran to develop a nuclear program. Mr. Chairman, I have long argued that financial sanctions are one of the most effective way to crack down on the dangerous Iranian regime. But we have to make sure that they are designed effectively.
Last year, 26 Democrats joined me in calling for the Iranian central bank, known as Bank Markazi, to also be included in our economic sanctions, as they have been heavily involved in terrorism and helping finance acquisitions of nuclear and conventional weapons technology. The central bank has also played a role in helping other Iranian banks circumvent U.S. financial sanctions. We should also include the central bank in the sanctions plan we are developing in this Committee.
All of these actions will go a long way to strengthen global security and reverse Iran's dangerous course. Yet unless we have a foolproof enforcement regime in place, any new tools we deploy will be less than effective.
Our existing sanctions are riddled with leaks in the form of trading partners who funnel our exports through a backdoor to Iran.
We can help plug these leaks by increasing the amount of inspectors we have stationed in the United Arab Emirates and in other countries where black markets are serving to circumvent our sanctions.
A 2007 GAO report found that enforcement is lacking, particularly for products that are sold to the UAE. At the time of that report, Treasury and Commerce Departments each only had one inspector stationed in the UAE.
To increase the effectiveness of any new sanctions, we must authorize the Commerce and Treasury Departments to enhance their manpower on the ground in UAE and other black market areas to ensure that Iran is not skirting our sanctions. That is why today I am calling on the administration to deploy more inspectors to the UAE and other areas of vulnerability in our enforcement of sanctions.
I hope these proposals are given serious consideration and I look forward to working with the Chairman to passing this important legislation.
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