Thursday, June 10, 2010

U.N. Slaps Iran With New Curbs

The Wall Street Journal

* JUNE 9, 2010


UNITED NATIONS—The United Nations Security Council passed new economic sanctions Wednesday against Iran for its nuclear work, setting up a growing confrontation between Tehran and the West.

Iranian leaders said Wednesday they were unbowed by the U.N.'s action and would push forward with their country's nuclear program. President Mahmoud Ahmadinejad dismissed any hopes for rapprochement between Iran and the U.S.

"These sanctions are like used tissues which should be thrown in the trash," the Iranian leader said after the vote, according to ISNA, a state-run news agency.

The resolution, the U.N.'s fourth round of sanctions against the country since 2006, calls for new curbs on conventional-weapons sales to Iran and steps up international inspections of cargoes shipped in and out of Iran. The sanctions are less severe than those initially sought by the U.S., but the White House said it will use the resolution to pursue a broader financial war against Iran in league with key allies in Europe, Asia and the Middle East.

President Barack Obama, in announcing the U.N.'s agreement, offered his most pointed attack on Iran's leadership following a year of fruitless attempts to engage it diplomatically. He justified the new sanctions on the grounds of defending human rights as much as combating a proliferation threat.

The vote "sends an unmistakable message about the international community's commitment to stopping the spread of nuclear weapons," Mr. Obama said at the White House. "Whether it is threatening the nuclear non-proliferation regime, or the human rights of its own citizens, or the stability of its own neighbors by supporting terrorism, the Iranian government continues to demonstrate that its own unjust actions are a threat to justice everywhere."

The resolution passed the 15-nation Security Council with 12 votes in favor. Brazil and Turkey voted against and Lebanon abstained.

While previous resolutions appear to have slowed Iran's nuclear pursuit, the country has moved its program forward, building new centrifuges and enriching uranium to a 20% level. Uranium must be enriched to above 90% to produce fuel for a nuclear weapon, which the West, as well as Russia and China, fear Tehran is pursing.

Iran says it is enriching uranium for civilian use only, as permitted under the Nuclear Non-Proliferation Treaty. The treaty, to which Iran is a party, also calls for inspections of Iran's nuclear facilities by the International Atomic Energy Agency, which has been unable to certify the purpose of Iran's program.

The resolution is a product of months of negotiations between the U.S., U.K. and France on the one hand, and Russia and China on the other. All are permanent Security Council members with a right to veto any resolution.

On Thursday morning China's foreign ministry said the new resolution doesn't close the door on further diplomatic efforts with Iran. "China always holds it is the right way to address the Iranian nuclear issue through dialogue, negotiation and other diplomatic means," the spokesman said in a statement on the foreign ministry's website.

The U.S. had weighed some form of energy sanctions on Iran, and wanted to prevent countries from doing business with Iran's central bank. Washington also wanted to ban all commerce with Iran's primary air and sea shipping companies.

From left, the U.K.'s Permanent Representative to the U.N. Mark Lyall Grant, China's Permanent Representative to the U.N. Li Baodong, an unidentified man, Russia's Permanent Representative to the U.N. Vitaly Churkin, the U.S.'s Permanent Representative to the U.N. Susan Rice, and France's Permanent Represenative to the U.N. Gerard Araud talk before the U.N. Security Council voted on new sanctions against Iran.

While watered down from previous U.S.-backed drafts, Wednesday's U.N. sanctions against Iran could bite. Here's how:

Conventional arms

The new sanctions ban supplying military hardware to Iran, including:

--battle tanks
--large-calibre artillery systems
--attack helicopters
--conventional missiles and missile systems

What it means: Iran can no longer go to the international market for much of its big-ticket defense needs. But Tehran has recently launched Iranian-made missiles, drones and warships.

High-Seas Trade

The resolution calls on nations, in their territorial waters, to:

-- inspect Iranian or other vessels suspected of transmitting nuclear or ballistic-missile related cargos
--restrict services—like refueling—to ships suspected of transporting illicit goods

What it means: Countries may be more inclined to inspect vessels in their ports rather than risk allowing contraband through. U.S. officials accuse Iran of attempting to disguise cargos and ship ownership to avoid sanctions enforcement.

Financial Services and Insurance

--calls on countries to deny financial services, insurance and reinsurance to firms suspected of trafficking nuclear proliferation contraband.

What it means: Iranian shipping companies and counterparties could find it costlier, or impossible, to insure even non-suspect shipments as insurers seek to avoid risk.


Identifies Javad Rahiqi, head of Iran's Atomic Energy Organization's Esfahan Nuclear Technology Center, as involved in nuclear or ballistic missile activity and subjects him to overseas asset freezes and effectively limits his travel and overseas financial transactions.

What it means: A symbolic move that could worry other senior Iranian officials involved in Iran's nuclear program, who travel or invest overseas. Practically, the move would have little consequence as Mr. Rahiqi's personal international contacts aren't significant for Iran's nuclear program.

New companies

Forty new companies, all but two based in Iran, have been added to the U.N.'s list of entities involved in nuclear or ballistic missile activity.

What it means: It greatly expands the number of companies identified as sanctionable. But most of these defense and heavy industry groups would have been subject to scrutiny for some time, including15 associated with the Islamic Revolutionary Guard Corps. Some some have already been named in U.S. unilateral sanctions.

In the end, there are limited sanctions on Iran's energy sector, save one oil-services company on a list of sanctioned firms. The resolution's preamble merely asks countries to "exercise vigilance over transactions involving Iranian banks, including the Central Bank of Iran."

U.S. officials working on the sanctions said they plan to pursue more aggressive unilateral measures. The Obama administration is targeting the businesses of Iran's elite military force, the Islamic Revolutionary Guard Corps, and have focused in particular on isolating Khatam al-Anbiya Construction, an IRGC-owned holding company that Washington believes is an umbrella for dozens of other companies that fund the Iranian military's operations.

The resolution calls for international asset freezes of 40 companies that weren't included in previous sanction efforts, including 15 new IRGC-linked entities. It also added a single individual, Javad Rahiqi, 56, the head of the Atomic Energy Organization of Iran's Esfahan Nuclear Technology Center, who will no longer be permitted to travel overseas.

The measure also reinforces an earlier Security Council call for nations to board ships on the high seas in search of suspected contraband items headed to or from Iran.

U.S. officials also said the language of the resolution is broad enough that Washington could press companies and countries to act against a range of Iranian finance, insurance and reinsurance companies for their alleged role in aiding Tehran's nuclear and missile programs.

Nations will not be allowed to license Iranian banks on their territories if they are linked to proliferation.

Still, a number of Republican lawmakers on Capitol Hill criticized the White House for accepting a sanctions resolution that they argued won't be aggressive enough to upend Iran's nuclear work.

These legislators vowed to push a new law through Congress this month that would take action against companies investing more than $20 million in Iran's energy sector. They pressed Mr. Obama not to seek waivers to exempt countries or companies from abiding by the law. "We need dramatic action to change the game of Iran's nuclear program," said Rep. Ed Royce (R.-Ca.). "This resolution is far from dramatic."

Rep. Gary Ackerman, a New York Democrat, said the sanctions do have teeth. "The question in the Security Council is never what would we like in the ideal, but rather, what can we get in the real world," he said in a statement. "And in the real world we got major new sanctions on Iranian banking, finance, shipping, and arms transactions, and vital designations of the Iran Revolutionary Guard Corps."

Iran suggested Wednesday the resolution would scuttle further diplomatic efforts on the nuclear issue. "No amount of pressure and mischief will be able to break our nation's determination to pursue" nuclear energy, said Mohammad Khazaee, Iran's ambassador to the U.N. "Iran has never bowed and will never bow to hostile actions" and will continue to "defend its rights," he said.

George Lopez, a Notre Dame University professor who studies sanctions, said the resolution's arms embargo appeared tough, but it could take six months or so to determine the overall effectiveness of the new sanctions. For the next two or three months, he said he expected harsh rhetoric from Tehran.

"I think you are going to get a lot of bluster out of this regime for a while. They are going to claim victory from the two negative and one abstention votes," Mr. Lopez said, adding that Iran could later seek to return to negotiations. "The tradition of the 10 years of this is that these guys do respond to pressure," he said. "They just never do it on our timeline."

The resolution contains a proposal from the U.S., China, Russia, Germany and the European Union to assist Iran's civilian nuclear program, provided Iran suspends uranium enrichment. Iran would be provided technological and financial assistance and support for the construction of an advanced light-water nuclear reactor.

Brazil's U.N. ambassador, Maria Luiza Ribeiro Viotti, votes against broader Iran sanctions at the 15-member U.N. Security Council on Wednesday. Brazil joined Turkey in casting the only votes against the sanctions

The U.S. says its "dual-track" approach to Iran—diplomacy and sanctions—won't end with this resolution. U.N. ambassador Susan Rice said Mr. Obama had "personally" become involved in a diplomatic outreach to Iran, a break from eight years of the Bush administration shunning any contact with Tehran. But she said Iran had so far squandered the opportunity.

The diplomatic outreach's high point came when the U.S. took part in direct talks with Iran in Geneva on Oct. 1. At that meeting, a confidence-building deal was concluded with Iranian negotiators in which Iran was to send a majority of its low-enriched fuel to Russia for enrichment up to 20%. France would then manufacture the uranium into fuel rods for use in Tehran's medical research reactor.

The Iranian leadership eventually nixed the deal and afterward announced it was enriching to 20% on its own.

Last month, Brazil and Turkey, two non-permanent Security Council members, tried to revive the fuel-swap deal with an agreement signed in Tehran. But that deal was significantly different, Western diplomats said: Iran was instead to send its nuclear material to Turkey but could recall it at any time, and neither Russia nor France were to play a role in the deal.

Within days, the Security Council reached its current sanctions plan. On Wednesday, Brazil and Turkey voted against it.

Maria Luiza Ribeiro Viotti, Brazil's U.N. ambassador, said Brasilia's vote aimed to "honor" its efforts to broker a deal with Iran, which was formally rejected by the permanent members of the council and Germany on Tuesday night. She said sanctions run counter to the "successful efforts" of Brazil and Turkey to engage Iran in a negotiated solution.

Turkey also expressed concern that the adoption of sanctions would "negatively affect the momentum" of the Brazil-Turkey initiative. Ertuğrul Apakan, Turkey's U.N. ambassador, said Turkey doesn't want any country in its region to possess nuclear weapons and called the Turkey-brokered proposal "a first step in a broader road map that could lead to a comprehensive settlement of the problem."

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