By Samuel Rubenfeld
President Barack Obama signed into law over the holiday weekend a defense authorization bill containing a provision that imposes sanctions on Iran’s central bank.
An Iranian woman stands in a currency exchange shop in northern Tehran on Jan. 3, 2012.The law, which contains several sections unrelated to the Iran sanctions, was controversial from the start, and Obama issued a strongly worded statement along with his signature in which he said he supported the broader bill “despite having serious reservations with certain provisions” of it.
Obama said specifically that the Iran sanctions section, along with several others, could interfere “with my constitutional authority to conduct foreign relations by directing the executive to take certain positions in negotiations or discussions with foreign governments.” Should application of the provisions interfere with his authorities under the Constitution, Obama said in the statement, “I will treat the provisions as nonbinding.”
The Iran sanctions measure penalizes foreign financial institutions that do business with Iran’s central bank, Bank Markazi. The law forces anyone that does business with Bank Markazi to choose between ending that business and with being blocked from the U.S. economy.
The Obama administration has some flexibility with which to enforce the legislation, which is intended to curtail the country’s ability to sell its oil. About half of Iran’s oil transactions are routed through the central bank. But a senior administration official talking to the Wall Street Journal said it intends to implement the law without harming the global economy.
“We believe we can do this,” the senior administration official said. “The president will consider his options, but our intent—our absolute intent—is to in a timed and phased way implement this legislation so it can have the impact that Congress intended and the president agrees with.”
In addition to the Journal’s report, there’s more coverage here, here, here, here, here, here, here, here and here on the law. (Lawfare Blog, NY Times, NPR, BBC, Reuters, NY Times, Reuters, Haaretz, Mother Jones)
Under the provision, certain measures begin to take effect in 60 days, including sanctions on purchases not related to oil and the sale of oil products to Iran through private banks. The toughest measures won’t go into effect for at least six months.
The president can waive the imposition of the sanctions if he determines such a waiver is in the national security interest in the U.S., and provides Congress with a justification for it that includes “any concrete cooperation” he got — or would expect to get — as a result from the waiver.
The original Iran sanctions amendment initially passed the U.S. Senate unanimously; it survived largely intact after a House-Senate conference on the broader defense bill that followed a White House veto threat over the unrelated provisions. Administration officials had been discussing for weeks whether to impose the sanctions, but held off because of concerns about a spike in crude prices, as well as the possibility of spurning relations with Iranian youth who approve of the U.S.
Iran dismissed the sanctions, with the head of the country’s chamber of commerce being quoted as saying those involved in trade “will find other alternatives.” However, Iranian President Mahmoud Ahmadinejad condemned the measure, saying the bank was strong enough to defeat “enemy plans.”
Earlier, they threatened that crude prices would skyrocket to $200 per barrel if Obama signed the bill into law.