CNN:State: Pressure on Iran could backfire

State: Pressure on Iran could backfire

http://security.blogs.cnn.com/2011/12/15/despite-concerns-congress-authorizes-irans-central-bank/

While the Obama administration has shown signs of supporting legislation that would increase pressure on the Iran's central bank, the administration is taking a cautious approach to how the provision should be implemented.

At issue is a section of the giant $662 billion defense authorization bill that would prevent foreign financial institutions that do business with Iran's Central Bank from operating in or doing business with the United States.

The administration initially feared such a move would drive up prices on the global oil market while the U.S. trudged through a sluggish economic recovery. It could have the unintended effect of adding money to Iran's coffers with the spike prices, further allowing it to continue financing its nuclear program.

The bill passed the Senate by a vote of 86-12 Thursday evening, and was sent to the White House for President Obama's signature.

State Department spokesperson Victoria Nuland told reporters at the State Department Thursday the administration had engaged Congress "quite vigorously" during the crafting of the legislation. However, the administration favored a bill that put further pressure on Iran "implemented in a manner that affects Iran but also protects the legitimate interests of America's friends and allies around the world," Nuland said.

"We are looking hard at the implementing aspects of this, and it's the subject of a robust conversation here," Nuland said hours before final passage of the bill.

Administration concerns over the central-bank portion of the bill were eased after adjustments were made to the legislation to provide the administration greater flexibility in implementing the law, by allowing the president to waive sanctions on the basis of national security. In addition, foreign central banks would be penalized only if they failed to reduce their purchases of Iranian oil in the face of alternative supplies.

Though speaking before the final legislation was passed, Nuland said the administration would study the final bill to get a full understanding of what obligations the administration would ultimately have in order to comply with the law.

"We want to implement the will of the Congress. We want to - we share the intent, which is to increase the pressure on Iran," Nuland said. "But as you know, with these kinds of complex pieces of legislation, there are various provisions that allow for interpretation, and those have to be worked through, including with the Congress."