Bush, Congress Wield Proliferation Sanctions

The Bush administration in July sanctioned nine companies for suspected involvement with Iran’s missile and unconventional weapons programs, and President George W. Bush Aug. 5 signed a short-term extension of an expiring 1996 sanctions law directed at Iran. At the same time, the Senate stepped up pressure on North Korea by voting to add it to a nonproliferation law that allows the president to sanction foreigners who supply weapons technology to countries of proliferation concern, such as Iran and Syria.

Of the nine sanctions announced by the administration, two were authorized by executive order, and seven were imposed under the Iran-Syria Nonproliferation Act.

Sanam Industrial Group and Ya Mahdi Industries Group, both based in Iran, were cited July 18 by the Department of the Treasury for alleged involvement in missile proliferation. That move was part of an ongoing effort by the Treasury Department to freeze the assets of organizations and individuals accused of being involved in supporting the spread of weapons of mass destruction. Twenty-five other entities were sanctioned June 2005 for financially contributing to or supporting proliferation activities. (See ACT, September 2005.)

The Iranian companies were said to be involved with the Aerospace Industries Organization (AIO), a subsidiary of the Iranian Ministry of Defense & Armed Forces Logistics. Last year, in issuing the executive order, Bush deemed the AIO a proliferation concern for its role in managing and coordinating Iran’s missile program.

The Treasury Department will now be able to freeze any financial assets being held in the United States by the designated companies and will prohibit U.S. businesses and individuals from working with them.

“As long as Iran’s nuclear ambitions continue to threaten the international community, the United States will use its authorities to target Iran’s efforts to sell and acquire items used to develop weapons of mass destruction and the missiles capable of carrying them,” Stuart Levey, the Treasury Department’s undersecretary for terrorism and financial intelligence, said in a July 18 statement.

Effective July 28, the Department of State sanctioned seven additional firms under a separate measure, the Iran-Syria Nonproliferation Act, for assisting Iran with its weapons programs. The move, which included penalties against two Indian companies, was announced shortly after the House voted July 26 to support a nuclear cooperation agreement with India.

The Indian companies, Prachi Poly Products Ltd. and Balaji Amines Ltd., are chemical manufacturers.

Also listed in the injunction are two Russian companies, the state-owned arms trading company Rosoboronexport and aircraft maker Sukhoi; two North Korean companies, Korean Mining and Industrial Development Corp. and Korea Pugang Trading Corp.; and one Cuban organization, the Center for Genetic Engineering and Biotechnology.

The sanctions will be in place for two years and will forbid U.S. government agencies from assisting or buying goods from the companies. The penalties will also block the sale of some military equipment, services, and technologies to the organizations and their subsidiaries.

The seven companies are the latest in a string of dozens of entities that have been punished for their assistance to Iran’s weapons programs under the Iran-Syria Nonproliferation Act. The Senate voted July 25 to expand that law to include North Korea, following a series of missile tests by Pyongyang earlier in the month.

If passed by both houses of Congress, the revised law would allow the president to sanction foreigners who transfer goods and technologies to North Korea that contribute to their ability to produce missile and nuclear weapons.

“ North Korea’s recent missile launches illustrate the threat this regime poses to the American people, the people of the region, and peace and stability in East Asia,” bill sponsor Senate Majority Leader Bill Frist (R-Tenn.) said in a July 25 statement.

Congress also took action on other sanctions measures.

With the Iran-Libya Sanctions Act set to expire Aug. 5, lawmakers agreed on a short-term extension until Sept. 29 so they could try to reach agreement on a new measure after the August congressional recess. The 1996 law calls for sanctions on foreign entities that invest in Iran’s and Libya’s energy sectors, a policy that lawmakers largely hope to maintain in a bid to curb Iran’s nuclear program.

In April, the House passed a measure intended to tighten those sanctions on Iran, but the Senate narrowly defeated a similar measure in June after the Bush administration said it would harm relations with countries, including U.S. allies, needed as part of its diplomatic strategy to counter Tehran. (See ACT, July/August 2006.)