House Passes Legislation Prohibiting Funds to Iran’s Gasoline Suppliers

Language Included in FY 2010 State-Foreign Operations Appropriations Act

Washington, D.C. (July 10, 2009) – The Foundation for Defense of Democracies praised the passage of H.R. 3081, the FY 2010 State-Foreign Operations Appropriations Act, which includes language proposed by U.S. Reps. Mark Kirk (R-IL) and Brad Sherman (D-CA) that prohibits certain U.S. government financial support for companies that supply refined petroleum, including gasoline, to Iran. The bill passed the U.S. House of Representatives on July 9 by a vote of 318 to 106.

“Iran's Islamist rulers – increasingly oppressive at home and aggressive abroad – are making clear that they do not seek rapprochement with the United States,” said FDD Executive Director Mark Dubowitz. “The passage of this bill with the inclusion of the Kirk-Sherman language puts the House on record as opposing the expenditure of taxpayer dollars for companies assisting Iran's energy sector. Ending American taxpayer support for the theocratic regime by curtailing gasoline supplies could help convince Iran's rulers to comply with international law and U.N. Security Council resolutions requiring Iran to suspend its illicit nuclear weapons program.”

“Iran's need to import 40 percent of its gasoline is its economic Achilles' Heel,” said Orde Kittrie, an FDD senior fellow, law professor at Arizona State University, and former U.S. State Department official. “This legislation directly targets this vulnerability, which is one of the last, best peaceful options available to prevent the Iranian regime from achieving its nuclear ambitions,” said Kittrie. Kittrie stated that “with this bill, Congress has now progressed from introducing Iran sanctions legislation to passing it. Patience with Iran on Capitol Hill appears to be running out and the screws are beginning to tighten.”

“The Iranian regime's recent stolen election and brutal crackdown is yet another in its long series of actions flouting international law,” said Kittrie. Kittrie added: “If the Iranian regime is to halt its illegal nuclear program, support for terrorism, and human rights abuses, we must change its cost-benefit analysis. The inclusion of the Kirk-Sherman language and the passage of this bill is an important step towards that goal.”

Although a major producer of crude oil, Iran lacks sufficient refinery capacity and thus must import approximately 40 percent of the gasoline it needs to fuel its economy and military. Iran imports this gasoline from a handful of foreign energy companies.

The language prohibiting financial support for companies that supply refined petroleum, including gasoline, to Iran included in the FY 2010 State-Foreign Operations Appropriations Act was proposed by U.S. Reps. Mark Kirk (R-IL) and Brad Sherman (D-CA) and was approved June 24th by the full Appropriations Committee. The State-Foreign Operations Appropriations Act was passed by the House on July 9th.

The provision prohibits the U.S. Export-Import Bank from providing credit, insurance, or guarantees to companies that export refined petroleum, including gasoline, to Iran or support the regime's domestic refining capacity.

One of Iran's largest suppliers of gasoline, Reliance Industries Limited of India, has benefited from $900 million in loan guarantees from the U.S. Export-Import Bank. These loan guarantees included over $500 million to help expand Reliance's Jamnagar refinery, which has in recent months refined some 30 percent of Iran's gasoline imports.

In addition to the Kirk-Sherman language, the bill requires reports on the status and progress of diplomatic efforts to prevent Iran from acquiring nuclear weapons, as well as reports on the enforcement of bilateral and multilateral sanctions against Iran.

The Foundation for Defense of Democracies has conducted extensive research on the handful of foreign energy companies supplying gasoline to Iran, has identified potential points of leverage against these companies that could be used to convince them to end their business relationships with Iran, and has formulated policy options available to U.S. and foreign policymakers to target Iran's reliance on imported gasoline.

An op-ed from the National Post by Mark Dubowitz is here: http://www.nationalpost.com/news/world/story.html?id=1501136

A Wall Street Journal editorial quoting Mark Dubowitz is here: http://online.wsj.com/article/SB123793752240531921.html

A Wall Street Journal op-ed by FDD senior fellow Orde Kittrie is here: http://online.wsj.com/article/SB122654026060023113.html

For more information, please visit http://www.defenddemocracy.org/iranenergyproject or contact Judy Mayka at [email protected] or 202-621-3948.