Jonathan Schanzer points out what is perhaps the best reason for the new sanctions legislation proposed by Senators Mark Kirk and Robert Menendez: Removing the ambiguity that is leading to a mad rush to invest in Iran.
But, as the Daily Beast's Eli Lake and Josh Rogin
recently reported, the administration's designations have trailed off
significantly in recent months, even though the JPA explicitly allows
for more designations under the existing regime. Indeed, before the
election of Iran's President Hassan Rouhani in June, no less than 183
entities were designated. Following the election of Rouhani, widely
touted as a moderate, there have been only 29 such designations.
In other words, it's highly unlikely that the National Security
Council, State, Treasury and Justice Departments just happened to
approve these most recent designations in the wake of the Geneva deal.
In all probability, they got the coveted interagency thumbs up weeks or
months ago. But the administration likely held off on designating new
entities for fear that rapprochement with Iran was still new and
fragile.
With an angry Congress openly questioning the
administration's will to hold the line on sanctions, these latest
designations were designed to prove a point: that the White House can be
serious about enforcing sanctions while also negotiating their end in a
final nuclear deal.
If that sounds like a fine line to walk, that's because it is.
Actively punishing Iran for its mendacity while trying to selectively
reduce other sanctions (in this case, automotive, petrochemicals and
precious metals) for the sake of diplomacy projects two competing
messages.
It should come as no surprise that this dual approach has inspired
the confidence of neither Iran nor Congress. Indeed, the only actors out
there who are heartened by Washington's conflicted policies are the companies eyeing investments in Iran.
They see confusion, and therefore ambiguity. And that's a whole lot
better than the investment environment of just a few months ago, when
Iran appeared to be completely off limits.
The new Senate bill will the provide Washington with an insurance
policy against Iranian deception. If it passes, it would legislate the
imposition of new sanctions the moment Iran violates the terms of the
interim deal.
That would immediately re-inject fear into the equation and deter
firms looking to cash in on the potential growth opportunities in Iran.
More importantly, it would untangle Washington's impossibly hedged Iran
policy. And though the White House will insist otherwise, it promises to
rearm the administration with the clear leverage that ultimately
brought Iran to the table in the first place.
Spokesman for the Majlis Foreign Policy Commission Hossein Naqavi Hosseini said on Tuesday that about 4.6 billion dollars of Iranˈs blocked oil revenues would be freed.
Hosseini quoted member of Iranˈs nuclear negotiating team Abbass Araghchi as saying that per the Geneva deal, no more sanctions will be imposed and oil sale will be kept intact under present conditions.
Just days before his inauguration, the US House has sent a sharp message to Iranian President-elect Hassan Rohani, passing harsh sanctions designed to reduce Iran's oil exports to zero.
The US House of Representatives passed a bill on Wednesday
containing punishing new sanctions against Iran, entrenching the US
position on the Islamic Republic's controversial nuclear program just
days before the inauguration of their new president, Hassan Rouhani.The
Senate is expected to support the legislation— the toughest sanctions
package to date, targeting what remains of Iran's oil sector— once
Congress reconvenes from its month-long summer recess, sources told The Jerusalem Post.
...
[D]espite Western efforts to divorce Iran from its customers, the Persian
state still exports over a million barrels a day. Because of the high
price of oil, Iran experienced its fourth best year on record for oil
revenues in 2012.
Those remaining customers— companies
concentrated mostly in China, South Korea, India and Turkey— will no
longer be granted exemptions for their activities by the Treasury
Department if Wednesday's legislation becomes law.
...
Previously
given a pass for diplomatic reasons, the exemptions will expire after a
year-long grace period, during which Iran's customers will face the
choice of finding oil elsewhere or else be cut out of the US economy.
The
US says there is spare capacity in the global market to replace Iran’s
exports. Libyan oil production is back online since its revolution ended
in 2011, and Saudi Arabia is prepared to accommodate Iran’s customers,
with spare production capacity already at 2 million to 2.5 million
barrels.
The bill passed by a huge margin, but guess who is opposed (aside from the obvious - Keith Ellison)....
The bill passed by a large margin of 400-20, but the
Obama administration, which in previous rounds had pushed for exemptions
for Chinese and Turkish companies, has voiced reservations in recent
days over the timing and consequences of some of the bill's strictest
provisions.
Uncertain how Rouhani will act in his first months as
president, Obama would like to give him time, officials say. And the
threatened expiration of exemptions may not intimidate Chinese
companies, forcing the US to make decisions that would harm its own
economy or, alternatively, renege on the law's requirements, weakening
America's diplomatic clout.
"We continue to work with Congress on
all sanctions legislation concerning Iran," State Department
spokesperson Jen Psaki told journalists the day before the vote, calling
the administration's sanction's regimen against Iran "unrelenting."
The State Department declined to comment on the specific House vote.
This time Congress may have Obama over the barrel. What could go wrong?
Congress to China: 'Take your pick. Do business with us or with Iran'
A bill being sponsored by 360 of the 435 members of the US House seeks to cut Iran's remaining oil exports to zero. The bill seems certain to pass and the Senate is likely to pass a similar bill when it returns from its August recess. A bill with that many co-sponsors would presumably be veto-proof.
The sanctions bill requests that
the US president, under his authority provided by the International Emergency
Economic Powers Act, come up with a strategy within two months to cut Iran’s
remaining export sales of roughly a million barrels a day.
After a year,
exemptions granted to countries such as China, Japan, Turkey and South Korea –
which continue to import Iranian oil – will no longer be granted. Companies in
those countries doing business with Iran previously given a pass will be cut off
from the US economy.
American officials are confident there is spare
capacity in the global market to replace Iran’s exports. Libya is back to
producing oil since its revolution ended in 2011, and Saudi Arabia is prepared
to accommodate Iran’s customers, with spare production capacity of 2 million to
2.5 million barrels a day.
...
China stands the most to lose:
Iran remains its third-largest source of oil after Saudi Arabia and Angola, and
the companies that facilitate that trade have major assets in the United States.
PetroChina, China’s largest oil producer, is one such company listed on the New
York Stock Exchange.
These Chinese firms, vocally opposed to
extraterritorial sanctions and to taking orders from the United States, will
have to decide within 14 months whether to have a business relationship with
Iran or the US.
The House bill also targets other loopholes in the
current sanctions regimen, including foreign exchange reserves that have allowed
Iran to deal in euros. These exchanges over the past year have been primarily
facilitated by Chinese banks. The bill attempts to strangle the banks’ ability
to operate with foreign partners of the US. It also targets Iranian shipping
with stricter inspection and flagging regulations.
The bill is a
significant response to the election of incoming Iranian President Hassan
Rouhani, who campaigned on a platform of reconciliation with the West. US
officials and experts have questioned the authenticity of Rouhani’s intentions,
and his ability to deliver, as Supreme Leader Ayatollah Ali Khamenei is still
firmly in charge of decision- making on the country’s nuclear
program.
There's just one small problem: If Iran goes full speed ahead, it can almost certainly have one or more nuclear bombs ready by September 2014. What could go wrong?
... wait until you see what happens in Turkey later today.
Turkish authorities said that they would make no effort to clear Taksim park, the focus of the protests in Istanbul, before Monday. In the meantime, Turkish Prime Minister Recep Tayyip Erdogan took on a menacing tone toward the protesters.
Prime Minister Tayyip Erdogan warned protesters who have taken to the
streets across Turkey demanding his resignation that his patience has
its limits and compared the unrest with an army attempt six years ago to
curb his power.
Riot police used teargas and water cannon to
disperse anti-government protesters from a square in the capital,
Ankara, just a few kilometers from where Erdogan spoke.
He held six rallies on Sunday, a measure of tensions after a week of the
biggest demonstrations and worst rioting of his decade in power.
Thousands waved red Turkish flags and shouted Allahu Akbar (God Is
Greatest) as he accused protesters of attacking women wearing
headscarves and desecrating mosques by taking beer bottles into them.
...
In the commercial center Istanbul, tens of thousands flooded the
central Taksim Square, where protests began nine days ago when police
used teargas and water cannon against a peaceful demonstration over
plans to build on a park there. Many see Turkey's secular order
threatened by Erdogan.
Protesters, many camped out in tents, now
control a large area around the square, with approach roads barricaded
by masonry, paving stones and steel rods. Police have withdrawn
completely from the area, water cannon kept hundreds of meters away by
the side of the Bosphorus waterway.
Western countries have held up
Erdogan's Turkey as an example of an Islamic democracy that could be
emulated elsewhere in the Middle East. Violent police action, however,
has drawn criticism from the West and Erdogan has increasingly accused
foreign forces of trying to aggravate the troubles.
He also
rounded on speculators, foreign and domestic, in the country's capital
markets, vowing to "choke" those who he said were growing rich off "the
sweat of the people", and urging Turks to put their money in state not
private banks.
"Those who attempt to sink the bourse, you will
collapse ... If we catch your speculation, we will choke you. No matter
who you are, we will choke you," he said.
Turkey's financial markets were turbulent last week and investors are preparing for more volatility this week.
Early
on Friday, the lira hit its weakest point against its euro/dollar
basket since October 2011, while Istanbul's main share index lost around
15 percent over the week. The yield of Turkey's two-year benchmark
sovereign bond hit a six-month high on Thursday.
"There is no doubt
there are more Iranian tankers being used for floating storage at the
moment on their side of the Gulf and the feeling is this is expected to
rise," said a European ship industry source with knowledge of tanker movements.
"The embargo is hurting and there has been talk of attempts by Iran to unload oil cargoes at distressed prices."
Ship industry sources gave varying estimates on how
much oil Iran was storing at sea, but all said the volume was higher.
Data from maritime intelligence publisher IHS Fairplay
estimated 10 of Iran's supertankers, each able to carry up to 2 million
barrels of crude, were storing oil, together with one smaller tanker
able to carry up to 1 million barrels.
The data showed a further two supertankers were also
probably deployed on floating storage, based on the length of time they
were stationary, meaning as much as 25 million barrels in total.
The vessels, all belonging to Iran's top tanker operator NITC, were located close to the Iranian oil terminals of Assaluyeh, Kharg Island and Bahregan, the data showed.
"There seem to be more vessels than there were four
months ago - the big area which seems to have changed is off Assaluyeh,"
said Richard Hurley, a senior analyst at IHS Fairplay.
"There are more ships that seem to have come in to that
anchorage in the past four months or so. At one point they were down to
a core storage fleet of around six vessels anchored off Kharg Island
and Assaluyeh."
NITC officials could not be reached for comment.
Too bad the sanctions have had absolutely no effect on Iran's zeal for its nuclear weapons program.
Iranian oil workers had to jump for their lives when part of a
multi-million dollar oil platform began to sink into the Persian Gulf.
New video of last week's sinking shows the workers running along the
structure and diving into the water as the ‘jacket’ of the $40 million
rig plunges under the waves.
The rig was being installed in the
South Pars field by Iran’s POGC and the builder Iranian Marine
Industrial which is controlled by the country’s Revolutionary Guards,
says Dow Jones newswires.
Reuters reports the local Mehr news
agency saying Iran had asked for foreign help to retrieve the oil rig
from 80 meters down in the Gulf.
I'm sure the 'international community is lining up to help them.
According to a report in the Sunday Times of London, Iran has withdrawn 275 members of its Qods force from Syria, where they had been backing the regime of Bashar al-Assad. According to the report, the troops were withdrawn amidst domestic criticism over the $5 billion Iran has spent to prop up Assad.
The members belong to a brigade known as Unit 400, which fought
alongside Syrian President Bashar Assad against Sunni rebels, the report
quoted a western intelligence officer as saying. According to The Times,
the unit flew out of Syria last week. The report added that the
information was confirmed by a relative of a Unit 400 officer.
The withdrawal of Iranian troops from Syria was seen by some as an
indicator of waning confidence among Iran’s Shi’ite leaders in Assad’s
ability to survive the uprising.
According to The Times,
there have been loud complaints about an estimated $5 billion of Iranian money spent to prop up the Assad regime in Damascus.
There are signs that Iran’s oil wealth, which pays for its
nuclear program and support for Assad, is eroding. Iran faces new
sanctions for failing to cooperate with Western concerns about its
nuclear program, and the sanctions are taking its toll, evident in the
fall in the value of the rial and soaring food prices.
Last week, Finance Minister Yuval Steinitz predicted that Iran's economy
is edging towards collapse due to international sanctions over its
controversial nuclear program.
"The sanctions on Iran in the past
year jumped a level," Steinitz said. "The Iranians are in great
economic difficulties as a result of the sanctions," he added.
A
Foreign Ministry document leaked last week also said sanctions had caused
more damage to Iran's economy than at first thought and ordinary
Iranians were suffering under soaring inflation.
Well, yeah, but so far we don't see any signs that Iran is slowing down the nuclear program. Ahmadinejad and Khameni aren't starving even if their people are. And Obama has not and will not back anything that smells of regime change.
Stopping Iranian oil sales by taking away their transponders
Some of you may recall that Nitzana Darshan-Leitner's Shurat HaDin put a big crimp in the attempt to send a flotilla to Gaza last summer by suing INMARSAT, the company that provides transponders to ships at sea and claiming that they were aiding and abetting terrorism.
Nitsana Darshan-Leitner, (real) human rights activist and Shurat HaDin’s founder, has submitted a letter to Inmarsat’s leadership citing a 2008 US Supreme Court ruling that those who support terror organizations are liable in US court for the murder an injuries they cause. Darshan-Leitner told the satellite company: “We will not tolerate Inmarsat’s – or any corporation’s – profiting from the blood of innocent people. Anything short of immediate and decisive action on our part would be akin to acceptance. It is a simple issue of justice: Inmarsat must uphold its legal obligations in compliance with US Treasury regulations and immediately cease its support for Iran.”
Iran has confirmed that a cyber attack hit its Oil Ministry data systems. It claims there was no damage, but the National Iranian Oil Company website was inaccessible as of Monday.
Oil ministry spokesman Alireza Nikzad told the government-run Fars News Agency, "This cyber attack has not damaged the main data of the oil ministry and the National Iranian Oil Company since the general servers are separate from the main servers; even their cables are not linked to each other and are not linked to Internet service.
"We have a backup from all our main or secondary data, and there is no problem in this regard.”
He said the virus was identified as “Viper” and was aimed at deleting data off the servers. The attack was focused on the Kharg Island oil export terminal, where 2.2 million barrels of crude oil are transferred every day.
According to Iranian media, over 50 of Tehran's top technical experts have been ordered to report to the ministry and assist in the "cyber battle."
The cyber attack, which has been ongoing throughout April, peaked on Sunday, when it took down several key computer systems in the Oil Ministry and corrupted the data stored on them in its entirety.
A virus was first detected inside the control systems of Kharg Island, which handles the vast majority of Iran's crude oil exports.
An Oil Ministry official said that it was still unclear whether the origin of the attack was external or internal.
Some Iranian media outlets ventured that the ministry may choose to shut down all non-vital systems for the near future to protect the Islamic Republic's crude exports while the problem was being resolved.
Now, who would want to attack Iran's oil exports? Hmmm.
Will that be too late? Key ship insurer the China P&I Club will halt indemnity coverage for tankers carrying Iranian oil from July amid tightening Western sanctions against OPEC's second largest producer, two club officials told Reuters on Thursday.
This is the first sign that refiners in China, Iran's top crude buyer, may struggle to obtain the shipping and insurance to keep importing from the Middle Eastern country. Iran's other top customers -- India, Japan and South Korea -- are running into similar problems, raising questions on how Tehran will be able to continue to export the bulk of its oil.
The China P&I Club, whose members include major Chinese shipping firms Sinotrans and COSCO Group , is the first Chinese maritime insurer to confirm it will halt business with tankers operating in Iran, following similar action in Japan.
"Many ship owners want to join our club and want our club to cover this risk, but considering all these regulations from the United States and the EU, I know the China P&I club will not do that," said a Hong Kong-based official with the insurer, which provides coverage to more than 1,000 vessels.
"The China P&I club will not take the risk. We have asked our members not to go there, if they go there, they take their own risk," the official added.
Starting in July, European insurers and reinsurers will be barred from indemnifying ships carrying Iranian crude and oil products anywhere in the world, in line with sanctions on Tehran.
Iran sells most of its 2.2 million barrels per day of oil exports in Asia, where China, India, Japan and South Korea are the four biggest buyers. They have either made a cut in imports or pledged to do so in the face of growing sanctions pressure by the West intended to compel the Islamic Republic to halt its disputed nuclear program.
...
It was not clear if other Chinese ship insurers were also planning to reduce tanker coverage.
"I really don't know what will happen," said a Beijing-based Chinese industry official. "We are talking about $1 billion (per tanker). No single insurance company can handle that."
China P&I Club is not a member of the Group of International P&I Clubs, an association of customer-owned ship insurers which cover 95 percent of the world's tankers against pollution and personal injury claims. The Chinese insurer has applied to join the club and could become a member as early as February 2012, industry sources said.
February 2012 was two months ago....
But I'm not sure any of this matters. I suspect we have reached a point where Iran could decide to gut it out and just tell the world in a few months that they're stopping because they're already a nuclear power. They may figure (perhaps even correctly) that once they already have weapons, there will be less of an incentive to sanction them, at least so long as the weapons are not in use.
President Obama's best friend among Middle East leaders wants an exemption from tough US sanctions against purchasers of Iranian oil that are due to come into effect at the end of June (Hat Tip: Joshua I).
"Turkey's absence from the United States waiver list regarding the Iran issue doesn't mean it will not be included," [Turkish Energy Minister Taner] Yıldız told reporters at an energy conference in Ankara.
Prime Minister Recep Tayyip Erdoğan plans to raise the issue with US President Barack Obama during a nuclear security summit in South Korea later this month, Turkish officials told Reuters.
Diplomatic sources in Ankara told Today's Zaman that the Turkish government officials have been continuing their efforts to have Turkey included in the waiver list of Washington.
Turkey imports around 200,000 barrels per day of oil from Iran, representing over 7 percent of Iran's oil exports. Yıldız said Turkey would continue to buy oil from Iran until existing contracts expire.
The United States exempted Japan and 10 EU nations from financial sanctions because they have significantly cut purchases of Iranian crude oil, but left Iran's top customers China and India exposed to the possibility of such steps.
The decision announced on Tuesday is a victory for the 11 countries, whose banks have been given a six-month reprieve from the threat of being cut off from the US financial system under new sanctions designed to pressure Iran over its nuclear program.
Yıldız said Turkey could not halt purchasing from Iran unless other suppliers were lined up.
The Republican Presidential candidates ought to be making a big deal out of this. Giving out all those exemptions - and there probably will be more - is effectively gutting sanctions that passed the Senate over Obama's objections by 100-0.
According to a senior Israeli official who is close to the investigation, the Indians are close to fully solving the case but they are not saying so publicly. Nonetheless, in quiet contacts with Israel and the United States, the Indians are not concealing the information in their possession, the Israeli official said. The Indians have located the motorcycle used in the attack, have identified who purchased it, and know how and when the attackers arrived in India, the Israeli added. Similar details have also been published by news agencies in India.
"The Indians received a great deal of assistance in the investigation from the United States and Israel and did a lot of work themselves," the senior Israeli official said. "They know Iran is behind the attack. They got to the suspects and carried out arrests. The picture is totally clear to all the officials in India up to the level of the interior minister, but they're not publicizing [it]."
The Israeli official said Indian security services have decided to characterize the incident as a case that, until further notice, is under investigation. This has lowered the pressure for the release of details, and the need to make serious decisions on how to proceed has been deferred. "The Indians understand that if they release the details they have, they won't have a choice but to take steps such as expelling the Iranian ambassador," said the Israeli source. "At this stage, they prefer to avoid such a crisis with Iran."
And it's not just India (and not just Thailand where it was publicly disclosed that Iranians were arrested) which was the location of an attack that was perpetrated by Iranians or those working on their behalf: In Georgia too, Iranians were involved in the attack.
Indian investigators were sent to Georgia and Thailand - where there were failed attacks a short time after the New Delhi blast - to compare findings over the explosive charges used. In both countries clear evidence was found of Iranian involvement in the attempts.
And it seems that Hezbullah may be involved as well:
There have been Indian media reports claiming that 13 suspicious telephone calls made to Iran and Lebanon in the hour before and after the New Delhi blast have been examined. Four of the calls were reportedly made from a public telephone with a view of the restaurant where Yehoshua-Koren and her husband were eating a short time before the attack.
But the Indians toned down reports of the investigation after the first two days, and Israel has not pressured India to disclose anything publicly. Although Haaretz doesn't say so, it seems intuitive that the reason for India's silence is its dependence on Iranian oil. India is one of Iran's largest customers and Iran is India's largest supplier. A report in the JPost on Friday indicated that the United States is attempting to find alternate supplies for the Indians.
The US may help broker deals with suppliers such as Iraq and Saudi Arabia, the people said, declining to be identified because the information is confidential. Saudi Arabia has already offered to replace Iranian oil supplies if needed, two of the people said. The US is in talks with countries around the world on reducing their dependence on Iranian oil, Victoria Nuland, a spokeswoman at the State Department in Washington, said in an e-mail yesterday.
The assurance follows Iran’s offer to sell extra crude to India as the Persian Gulf nation, OPEC’s second-biggest producer, cuts supplies to some European nations in response to sanctions imposed over its nuclear program. The US and European Union tightened sanctions on Iran last month, restricting trade and financial transactions. They say the program is a cover for developing atomic weapons. Iran denies the accusation.
“This move is going to have an impact and India is going to be hard-nosed in the way they are going to deal with it,” Praveen Kumar, an analyst at Facts Global Energy in Singapore, said. “It’s turned the situation a little in favor of India, which can potentially use it to get a better deal from Iran.”
...
The international measures have made it difficult for India and Iran to preserve $9.5 billion in annual crude trade, after the Reserve Bank of India dismantled a mechanism used to settle payments in euros and dollars in December 2010. Transactions are currently routed through Turkiye Halk Bankasi AS (HALKB), based in Ankara, which has told Indian refiners it may no longer be able to act as an intermediary, four people with knowledge of the matter said Jan. 10.
The Turkish lender will stop processing transactions for supplies into Turkish refineries from July, an official at Tupras Turkiye Petrol Rafinerileri AS (TUPRS), which operates four plants, said Wednesday.
India is seeking an additional 5 million tons a year of oil from Saudi Arabia in the year ending March 2013, Junior Oil Minister R.P.N. Singh said in New Delhi yesterday. Saudi Arabia is producing 9.8 million barrels of oil a day and has spare capacity of 2.5 million barrels a day, according to Prince Salman bin Abdulaziz, the kingdom’s deputy oil minister.
For those who are wondering, it varies from one type of crude oil to the next, but typically there's a little more than seven barrels of oil per metric ton so 5 million tons over the course of a year is 35 million barrels or 95,000 barrels of oil per day.
Meanwhile, Barack Obama's nightmare is coming true.The price of oil soared to $124 per barrel on Friday. Gas prices here are going to a record high on Wednesday night, and that's probably going to be the case where you are really soon. I would bet on the Indians taking supply from the Saudis and not continuing with the Iranians under these circumstances - they have too many other interests in common with Israel (like military supplies that they need to keep Pakistan in check).
I was away from the computer even more than I anticipated today. The problem is it also means a lot of my work slipped for another day....
The IAEA confirmed on Tuesday that Iran is pursuing a nuclear weapon. I suppose we should be grateful that Yukio Amano now runs the IAEA - if ElBaradei was still running it, they'd have to confirm that it was a nuclear weapon after it hit Israel, God forbid. But now that everyone knows that Iran is developing a nuclear weapon, will anything be done to stop it?
In the most critical and damning report of Iran’s nuclear program to date, the International Atomic Energy Agency (IAEA) said Tuesday that the Islamic Republic is working to develop a nuclear-weapon design and is conducting extensive research and tests only relevant for a nuclear weapon.
"The agency has serious concerns regarding possible military dimensions to Iran's nuclear program," the IAEA said in the report, which included a 13-page annex with key technical descriptions of its research. “The information indicates that Iran has carried out activities relevant to the development of a nuclear explosive device."
...
The report focuses on three main technical areas - the “green salt project”, a name for a covert Iranian program to enrich military-grade uranium; the development and testing of high explosives; and the re-engineering of the payload chamber of ballistic missiles to be able to accommodate a nuclear warhead.
In the report, for example, the IAEA reveals that Iran was working on “exploding bridgewire detonators” which are fast-acting detonators required to create a nuclear explosion.
“Given their possible application in a nuclear explosive device, and the fact that there are limited civilian and conventional military applications for such technology, Iran’s development of such detonators and equipment is a matter of concern,” the report said.
One member state provided the IAEA with information about a “large-scale” test Iran conducted in 2003 to initiate a high explosive charge in the form of a hemispherical shell whose dimensions are consistent with the dimensions of a potential nuclear payload that can be installed on a Shahab-3 ballistic missile.
Work on this project was assisted, according to the IAEA, by a foreign expert, apparently a reference to a Russian scientist who worked with Iran from 1996 to 2002. The scientist has been named in various media reports as Vyacheslav Danilenko.
Additional information in the report reveals that Iran has manufactured simulated nuclear explosive components using high density materials such as tungsten to determine if its theoretical design of an implosion device is correct.
Unfortunately, for now at least, the western response looks like it will be weak.
However, a US official said on Tuesday that Washington may impose more sanctions on Iran, possibly on commercial banks or front companies, but is unlikely to go after its oil and gas sector or its central bank for now,
"I think you will see bilateral sanctions increasing," the official, speaking on condition of anonymity, said after the report's release.
"From our side, we are really looking to close loopholes wherever they may exist," he added, noting that US sanctions are so comprehensive that "there is not a whole lot out there other than the oil and gas market and you know how sensitive that is."
"I don't think we are there yet," he added, referring to the possibility of the United States seeking via US sanctions to make it harder for Iran to export oil and gas, the mainstay of the Islamic Republic's economy.
The official also played down the chances of sanctioning Iran's central bank, which is the clearinghouse for much of its petroleum trade with the rest of the world and which Washington recently suggested was a possibility.
"That is off the table (for now)," said the US official. "That could change, depending on what other players (think). I don't want to rule that out, but it is not really currently on the table."
Of course, the oil and gas industry and the central bank are the only unimposed sanctions that could have a major impact.
What could go wrong?
UPDATE 8:01 AM
I meant to add this last night. You can find a copy of the IAEA report here.
Here's yet another reason why sanctions against Iran are not very effective: A state-owned Indian oil company has announced that it is paying its bills for Iranian oil via a state-owned bank in Turkey (Hat Tip: Joshua I).
India's top state-run refiner, Indian Oil Corp Ltd, said on Wednesday it had begun paying its debt to Iran for oil imports and would clear an outstanding of 380 million euros this month using an arrangement with a state-controlled bank in Turkey.
P.K. Goyal, finance director of IOC , said the company had paid off 73 million euros and was expecting one cargo of Iranian oil in September.
Indian refiners, Iran's second-largest oil buyer after China, racked up a $4.8 billion debt after the Reserve Bank of India scrapped a clearing house system last December -- a move welcomed by Washington as it tries to isolate the Islamic Republic.
As debts mounted, Iran refused to issue Indian refiners with firm crude supply plans for August, forcing them to look for alternatives.
But with payments flowing again through Turkey's state-controlled Halkbank , Indian refiners expect Iran to resume 400,000 barrels a day of oil exports in September.
Goyal said the payment mechanism through the Turkish bank looked "as of now" like a permanent arrangement.
I have said before that I don't believe that there's a way that sanctions can stop Iran. But given that the Obama administration considers Turkey such an important ally that it is trying to squeeze an apology out Israel to satisfy it, and given that both Israel and the US have cordial relations with India, one might expect to see more effort to put a stop to this.
I am an Orthodox Jew - some would even call me 'ultra-Orthodox.' Born in Boston, I was a corporate and securities attorney in New York City for seven years before making aliya to Israel in 1991 (I don't look it but I really am that old :-). I have been happily married to the same woman for thirty-five years, and we have eight children (bli ayin hara) ranging in age from 13 to 33 years and nine grandchildren. Four of our children are married! Before I started blogging I was a heavy contributor on a number of email lists and ran an email list called the Matzav from 2000-2004. You can contact me at: IsraelMatzav at gmail dot com
