Congress throws down the gauntlet to Rohani

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.

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[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.

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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?