Briefs the Press on Iran Sanctions

Special Briefing
James B. Steinberg
Deputy Secretary of State
Washington, DC
May 24, 2011

MS. FULTON: Good morning, ladies and gentlemen, and welcome to the Department of State. Today we have Deputy Secretary of State Steinberg here to speak to us about the – some actions the U.S. is taking under the Iran Sanctions Act. He will make a statement and then have some time for some brief Q&As, but time is a bit limited. So because of that, we’ve planned for a 12 o’clock telephone background briefing with several experts on the Iran sanctions actions. So if you have detailed technical questions, I encourage you to hold them for that call. We have already sent out the call information. If you don’t have it, please just contact the press office.

But otherwise, without further ado, Deputy Secretary Steinberg.

DEPUTY SECRETARY STEINBERG: Good morning everybody. I’m here this morning to announce that Secretary of State Clinton has decided to impose sanctions on seven foreign entities under the Iran Sanctions Act of 1996 as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act, sometimes known as CISADA, of 2010, for their activities in support of Iran’s energy sector. These companies are Petrochemical Commercial Company International (PCCI), Jersey and Iran; Royal Oyster Group, UAE; Speedy Ship, UAE, Iran; Tanker Pacific, Singapore; Ofer Brothers Group, Israel; Associated Shipbroking, Monaco; and Petroleos de Venezuela, sometimes known as PDVSA, in Venezuela.

All of these companies have engaged in activities related to the supply of refined petroleum products to Iran, including the direct supply of gasoline and related products, as well as the provision of a product tanker to the Islamic Republic of Iran Shipping Lines (IRISL), an entity that has been designated by the United States and the European Union for its role in supporting Iran’s proliferation activities.

The intent of sanctions on Iran is to pressure it to comply with its international obligations. In its struggle to secure the resources it needs for its energy sector, Iran repeatedly has resorted to deceptive practices to evade sanctions. This Administration, which is the first to impose sanctions on firms under the Iran Sanctions Act, has been working aggressively to prevent Iran from developing its energy sector. Iran uses revenues from its energy sector to fund its nuclear program, as well as to mask procurement of dual-use items. Today’s actions add further pressure on Iran to comply with its international obligations.

Under the Iran Sanctions Act, the Secretary has the authority to calibrate sanctions on a case-by-case basis. Accordingly, different sanctions have been selected for each entity ranging from prohibitions on certain types of government assistance to broader sanctions on property transactions with U.S. persons. In some cases, our intent has been to shut down the activities of target firms; in others our intent is dissuasive. In all cases, we’ve examined transactions in detail and have made judgments about the likely impact of our actions on the global energy market.

For example, in the case of PDVSA, the sanctions we have imposed will cut off PDVSA’s access to U.S. Government contracts, U.S. Export – Import (inaudible) financing and licenses for controlled technologies. These sanctions will not prevent PDVSA’s sale of oil to the United States or other markets, and the sanctions do not affect the operations of PDVSA’s subsidiaries.

To counter Iran’s expanding nuclear program, the Department of State has spent considerable time and effort to discourage companies from doing business with Iran in sanctionable sectors. In fact, in September of last year, you may recall I held a similar briefing to announce that we had secured the withdrawal of four major international oil companies – Royal Dutch Shell, ENI, Statoil, and Total – from projects in Iran. And in October 2010, we secured the withdrawal of a fifth major oil company, INPEX, from its project in Iran. The impact of these withdrawals has cost Iran hundreds of millions of dollars.

In the refined petroleum sector, we’ve seen many indications that shipments of refined petroleum have dropped significantly since the passage of CISADA. Some reports indicate that imports in some months have dropped over 60 percent.

Iran has lost millions in potential revenue by converting petrochemical plants to produce gasoline to make up for their dramatic shortfall in gasoline imports. In addition, the State Department has also convinced the jet fuel suppliers in 17 cities in Europe and Asia to which IranAir flies to stop providing fuel. These firms have been joined by scores of other companies working in a variety of sectors that have recognized that the risk of doing business with Iran are just too high in light of Iran’s continuing efforts in its nuclear program and its support of terrorism.

When necessary we have imposed, and will continue to impose sanctions against firms that commit sanctionable activity, as we demonstrated with the sanctions against the oil firms Naftiran Intertrade Company and Belarusneft and the seven more companies we add to the list today.

By imposing these sanctions, we’re sending a clear message to companies around the world: Those who continue to irresponsibly support Iran’s energy sector or help facilitate Iran’s efforts to evade U.S. sanctions will face significant consequences.

Additionally, in a separate action, the United States today is imposing sanctions on 16 foreign entities – individuals pursuant to the Iran, North Korea, Syria, and Nonproliferation Act, sometimes known as INKSNA, for their activities in support of WMD or missile programs. These include companies – include three Chinese entities and one Chinese individual, two Belarusian entities, five Iranian entities, and one Iranian individual, one North Korean entity, two Syrian entities, and one Venezuelan entity.

These entities were sanctioned for the transfer to or acquisition from North Korea, Syria, or Iran of goods, services, or technologies controlled under the various export control regimes, or otherwise have the potential to make a material contribution to the developments of WMD or cruise or ballistic missile systems. The majority of these entities or individuals were sanctioned because of proliferation activity involving Iran.

We’ve also worked diligently with our foreign partners in order to urge them to develop their own sanctions measures. In addition to four UN Security Council resolutions imposing binding obligations on states to implement sanctions against Iran, the EU, Japan, South Korea, Canada, Norway, Switzerland, and Australia have all also imposed robust autonomous sanctions against Iran.

As a result, there’s an international consensus to raise the cost of Iran’s refusal to meet its international nuclear obligations, and these are not the end of our efforts. We continue to review reports of sanctionable activity, engaging with foreign governments and evaluating and applying U.S. sanctions laws.

Let me take a few of your questions.

QUESTION: Just on the PDVSA point, you said that you had considered the effect on the oil market before making a decision. Can you say how you arrived at that conclusion and a little bit more about what PDVSA was doing specifically to assist Iran’s --

DEPUTY SECRETARY STEINBERG: Well, I think that with respect to the impact, obviously, we consulted closely with the economic agencies, including DOE and the other economic agencies. And in terms of the specific methodologies, you may want to ask that when we have some experts from – I think DOE will be participating in the call later. So I can give – they can give you a little bit more detail of the methodology that they used.

In terms of PDVSA’s activities, these were sales and purchases of refined petroleum products, which are specifically covered by the act.

QUESTION: Can you discuss the specific case of the Israeli firm? It seems odd that they would be involved in trade with Iran.

DEPUTY SECRETARY STEINBERG: Again, I think we – in terms of the specific activities, we’ve got a fact sheet – is that out now – in terms of what the specific –

MS. FULTON: We’ll be handing it out at the end.

DEPUTY SECRETARY STEINBERG: But again, it was for trade in petroleum products, and this was a company that engages in this kind of trade.

QUESTION: Just one more: Could you discuss the state of play vis-à-vis Iran and the P-5+1 talks? They have sent a letter to the Europeans. Are we any closer to seeing talks? Are the sanctions pushing them toward this point?

DEPUTY SECRETARY STEINBERG: Well, I think it’s clear that the letter that they sent back was not responsive to what we feel is – the necessary willingness of them to engage directly on the issues concerned. They talked in very general terms about cooperative matters, and it’s very clear to us, though – the President has said that we’re prepared to engage on other issues with Iran, that the core is a real commitment for them to address the nuclear program, and we did not see that in the letter that was sent to Cathy Ashton.

So it’s very clear that’s why we’re continuing to pursue these measures, both by ourselves and with others, because I think we need to continue to keep the pressure on Iran. This clearly had an impact on their economy. At what point that will cause them to make different decisions obviously is something we have to watch carefully, but it is a reason for us to make sure that we are very clear both in terms of our application of the sanctions law and our diplomatic engagement with others, that we are going to continue to push this until and unless the Iranians take a different position.

Okay. Well, thank you all very much; appreciate your time.

PRN: 2011/824