msnbc.com news services
updated 6/24/2010 7:25:20 PM ET 2010-06-24T23:25:20

Congress on Thursday approved tough unilateral sanctions aimed at squeezing Iran's energy and banking sectors and sent the measure to President Barack Obama to sign into law.

Final action came as the House passed the bill after the Senate acted earlier Thursday.

The new sanctions target Iran's Revolutionary Guard and Iran's imports of gas and other refined energy products in response to the Tehran government's defiance of demands it abandon its nuclear ambitions.

Sen. John McCain, R-Ariz., said the legislation, coming after a year in which Obama administration efforts at direct diplomacy with Tehran produced few results, represented "the most powerful sanctions ever imposed by the Congress on the government of Iran."

Foreign companies will be given a choice, he said. "Do you want to do business with Iran, or do you want to do business with the United States?" The Senate vote was 99-0.

The House passed its version of the bill in October and the Senate acted in January. But Democratic leaders delayed final action so diplomatic efforts could play out.

Two weeks ago, the U.N. Security Council approved a fourth round of sanctions against Iran that took aim at the powerful Revolutionary Guard and Iran's investments in ballistic missiles and nuclear materials.

Last week the Treasury Department adding three dozen more companies and individuals to its list of those subject to penalties because of their ties to Iran's nuclear program or role in helping Iran evade existing sanctions.

"First and foremost, we must stop Iran from continuing its illicit nuclear program," said the bill's chief negotiators, Sen. Christopher Dodd, D-Conn., and Rep. Howard Berman, D-Calif. "Our legislation will provide the administration with powerful new tools to press Iran to change course."

The White House praised the compromise and said it would strengthen "a multilateral strategy to isolate and pressure Iran."

The legislation would:

  • Expands the scope of the 1996 Iran Sanctions Act by penalizing foreign companies that assist Iran's energy sector. While Iran is a major exporter of oil, it relies heavily on imports for its refined products such as gasoline.
  • Ban U.S. banks from dealing with foreign banks doing business with the Revolutionary Guard or aiding Iran's nuclear program.
  • Ban foreign companies from U.S. government procurement contracts if they provide Iran with technology used to restrict the free flow of information. Iranians involved in human rights abuses would be barred from obtaining visas and be subject to having their assets in the United States seized.
  • Provide a legal framework for U.S. states, local governments and other investors to divest their portfolios of foreign companies involved in Iran's energy sector.

The Tehran government has shrugged off the latest U.N. penalties and says its nuclear program is for peaceful purposes. Critics of the sanctions have said previous penalties haven't worked because there hasn't been international cooperation behind theme or because Washington has been reluctant to punish companies from countries with close ties to the U.S.

"We continue to believe the legislation is ill-advised," said Richard Sawaya, director of USA Engage, a business and trade group that opposes the penalties. "Unilateral sanctions fail to produce their intended effects upon sovereign states, and the scope of these sanctions is worrisome."

As with past measures, the White House asked for flexibility in applying sanctions so as to protect national security interests.

"Whether the United States and our allies can stop Iran from acquiring a nuclear capability is a matter of political will," said House GOP leader John Boehner of Ohio. "Congress will closely monitor whether the Obama administration effectively implements the sanctions authorized."

Dodd acknowledged that past presidents have failed to comply with the 1996 act, avoiding confrontations with other countries by not investigating companies suspected of violating sanctions. He said the new bill, while still containing waiver provisions, states "in no uncertain terms" that the president must investigate if there is credible evidence of a violation and ultimately impose sanctions.

Administration officials told the Senate Foreign Relations Committee this week that sanctions would be enforced and could be effective.

"Iran is not 10 feet tall," said Undersecretary of State William Burns. "Sanctions create real problems for them."

This article contains reporting from Reuters and The Associated Press.

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