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Obama Inks Iran Penalties, Tehran Calls for Atomic Discussions

An Iranian navy vessel launches a missile during a drill in the Gulf of Oman on Sunday. Iran's navy said Sunday it test-fired an advanced surface-to-air missile during a drill in international waters near the Strait of Hormuz, the passageway for a significant portion of the world's oil supply (AP Photo/Iranian Students’ News Agency).
An Iranian navy vessel launches a missile during a drill in the Gulf of Oman on Sunday. Iran's navy said Sunday it test-fired an advanced surface-to-air missile during a drill in international waters near the Strait of Hormuz, the passageway for a significant portion of the world's oil supply (AP Photo/Iranian Students’ News Agency).

The United States on Saturday enacted new penalties targeting Iran's petroleum earnings, after Tehran indicated it could join new discussions with Western powers over its disputed atomic activities, Reuters reported (see GSN, Dec. 23, 2011; MacInnis/Hafezi, Reuters I, Dec. 31, 2011).

The penalties, contained in defense authorization legislation inked into law by President Obama on Saturday, could affect independent financial institutions as well as central and other state-run banks that do business with Iran's central bank, the New York Times reported. The measures would take effect following delays of between two and six months; the nature of a business exchange would determine the specific wait time involved, Reuters reported.

The measure is the latest move by Washington to curb an Iranian nuclear program believed to be geared toward weapon development. Tehran denies that allegation.

"The sanctions will force a choice between buying Iranian oil or engaging in the U.S. financial system, the largest in the world. That is going to change the risk calculus for a lot of folks," Center for American Progress security analyst Brian Katulis said. "They are going to wait to see how this signal is received before they take any further steps."

Japan and other U.S. partners have reservations about the newly enacted legislation, though it includes provisions that could limit the application of sanctions, according to U.S. government sources. The law enables Obama to exclude entities in nations deemed to have substantially curbed business with Tehran, and the president could also invoke U.S. security needs or protection of the international energy trade in justifying exclusions. He is required to inform lawmakers of any such exemptions, which would expire without renewal (Andrew Quinn, Reuters II, Jan. 3).

The Obama administration hopes to carry out the law's provisions without dealing a blow to international markets, the Wall Street Journal on Saturday quoted high-level administration insiders as saying.

"We believe we can do this," an administration source said. "The president will consider his options, but our intent -- our absolute intent -- is to in a timed and phased way implement this legislation so it can have the impact that Congress intended and the president agrees with."

In a signing statement, Obama said the Iran measures and other portions of the legislation "would interfere with my constitutional authority to conduct foreign relations" because he is compelled under the law "to take certain positions in negotiations or discussions with foreign governments." 

"Should any application of these provisions conflict with my constitutional authorities, I will treat the provisions as nonbinding," he said.

Iran might consider the bill's enactment a move of war, a number of U.S. government sources suggested (Lee/Johnson, Wall Street Journal I, Dec. 31, 2011).

Tehran on Tuesday said a significant devaluation in Iran's monetary unit in relation to the U.S. dollar was not related to the new penalties against the Iranian central bank, the Associated Press reported. Foreign Ministry spokesman Ramin Mehmanparast said the punitive measures had not yet been implemented (Nasser Karimi, Associated Press I/Google News, Dec. 31).

"The Iranian nation and those involved in trade and economic activities will find other alternatives," Reuters quoted Mohammad Nahavandian, the head of Iran's Chamber of Commerce, as saying (Reuters III, Jan. 1).

Iranian Oil Minister Rostam Qasemi added: "There is no doubt that the price of oil will increase drastically and the international markets will have to pay a heavy price" in the wake of new penalties from Western states. The European Union this month is expected to consider a possible ban on imports of Iranian oil.

"One can't give accurate predictions, but sanctions on Iran's oil will drive up the price of oil to at least $200"  for each barrel, Agence France-Presse quoted Qasemi as saying (Agence France-Presse I/al-Ahram, Dec. 31, 2011).

Steps to enact "crippling" penalties against Iran have had little success, but "Iran's central bank and its petroleum industry are under a lot of pressure," the Xinhua News Agency quoted Israeli Defense Minister Ehud Barak as saying on Monday (Xinhua News Agency, Jan. 2).

Meanwhile, senior Iranian nuclear negotiator Saeed Jalili said his country was prepared to take part in EU-coordinated discussions aimed at addressing fears shared by Western powers over its nuclear activities, AFP reported.

"We officially told them to come back to the negotiation based on cooperation," the official said.

"We will soon send a letter, after which (new) talks will be scheduled," Iranian Ambassador to Germany Alireza Sheikh-Attar on Saturday told Iran's Mehr News Agency (Agence France-Presse II/Google News, Jan. 1).

"We are waiting for a date and venue of the next meeting to be declared by Mrs. (EU foreign policy chief Catherine) Ashton for negotiations between Iran and the [P-5+1] group," Mehmanparast said on Tuesday, referring to the five permanent U.N. Security Council member nations and Germany.

Upon receiving such a communication, Iranian officials "will express their point of view and through contacts there will be a final agreement" on a gathering, the spokesman said (Agence France-Presse III/EUbusiness, Jan. 3).

An Ashton representative, though, said the Iranians "are getting things the wrong way around" and must first reply to a prior EU statement.

"First things first. They must first respond to the letter and then we'll take it from there," spokesman Michael Mann said (Agence France-Presse IV/Daily Star, Jan. 3).

Elsewhere, the Iranian Atomic Energy Organization on Sunday said the country's specialists had "tested the first nuclear fuel rod produced from uranium ore deposits inside the country," AFP reported.

"After going through physical checks, it was inserted into the core of the Tehran Research Reactor in order to study how well it works," the Iranian office said on its website (Agence France-Presse V/PhysOrg, Jan. 1).

Mehmanparast said the International Atomic Energy Agency would soon dispatch a senior-level team to Iran, Iran's Press TV reported. The U.N. nuclear watchdog is continuing a years-long probe on Iran's atomic activities and intentions.

“An IAEA delegation, headed by a deputy director general of the agency, will travel to Iran soon and this (visit) is in line with Tehran's continued cooperation with this international body,” the foreign ministry spokesman said (Press TV, Jan. 3).

Separately, Iran has "successfully test-fired long-range shore-to-sea and surface-to-surface missiles, called Qader (Capable) and Nour (Light)," Reuters quoted Iranian Deputy Navy Commander Mahmoud Mousavi as saying on Monday. The announcement capped 10 days of Iranian military practice maneuvers amid suggestions the nation could block the Strait of Hormuz, a crucial waterway for transferring four-tenths of the world's petroleum.

"No order has been given for the closure of the Strait of Hormuz. But we are prepared for various scenarios,"  Iranian navy head Habibollah Sayyari said in remarks reported by state media (Ramin Mostafavi, Reuters IV, Jan. 2).

A spokeswoman for the U.S. Fifth Fleet said it was "always ready to counter malevolent actions", the BBC reported last week (BBC News, Dec. 28, 2011).

Iranian army head Gen. Ataollah Salehi on Tuesday cautioned a U.S. aircraft carrier against moving back to the Persian Gulf, AP reported.

"We recommend to the American warship that passed through the Strait of Hormuz and went to Gulf of Oman not to return to the Persian Gulf," the Islamic Republic News Agency quoted him as saying (Nasser Karimi, Associated Press II/Yahoo!News, Jan. 3).

Iranian Brig. Gen. Hossein Salami added on Sunday: "We will respond to any threat by intensified threat and this fact has no time or geographical limitation."

"The Strait of Hormuz is a part of our defense geography as well," Iran's Fars News Agency quoted him as saying (Fars News Agency, Jan. 1).

French Foreign Minister Alain Juppe on Tuesday said "Iran is pursuing the development of its nuclear arms, I have no doubt about it," AFP reported. "The last report by the International Atomic Energy Agency is quite explicit on this point."

"This is why France, without closing the path of negotiation and dialogue with Iran, wants stricter sanctions," he said (Agence France-Presse V/Spacewar.com, Jan. 3).

Separately, the United States has sought to persuade Israel that Tehran's potential violation of specific "red lines" would prompt U.S. strikes against Iranian sites, the Daily Beast reported last week (Eli Lake, Daily Beast, Dec. 28, 2011).

Israeli Intelligence Minister Dan Meridor on Monday said "Israel is watching very closely, and evaluating attempts by the Iranian republic to develop nuclear weapons," Xinhua reported.

"The entire world, led by the United States and President (Barack) Obama, are trying to keep that from happening," Meridor said  (Xinhua, Jan. 2).

The head of Israel's Mossad intelligence service questioned whether a nuclear-armed Iran would constitute an "existential threat" to his country, the Indo-Asian News Service reported last week.

"What is the significance of the term existential threat?" Tamir Pardo asked.

"Does Iran pose a threat to Israel? Absolutely," Haaretz quoted him as saying. "But if one said a nuclear bomb in Iranian hands was an existential threat, that would mean that we would have to close up shop and go home."

"That's not the situation. The term existential threat is used too freely," he said (Indo-Asian News Service/Yahoo!News, Dec. 30, 2011).

In Iowa, Republican presidential contender Mitt Romney said Obama has not taken sufficient economic action to pressure Iran over its nuclear efforts, the Journal reported.

“I want to make sure that the people of this nation understand that he failed us not only here at home, he’s failed us in dealing with the greatest threat we face, which comes from Iran,” the former Massachusetts governor said.

Former Senator Rick Santorum of Pennsylvania, another presidential hopeful, vowed to take military action against Iranian nuclear sites if Tehran does not open the facilities to international audits (Wall Street Journal II, Jan. 1).

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