* Aims to close loopholes in current sanctions
* Adds pressure ahead of May 23 Iran negotiations
By Roberta Rampton
WASHINGTON, May 16 (Reuters) - The U.S. Senate is set to
vote on a tough new round of economic sanctions on Iran's oil
sector on Thursday, including measures meant to shut down any
financial deals with the country's powerful state oil and tanker
The proposed penalties would increase pressure on Tehran to
abandon its nuclear program ahead of key talks next week,
building on penalties signed into law by President Barack Obama
in December that threatened sanctions against any foreign
institutions that trades with Iran's central bank.
The United States says Iran's nuclear program is a cover for
developing the capability to build atomic bombs, while Iran says
it is for civilian purposes.
Major importers of Iranian crude oil have already cut their
purchases in order to win waivers from those sanctions.
The new package would extend sanctions to cover dealings
with the National Iranian Oil Co and National Iranian Tanker Co,
aiming to close a potential loophole that could have allowed
Tehran, the world's third-largest petroleum exporter, to
continue selling some of its oil.
While the new limits would be a symbolic step in effectively
putting Iran's entire energy sector off-limits, it is unclear
what practical effect this would have on oil flows since most
trade has to be processed through the central bank.
Passing the bill in the Senate before May 23 negotiations in
Baghdad with Iran and world powers will send a strong message
that the United States will impose further sanctions unless Iran
backs down from its nuclear plan, said Democratic Senator Robert
"Iran must either wilfully commit to terminating its nuclear
program or we will force their hand through crippling
sanctions," said Menendez, who helped craft the package.
TOUGHER HOUSE VERSION
The House of Representatives passed a version of the bill in
December that is tougher than the Senate's in several areas,
including banning ships from U.S. ports that have recently
visited Iranian ports.
A new sanction package could prompt Tehran's negotiators to
make concessions, said Anthony Skinner, London-based head of
Middle East and North Africa with risk analysis firm Maplecroft.
"While Iran does not want to give up its nuclear program,
the economic squeeze will force the authorities to at least give
the impression that it is negotiating in earnest," Skinner said.
Senate Majority Leader Harry Reid will ask the chamber to
give the package "unanimous consent," in which senators agree to
the bill without requiring a roll-call vote, a Senate Democratic
leadership aide said.
Reid tried to move a sanctions bill in March, but failed
because some Republicans wanted to add provisions such as
sanctioning companies that insure trade with Iran.
The revised package to be considered on Thursday includes
sanctions on European satellite companies that provide service
to the Iranian government, targeting Iran's jamming of satellite
It also includes non-binding recommendations to the
administration on enforcement and monitoring of sanctions
evasion efforts by Iran, and urges the president to consider
sanctions on insurers of Iranian oil shipments and on shipping
The American Israel Public Affairs Committee, a powerful
pro-Israel lobby group, endorsed the package in a letter to
Senate leaders on Thursday, and said it could be strengthened
when the Senate and House square their versions of the bill
Representative Ileana Ros-Lehtinen, chairman of the House
Foreign Affairs Committee, said more sanctions would help
cripple Iran's oil revenues and criticized the upcoming
negotiations with Iran..
"I'm deeply concerned that the administration's foolish
embrace of yet another round of negotiations will only embolden
the regime," Ros-Lehtinen said at a hearing on Thursday.
"The administration has already made concession after
concession only to come up empty-handed," she said.
(Additional reporting by Timothy Gardner in Washington and
Jonathan Saul in London; Editing by Russell Blinch and Vicki
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