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The Iran Counter-Proliferation Act: Potential Implications for Russian-Iranian Relations and U.S.-Russian Nuclear Cooperation
By Anya Loukianova and Nikolai Sokov
A review of the likely impact of the Iran Counter-Proliferation Act, in light of a recent move by the Bush Administration to tighten financial sanctions against Iran.
October 26, 2007
H.R. 1400 represents the latest and by far the toughest attempt by Congress to force Russia to change its policy towards Iran. Paradoxically, the bill comes at the time when cooperation on the Russian-Iranian nuclear power plant project in Bushehr—the only current nuclear energy venture between the two countries—is at its lowest since the inception of nuclear cooperation in the early 1990s, and when the United States and Russia seem to have reached a modicum of cooperation in the UN Security Council on sanctions against the Iranian uranium enrichment program. However, while H.R. 1400 forces imposition of sanctions on entities dealing with Iran and denies waiver power to the executive, the broader language of the bill makes it an appealing congressional response at a time when the executive has grown frustrated with building consensus on multilateral sanctions against Iran and has turned to unilateral measures.
As U.S.-Russian discussions on potential cooperation for the predicted future growth of nuclear energy are one of the very few pillars still holding up the increasingly strained bilateral relationship, exploration of the impact of the Iran Counter-Proliferation Act on Russian policy towards Iran and U.S.-Russian relations is in order. This research story argues that the likely effect of the Act on Russian-Iranian cooperation will be negligible. As it has done in the past, Russia will emphasize that its cooperation with Iran is pursued in strict compliance with international law and relevant UN Security Council resolutions and will, as a matter of principle, condemn the "extraterritorial" application of U.S. law. Moreover, Russian interest in a 123 Agreement with the United States is overestimated: Moscow will not think twice about postponing 123 negotiations until better times. The impact of the Act on overall U.S.-Russian relations will probably be minimal as well, both because Russia will be reluctant to burden the already shaky relationship further and because it simply does not expect much in terms of cooperation with the United States.
H.R. 1400 Links Civilian Nuclear Cooperation with Russia to Termination of Its Cooperation with Iran
On March 8, 2007, Representative Tom Lantos (D-CA), introduced the Iran Counter-Proliferation Act. The bill, crafted with the help of House Foreign Affairs Committee ranking member Ileana Ros-Lehtinen (R-FL), had several overarching objectives: to "prevent Iran from securing nuclear arms and the means to produce them," and "ensure ... [accomplishment of] this all-important goal in a peaceful manner." In sum, H.R. 1400 broadens restrictions on the commercial activity of U.S. companies in Iran, widening prohibitions on the import of Iranian goods to the United States, and promotes the policy of "zero foreign investment" in Iranian entities, which deal with "petroleum resources." The Iran Counter-Proliferation Act intends to put "countries seeking to maintain good relations with the U.S. on notice" that the United States would not "be used as [an] indirect purveyor of nuclear assistance to Iran." H.R. 1400 also designates the Islamic Revolutionary Guards Corps as a terrorist organization and provides for enforcement of economic sanctions against U.S. and foreign investors in the Iranian economy. Most significantly, however, the Act limits the executive's power to waive imposition of the sanctions prescribed by the Iran Sanctions Act of 1996 (ISA). The ISA, which initially required the sanctioning of entities engaged with Iran's petroleum companies, was amended by the 2006 Iran Freedom Support Act (Public Law 109-293) to apply to entities transferring dual-use technology and advanced conventional weapons. It is worth noting that no sanctions have been levied under the ISA due to executive waivers. 
Russia figures prominently in H.R. 1400 as the country of utmost congressional concern due to allegedly "assisting the nuclear program of Iran or transferring advanced conventional weapons or missiles to Iran" as well as "block[ing] effective U.N. sanctions against Iran." The bill's authors contend that if the efforts of the Bush Administration at building consensus for "effective U.N. sanctions" falter, the United States needs to "be prepared to tighten and to fully enforce" bilateral sanctions against Iran and foreign entities, which engage with Iranian energy companies. As expressed by Congresswoman Ros-Lehtinen, Russia and China need to show their commitment "to nonproliferation, or face consequences in their relations with the United States." Moreover, some legislators seem to adhere to a harsh image of Russian-Iranian nuclear cooperation, alleging Russian participation in the Iranian uranium enrichment program. Rep. David Scott (D-GA), for example, has argued that Russia was not just an "obstacle to the process of sanctions working in Iran," but that "intelligence" indicated that Russia was also the source of "fissile material" for the Iranian weapons program. Scott insisted that it was "clear" to anyone "that... [Russia was] the main culprit of getting... [Iran] in the position of being the threat they are." A clarification that Russia was not providing fissile materials to Iran, and that U.S. concerns rested with Iranian progress in the development of enrichment technology rather than Russia's fuel supplies to Bushehr—clarification provided by Principal Deputy Assistant Secretary of State Patricia McNerney, who responded to Scott during a congressional hearing—did not seem to change Scott's view.
To add "teeth" to the legislation, House members included language in Section 405 of H.R. 1400 stating that "no agreement for cooperation between the United States and the government of any country [that is assisting Iran -- i.e. Russia]... may be submitted to the President or to Congress pursuant to section 123 of the Atomic Energy Act of 1954." This provision further notes that "no approval may be given for the transfer or retransfer directly or indirectly to such country of any nuclear material, facilities, components, or other goods, services, or technology that would be subject to such agreement." Consequently, this provision effectively blocs a proposed 123 Agreement between the United States and Russia, a long-standing goal of the Russian government and the Russian Federal Atomic Energy Agency (Rosatom).
H.R. 1400 conditions submission of the 123 Agreement with Russia for congressional approval upon the Bush Administration's report to the Senate Committee on Foreign Relations and the House Committee on Foreign Affairs that either Russia has suspended its assistance to the Iranian nuclear program, has ceased transfers of conventional weapons and missile technology, and "is committed to maintaining that suspension" or that "Iran has ceased its efforts to design, develop, or acquire a nuclear explosive device or related materials or technology."  A Senate version of the Act, S. 970, has a nominally higher threshold for a 123 Agreement approval, stating that either Russia ceases cooperation or "Iran has completely, verifiably, and irreversibly dismantled all nuclear enrichment-related and reprocessing-related programs."
The Predecessor: H.R. 1883 Iran Nonproliferation Act of 2000
H.R. 1400 bears both striking similarities and equally striking contrasts to the previous congressional attempt to leverage U.S. interest in the termination of Russian-Iranian cooperation, the Iran Nonproliferation Act (INA) of 2000 (Public Law 106-178). The INA sought to halt Russian assistance to Iranian missile programs by placing restrictions on U.S.-Russian space cooperation. After an initial veto by the Clinton Administration, the bill passed with a 419-0 vote in the House in September of 1999, and with a 98-0 vote in the Senate. After that, Bill Clinton signed the INA into law in 2000.
The initial version of the INA, first introduced exactly ten years ago, at the height of U.S. concern regarding the Iranian missile programs and prior to Russian actions to improve its export control system, intended to punish Russian entities for transfers of missile technology to Iran and was specifically calibrated to target Russia's space agency (RosAviaKosmos). Dana Rohrabacher (R-CA), chairman of House Subcommittee on Space and Aeronautics, stated that the purpose of the bill was to "put on notice that we should not have high-level cooperation, even in space, if the Russians were using their technological skills to help Iran build a nuclear weapon." While Clinton Administration efforts to involve Russia in the International Space Station (ISS) carried with them the implicit U.S. goal of ensuring Russian compliance with the Missile Technology Control Regime (MTCR), Section 6 of the INA effectively linked Russian cooperation programs with Iran with U.S. payments to Russia for ISS activities. The INA text prohibited NASA from paying the Russian space agency for any services provided until the executive branch certified that Russians have ended technology transfers and leakages to Iran.
Like H.R. 1400 today, the original, 1998 version of the INA initially lacked an executive waiver provision, which was only added to the final version of the bill, allowing the Clinton administration, as one former official described it, to "[hold] our noses and sign" the 2000 version. Since then, the INA has been used as a vehicle for levying sanctions against Russian companies. Its central provision, the ban on payments in connection with the ISS, eventually had to be dropped after the Columbia shuttle accident in 2003, when it became clear that the United States would have to cease participation in the ISS if it could not pay Russia for "lifeboat" services. In 2005, Congress amended the INA (S. 1713, Iran Nonproliferation Amendments Act of 2005) to allow some payments to RosAviaKosmos.
While the bills embody similar approaches to leveraging Russian interest in cooperation with the United States, H.R. 1400 embodies a tougher line than H.R. 1883 because it presently denies the administration the flexibility of executive waivers and mandates imposition of sanctions. However, this lack of flexibility could yield either benefits or losses, depending on the specific circumstances. On the one hand, the prospect of unavoidable sanctions may force Moscow to back down and terminate its cooperation with Iran. On the other hand, the rigidity of the bill's provisions could make tradeoffs in pursuit of more modest—but also more achievable—gains impossible if Russia chooses intransigence. A closer look at the status of Russian cooperation with Iran, its relationship to international law, and the specific grievances voiced in Congress helps shed light on possible outcomes.
Russian-Iranian Cooperation Programs: U.S. vs. Russian Views
U.S. lawmakers have expressed concern regarding Russian-Iranian nuclear cooperation since the early 1990s, when Russia first announced its intent to complete the Bushehr nuclear power plant (NPP). However, over the course of the last decade Russia has made significant changes to the original deal—often under U.S. pressure—and removed the elements that were questionable from the point of view of the nonproliferation regime, such as the promise to provide centrifuges for uranium enrichment and extended training to Iranian specialists. In the end, the deal was brought into compliance with Nuclear Suppliers Group (NSG) guidelines; Russia has also convinced Iran to conclude an agreement on the return of spent fuel, an important tool to ensure that the Bushehr nuclear power plant is not used as a source of weapons-grade fissile materials. In addition, the Russian NPP project in Bushehr has entailed maximum transparency and a commitment to full IAEA safeguards, as well as the model fuel-lease arrangement.
The official Russian position with regard to the Bushehr project is centered on the fact that its nuclear cooperation with Iran strictly abides by international law and that it cannot—and should not—be terminated because Iran is entitled to such assistance under Article IV of the Treaty on the Non-Proliferation of Nuclear Weapons (NPT). The program can only be terminated if Iran is found conclusively to be in violation of its NPT obligations by the appropriate international body, the International Atomic Energy Agency (IAEA). Since the IAEA has not accused Iran of any such violation to date and only has "questions" with regard to past Iranian activities, Russia feels entitled to continue its program. Certainly, there is more at stake than legalities alone: this is also a question of prestige and reliability. If Russia terminates or even temporarily halts the Bushehr project, it could be seen as an unreliable partner that might terminate future similar projects under U.S. pressure. Thus international law is seen as the only tenable foundation for the possible discontinuation of nuclear cooperation with Iran.
Despite this legal interpretation, however, construction at Bushehr has in fact ground to a halt since the beginning of 2007, but for a different reason: the so-called "nonpayment crisis." According to Russian sources, work at the site was halted because Iran was not making regular payments according to the agreed schedule. There are reasons to believe, however, that that crisis is at least partially of Russia's own making and is probably intended to slow down the completion of the project until the situation around the Iranian nuclear program is clarified. Significantly, as a result of the delays in the completion of the power plant (so far for 12 months) the delivery of the first batch of fuel was also postponed by one year—until the spring of 2008. Unofficial sources speculate that Russia simply was reluctant to supply fuel, which is based on low-enriched uranium, for fear that it might be further enriched by Iran to weapons-grade level (enriching to 3-4 percent takes about 50 percent of the separative work required to enrich uranium to 90 percent, the level of enrichment ideally used in weapons). New delays in both the construction of the nuclear power plant and, accordingly, the delivery of fuel seem likely.
Thus, the text of H.R. 1400 is bound to cause a clash between the United States and Russia because the bill defines "assisting the nuclear program of Iran" (Section 405) as "intentional transfer ... of goods, services, or technology listed on the Nuclear Suppliers Group Guidelines for the Export of Nuclear Material, Equipment and Technology, or the Nuclear Suppliers Group Guidelines for Transfers of Nuclear-Related Dual-Use Equipment, Material, and Related Technology." This would mean, in Russia's view, that Congress seeks to force it to terminate activities that are permissible under international law, that is, take the very step it has so far refused to take: terminate a legal cooperation program under explicit U.S. pressure. To make things worse, this pressure comes at a time when Russia has already reduced cooperation with Iran in the nuclear sphere to the bare minimum possible without openly violating its contractual obligations.
Conventional Arms Sales and Missile Assistance
H.R. 1400 also includes language regarding sales and transfers of missile technology (in accordance with MTCR control lists) and conventional weapons (in accordance with Wassenaar Arrangement guidelines). However, both of these provisions appear excessive and no longer necessary. Congressional concerns with regards to Russian missile and conventional weapons assistance have already been addressed by multiple punitive measures, such as the sanctions provided for in the Iran Nonproliferation Act, related nonproliferation sanctions legislation, and Executive Orders 12938 and 13382. Moreover, Russia appears to have halted all missile technology and know-how transfer and leakage to Iran limited by both MTCR and the Wassenaar Arrangement. In the past several years Russia has maintained consistently that its cooperation with Iran is in strict compliance with international law and that any sanctions that have been introduced by the United States during this time constitute an "extraterritorial application" of U.S. domestic law rather than enforcement of international norms and sanctions. Thus, it will likely reject not just the H.R. 1400 sanctions and prohibitions, but the very premise upon which they are based.
Moreover, Russia maintains that it is already exercising restraint with regard to military cooperation with Iran and is doing far less than its legal rights allow. Experts of the Moscow-based Center for Analysis of Strategies and Technologies contend that Russian-Iranian military-technical cooperation slowed almost to a trickle after agreements reached during the Gore-Chernomyrdin Commission meetings in the 1990s. While there has been recent speculation regarding possible future Russian sales of turbojet engines to Iran, contracts and deliveries—signed and completed during the 1990s through 2000—have been modest and included 30 Mi-17 transport helicopters, some for the Iranian Red Crescent, and Russian production and launch of the Iranian Zohreh (Venus) communications satellite.
Of greatest concern for U.S. lawmakers appears to be the recent $780 million sale of 29 Tor-M1 air defense systems to Iran. Indeed, these systems could be used against U.S. and Israeli manned and unmanned aircraft, but their utility is quite limited in terms of distance and altitude as well as ability to track targets. Even in this deal, the Russians aver, they stopped short of what they are permitted to sell under international law: it is well known that the Iranians wanted the much more capable S-300 air defense and missile defense system, but Moscow limited itself to a more modest deal.
Granted, some congressional concerns may have been spurred by recent press speculation regarding potential sales (directly to Iran) and retransfers (through Belarus or Syria) of fighter aircraft and air defense missile systems to Iran by Russia's state arms intermediary Rosoboronexport—allegations which have so far not been substantiated. [see box, below]
The congressional frustration that gave birth to the Iran Counter-Proliferation Act has seemingly been caused by a shift in the executive branch's approach towards Russia in connection to the 123 Agreement. A December 2005 article in Platts NuclearFuel detailed this policy shift, referring to discussions with executive branch officials. NuclearFuel's Daniel Horner wrote that while "under long standing U.S. policy... [which] dated back to the end of the George H.W. Bush administration, the U.S. has insisted that Russia end its cooperation with Iran in various military and proliferation-sensitive areas as condition for beginning negotiations," U.S. officials now maintained that linking U.S.-Russian nuclear cooperation to Russian nuclear cooperation with Iran had proven to yield little or no leverage. A July 13, 2006 article in NuclearFuel cited former Assistant Secretary of State for Nonproliferation Robert Einhorn's explanation of the policy shift: "rather than focusing on Russia's specific nuclear transfers as well as exports relating to missiles and advanced conventional weapons, which were also part of the original preconditions, the assessment is now based on how 'helpful or hurtful' Russia has been in general."
Indeed, Russia has proven to be amenable to U.S. pressure with regard to aspects of its cooperation with Iran the legality of which is questionable, but has remained stubborn on the core Bushehr project, which is legal under international law; also, its propensity to yield to U.S. pressure was greatest when issues were raised away from public view. At the same time, even as the United States and Russia continued to disagree on the Bushehr project, Moscow has refrained from blocking U.S. policy in the UN Security Council and the IAEA, limiting itself to efforts aimed at softening the harsher elements of U.S. proposals. It also slowed down implementation of the Bushehr deal in 2007 as the crisis over the Iranian uranium enrichment program worsened, though it has always pointed to non-political reasons for the delays. The track record has been quite clear: the United States possesses considerable leverage only over certain types of Russian actions; further pressure over additional activities yields no or negligible results. Given this reality, pursuit of a 123 Agreement with Russia is logical.
H.R. 1400 directly challenged this newfound executive flexibility by using a bigger and sharper stick to threaten Russia, and upset Moscow's calculations with regard to profitable nuclear fuel and other business ventures with the United States. In addition, to prevent the executive from circumventing the congressional censure, the bill removes the executive waiver provision, which effectively rid the previous law, the Iran Nonproliferation Act, of its teeth.
The first reaction to H.R. 1400 came from Rosatom press secretary Sergey Novikov, who was quoted as saying that "American legislation does not govern Russian-Iranian relations. Only UN Security Council sanctions can prohibit energy cooperation with Iran, and the Bushehr project has been excluded from them. If there are new sanctions which will apply to the Bushehr project, we will see how to conduct ourselves."
This statement goes to the heart of the likely Russian reaction: as long as its cooperation with Iran is legal under international law, it feels entitled to pursue these programs. Of course, a variety of concessions is always possible, in a quiet way, but the language of H.R. 1400 requires a definitive and public termination of all nuclear, missile, and conventional arms deals between Russia and Iran, and Moscow is highly unlikely to bow openly to U.S. pressure. Furthermore, as noted above, Russia believes it has already reduced its cooperation to Iran below the limits established by international law and thus even partial concessions seem improbable.
The most likely effect, if the final bill follows the House version, is loud condemnation from Moscow and perhaps additional difficulties in the already uneasy cooperation between the United States and Russia in the UN Security Council. The "hook" of the 123 Agreement does not appear a very convincing tool either because the main current U.S.-Russian nuclear cooperative venture, export of Russian nuclear fuel to the United States, does not require the agreement, while more ambitious projects can simply be postponed until more opportune times.
At the same time, it does not appear likely that even the toughest possible version of the bill will have a major impact on overall U.S.-Russian relations. The relationship is already strained and there is not much that can be done to make it worse. Some basic level of cooperation, which is dictated by the core national interests of the two states, will persist under almost any circumstances. Moscow does not need another scandal and will probably prefer to "forget" about the bill, although the psychological atmosphere of the relationship will worsen. In other words, whether the bill is adopted or not will hardly change anything in Russian-Iranian or U.S.-Russian relations (except, of course, in psychological, "atmospheric" terms).
Upon its introduction in March of 2007, H.R. 1400 was held up in five committees in the House; however, it eventually had to go up for a vote on the floor. On September 25, the bill passed with 325 sponsors, 397-16 votes and full bipartisan support. The bill was referred to the Senate Committee on Banking, Housing, and Urban Affairs on September 26, 2007, where its future is unclear at the moment.
The Senate version of the Iran Counter-Proliferation Act, S. 970, was introduced on March 22, 2007 by Sen. Gordon Smith (R-OR). Section 6 of S. 970, while using different language, singles out Russia similarly to Section 405 of H.R. 1400 and places similar restrictions on U.S.-Russian civilian nuclear cooperation. During a recent floor statement Smith singled out Russia, stating that it "has significantly contributed to the development of Iran's nuclear program." However, S. 970 does not have a section amending the Iran Sanctions Act of 1996 to deny the executive waiver authority. S. 970 already has 68 cosponsors (as of October 19, 2007, including presidential aspirants Clinton, Obama, McCain, and Dodd), though some experts have pointed out the absence of Majority Leader Harry Reid (D-Nev) and Foreign Relations Chairman Joseph Biden (D-Del), as well as Foreign Relations Ranking Minority Member Richard Lugar (R-IN) among the bill's supporters. The bill has been referred to the Finance Committee.
The future of the Russia clause in the Iran Counter-Proliferation Act is difficult to predict, as it is difficult to predict the future of the bill itself in the heat of the negotiations with Iran, the aftermath of the visit of Iranian leader Ahmadinejad to the United States, Putin's visit to Iran, and the upcoming presidential and congressional elections. However, with recent executive actions to tighten the financial noose around Iran's neck, it remains likely that H.R. 1400 or S. 970 may gain traction in the Senate. Perhaps soon we may see a dynamic ironically similar to that which resulted in the passing of the Iran Nonproliferation Act during the Clinton Administration. However, if the Iran Counter-Proliferation Act passes with language that doesn't allow an executive waiver or prohibits the 123 Agreement, will the Bush Administration veto it?
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