Unserious on Iran sanctions

REVIEW & OUTLOOK

The Obama Administration has advertised its sanctions regime against Iran as the toughest ever applied and a great diplomatic success. So what are we to make of its decision this week to punish only a single company doing business with Iran's oil and gas industry—and a small fry at that?

The State Department announced that it is punishing Belarusneft, a firm owned by the government of Belarus, for signing a $500 million contract in 2007 to develop an oil field in southwestern Iran. The company is now barred from working with the U.S. Export-Import Bank, receiving large loans from U.S. banks, contracting with the U.S. government and obtaining U.S. export licenses. The effect of all this? Nil. The State Department admits that Belarusneft doesn't seek to do any of these things.

The sanctions may also be redundant: Belarusneft's parent company, Belneftekhim, has been under U.S. sanctions since 2007 for its connections to Belarusian President and international pariah Alexander Lukashenko.

The failure to sanction bigger offenders caught the attention of Congress. "We do not believe this represents full compliance with the sanctions regime put in place by Congress," wrote Senators Mark Kirk (R., Ill.), Jon Kyl (R., Ariz.) and Joe Lieberman (I., Conn.) to Secretary of State Hillary Clinton and Treasury Secretary Tim Geithner this week. They attached a classified 54-page annex detailing international firms that are or might be in violation of U.S. sanctions.

We assume the list includes, among others, the China National Offshore Oil Corporation (CNOOC), the China National Petroleum Corporation (CNPC), Sinopec, Zhuhai Zhen Rong, Lukoil and Turpas—all companies known to be investing in Iran. None of this is news to the Obama Administration, which would appear to lack the political will to act against firms with friends in Beijing, Moscow and Ankara.

We doubt that sanctions will stop Iran's nuclear program, but without enforcement the effort is hopeless. Chinese, Russian and Turkish companies not only allow Iran to tap its resources and access refined petroleum. They also replace the very projects previously abandoned by Western European and Japanese companies in response to U.S. pressure. When CNPC in 2009 invested roughly $2 billion in the South Azadegan fields that Japan's Inpex had vacated, it nullified the effect of Inpex's departure. CNPC and other sanctions violators also benefit from having fewer competitors.

White House National Security Adviser Tom Donilon said this week that "Even with all the events unfolding in the Middle East, we remain focused on the strategic imperative of ensuring that Iran does not acquire nuclear weapons." Would that it were so.

The Wall Street Journal