Lew warns CEOs testing US on Iran sanctions to ‘think again’

Bloomberg

By Ian Katz

Treasury Secretary Jacob J. Lew warned corporate executives not to test the U.S.’s commitment to sanctions against Iran and said enforcement will be “unflinching.”

An international agreement designed to limit Iran’s nuclear program “does nothing to undo or weaken the core architecture of our sanctions regime,” Lew told the American Jewish Joint Distribution Committee last night in Washington. “Our goal is to build pressure to change the policy of the Iranian government -- and in this case, the only acceptable end result is an Iran that does not have nuclear weapons.”

Some U.S. senators vowed to continue seeking new sanctions against Iran after meeting with Lew and Secretary of State John Kerry yesterday. The lawmakers favoring more sanctions said they see little chance of action until early 2014 at best, in light of opposition from Senate Democratic leaders to a debate in the chamber before a holiday break.

Senator Lindsey Graham, a South Carolina Republican, said he expects a group of senators to introduce a measure soon with sanctions to be imposed after the six-month interim agreement between Iran and six world powers reached in Geneva last month.

Kerry and Lew provided a classified briefing for the senators. Lawmakers in both parties sought more information about potential gaps in the Nov. 24 agreement, verification of Iran’s cooperation and action against anyone who violates the sanctions.

‘Think Again’

In his speech after meeting with the senators, Lew said “our enforcement of the sanctions regime will be as unflinching as ever -- so any CEO, general counsel, or business person who thinks now might be a time to test our resolve, better think again.”

Iran’s nuclear program “will be subjected to intrusive international inspections and enhanced transparency,” Lew said.

During the six months of the interim agreement, Iran will continue to lose about $30 billion in oil revenue, he said.

Separately, Lew will tell the House Financial Services Committee today that developing nations need to reduce obstacles to growth amid signs most advanced economies are improving.

“Emerging markets need to make reforms that increase their resilience and address structural constraints to growth,” Lew said in testimony prepared for a hearing before the panel.

In comments on the world’s second-largest economy, Lew said China’s new leadership has made “bold commitments to reform. The pace and character of these reforms will shape China’s economic transition toward domestic consumption-led growth, and away from resource-intensive export growth.”

Japan’s Reforms

Japan, the world’s third-largest economy, has taken “forceful action to begin ending deflation, but to achieve sustained success Japan needs to undertake structural reforms to strengthen domestic demand growth,” he said.

Lew urged Congress to approve a plan on the International Monetary Fund’s lending capacity that tries to make good on a pledge made in 2010. The agreement among IMF member nations would double the amount the IMF has readily available for lending.

The Obama administration is seeking to boost the U.S.’s share, or quota, at the Washington-based IMF by shifting about $63 billion from an existing credit line. The hearing is the Treasury secretary’s annual testimony to the committee on the international finance system.

The IMF’s “quota and governance reforms are a good deal for the United States and the global economy,” Lew said in the prepared testimony, which was obtained by Bloomberg News. Treasury spokeswoman Holly Shulman declined to comment.