China and Singapore granted exceptions to U.S. sanctions
June 28th, 2012
08:02 PM ET

China and Singapore granted exceptions to U.S. sanctions

By Jamie Crawford

China and Singapore received exceptions from U.S. sanctions scheduled to go into effect today that would have cut off banks in those countries from the U.S. financial system for continuing large volumes of Iranian oil transactions, Secretary of State Hillary Clinton said Thursday.

CNN was first to report the exemptions earlier Thursday.

"Today, I have made the determination that two additional countries, China and Singapore, have significantly reduced their volume of crude oil purchases from Iran," Clinton said in a written statement. "As a result, I will report to the Congress that sanctions pursuant to Section 1245(d)(1) of the National Defense Authorization Act (NDAA) for Fiscal Year 2012 will not apply to their financial institutions for a potentially renewable period of 180 days."

The move will keep Chinese and Singaporean banks and financial institutions from being cut off from the U.S. banking system as the legislation calls for those institutions who do not demonstrate a significant reduction in the purchases of Iranian petroleum.

The sanctions effort is largely driven by a determination from the Obama administration that there is enough non-Iranian oil available on the global market to make up for the loss of Iranian petroleum.

On a separate track, the European Union will go ahead with a complete embargo of Iranian oil purchases on July 1.

The sanctions are aimed at pressuring the regime in Iran to agree to limits on its nuclear program. Iran maintains its nuclear program is for peaceful purposes only.

"The Iranian regime's choice here has been to flout its international obligations, but they are paying an increasingly high price for that choice," a senior administration official told reporters in a conference call Thursday. "With these steps today and the steps we are prepared to take going forward, the costs are only going to rise further for Iran."

In the call, the official said the decision to issue the exception to China was made after a statement was posted on a Chinese energy website that showed a 25% reduction in the importation of Iranian crude for the beginning of this year relative to last. There were additional indications that there would continue to be significant reductions of Chinese purchases for the remainder of the year.

The official also noted that China has played an important role in the international discussions with Iran over its nuclear program, as well as the four votes in the U.N. Security Council to impose sanctions on Iran over its nuclear program.

Singapore was granted an exception to the sanctions largely as a result of its decision last month to terminate all imports of Iranian oil going forward.

"With respect to China, Secretary Clinton has assured me that at this time China has met the significant reduction standard required by the law and recent precedent to qualify for an exemption from sanctions," said Sen. Robert Menendez, D-New Jersey and co-author of the legislation on which the sanctions are based, said in a written statement. "The Chinese, however, will have to be mindful that the law requires a significant reduction every 180 days to continue qualifying for an exemption and that we will expect to see additional significant reductions by China and other nations that are continuing to purchase Iranian petroleum or petroleum products in order to qualify for future exemptions."

The announcement was met with calls elsewhere on Capitol Hill for more to be done.

"The administration likes to pat itself on the back for supposedly being strong on Iran sanctions. But actions speak louder than words, and today the administration has granted a free pass to Iran's biggest enabler, China, which purchases more Iranian crude than any other country," said Rep. Ileana Ros-Lehtinen, R-Florida, and chairwoman of the House Foreign Relations Committee, in a written statement.

"If the administration is willing to give China, a country that has aided the Iranian regime's efforts to acquire nuclear capabilities, a free pass, who is it willing to sanction? Congress will once again fill the leadership vacuum created by the administration and work to strengthen sanctions against the regime in Tehran," Ros-Lehtinen said.

According to the International Energy Agency, Iran's crude exports have dropped by roughly a million barrels a day since the sanctions have gone into effect compared with 2011 figures, an almost $8 billion in lost revenues every quarter. Inflation and unemployment are on a rapid rise within Iran, and the value of its currency, the rial, has lost about 45% of its value since November.

China and Singapore now join 18 others that have been granted exceptions from U.S. sanctions.

After Thursday, any foreign financial institutions based in a country that has not been granted an exception from the U.S. government that knowingly conducts a significant transaction for the sale of Iranian petroleum with Iran's central bank will be subject to U.S. sanctions. Because of the ever-changing data in global energy markets, U.S. officials would not name any specific countries that could be affected, but Pakistan and the Philippines are two countries that have been purchasers of Iranian oil that were not granted exceptions.

"We are going to ... be monitoring extremely closely international financial systems throughout the world to ensure that banks ... are complying and to ensure that banks around the world are not doing business with the Central Bank of Iran," a second senior administration official told reporters in the same call. "And you can be sure that if we detect and as we detect violations, we will be swift to act."

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Filed under: China • Iran • Sanctions
soundoff (9 Responses)
  1. GIB

    DOES IRAN HAVE A CHINA-TOWN

    June 30, 2012 at 11:19 am | Reply
  2. Jinraj Joshipura

    I had predicted that US will back down in case of china too. I wrote in several newspapers comments few weeks ago that US will back down and that is exactly what has happened. In summary all those who buy most of the Iranian oil had to be given exemptions as they were not going to comply with sanctions anyway. US had no choice and will not have choice. US congress is wasting its time strengthening unilateral and extraterritorial toothless sanctions which no countries are going to comply. It is childish game they are playing because of lollypops given by AIPAC while there are major issues at home.

    June 29, 2012 at 1:26 pm | Reply
    • John

      As "toothless" as you may see the sanctions, the biggest impact they have are on civilian manufacturers in Iran who employ millions. US sanctions on Iraq, prior to the invasion, killed 200,000 civilians and did not topple the regime. Looking to both Iraq and Cuba, the sanctions/embargoes imposed by the US did nothing to spur regime change. The fear in Iran is that American aggression may even be counterproductive, weakening a population that is already unhappy with its leadership. This isn't about thwarting a nuclear weapons program or freeing an oppressed Iranian population, this is about appeasing wealthy Israel supporters here in the US and weakening a regional power that does not bow to US and Israeli demands. As I said, by integrating Iran into the world economy and by building prosperous relations we can then expect concessions. But congress is sold, and the Israeli wedge between the US and a constructive relationship with Middle Easterners is growing. Once again the Israeli baby is walking the American dog.

      June 29, 2012 at 6:07 pm | Reply
  3. John

    If I were any other purchaser of Iranian oil I would be furious. US aggression against the Iranian regime is based solely on the power of Israeli lobbies in Washington. The Iran threat is an invented one, if we want a peaceful Middle East we need to stop propping up dictatorships that oppress their people and seek to quell all dissent. Israel is a country that has been the aggressor in numerous military engagements over the past 30 years, it would be devastating if they pulled us down with them. Sanctions are hurting civilians more than anything else and it is unwise that that us Americans are continuing such policies. Civilian aircraft parts are under direct sanction with Iran and I find it hard to believe that targeting Iranian industrialists and airline passengers (compromising their safety while on board) is going to topple a regime. Cooperation and economic integration is the only way to leverage any sort of deal.

    June 29, 2012 at 10:22 am | Reply
    • Jinraj Joshipura

      Fully in support of your comments,

      June 29, 2012 at 1:27 pm | Reply
    • Harry

      John, you are totally right. Sanctions are an act of war against the civillian population, not th leadership. Iran pose absolutely no threat to the US; perhaps to Israel, but not the US. After all the US have done to Iranian with collusion of Israel and UK, US should apologize to the IRanian people.

      Now US has no leverage against the Iranian government, since there are no business with the US anyway, so why should Iranian care. Economic integrations with Iran will provide more leverage in the long run than sanction.

      US foreign policy need to be adjusted.

      June 29, 2012 at 6:50 pm | Reply
  4. Cheese Wonton

    Gutless.

    June 28, 2012 at 11:21 pm | Reply

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