Senate approves new sanctions for Iran energy, shipping

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WASHINGTON (Reuters) - The U.S. Senate resoundingly approved on Friday expanded sanctions on global trade with Iran's energy and shipping sectors, its latest effort to ratchet up economic pressure on Tehran over its nuclear program.

The new package, which keeps in place exemptions for countries that have made significant cuts to their purchases of Iranian crude oil, would be the third round of sanctions in a year if passed into law.

The existing sanctions have already hurt Iran's economy, but it is uncertain whether the additional measures will stop or slow Iran's nuclear program.

Washington says Tehran is enriching uranium to levels that could be used in nuclear weapons. Iran says the program is for peaceful purposes.

Senators voted 94-0 to make the new sanctions part of an annual defense policy bill.

"We must be clear to the Iranians that toughing it out and waiting it out is not an option, that it will only get worse," Democratic Senator Robert Menendez said.

Menendez, of New Jersey, co-authored the package with Republican Senator Mark Kirk of Illinois and Senator Joseph Lieberman, an Independent from Connecticut.

The measures would also restrict trade with Iran in precious metals, graphite, raw or semi-finished metals, such as aluminum and steel, metallurgical coal and software for integrating industrial processes in Iran's energy and shipping sectors.

Insurance or reinsurance providers would be restricted from trade with Iran in energy, shipping and ship-building sectors.

Further, the new sanctions include measures aimed at stopping the flow of gold from Turkey to Iran.

WHITE HOUSE CONCERNED

The Obama administration has not publicly commented on the proposals, but has privately raised concerns that it does not provide enough "waiver flexibility," said Carl Levin, chairman of the Senate Armed Services Committee.

Levin said those concerns may be addressed when the Senate and House of Representatives work out differences to finalize the massive defense bill.

The House has approved its version of the bill, and both bodies will need to approve a final version before it is sent to President Barack Obama to sign into law.

The American Israel Public Affairs Committee, a powerful pro-Israel lobby group, endorsed the measures, which it said would close a loophole in existing laws.

"In an effort to circumvent international sanctions on the Central Bank of Iran, some purchasers of Iranian oil and natural gas have been using gold and other precious metals to pay for petroleum products," AIPAC leaders said in a letter to senators ahead of the vote, urging support for the bill.

Israel says international sanctions against Iran are not working and is threatening to use military force to prevent Iran from becoming a nuclear power. Washington says all options are on the table in dealing with Iran, but sanctions and diplomacy should be given more time.

Some experts expressed doubt on Friday that a fresh round of sanctions will prompt Iran to make concessions on the nuclear issue. Paul Pillar, a former CIA analyst, said sanctions will not work without solid diplomacy to accompany them.

"It is a fallacy to believe there is some breaking point at which the regime in Tehran cries 'uncle' and makes major changes in policy even if it sees itself as getting nothing in return," Pillar said.

Jeff Colgan, a professor at American University in Washington who studies the geopolitics of oil, said the expanded sanctions would represent a "continuation of a cat-and-mouse game."

"The sanctions get placed, Iran tries to find ways around them, and the U.S. tries to close the loopholes. But so far, a dent in the (Iranian) economy has not resulted in a change in the nuclear program," Colgan said.

The United Nations' nuclear chief said on Thursday his agency has made no progress in its year-long push to investigate whether Iran has worked on developing an atomic bomb.

(Additional reporting by Timothy Gardner; Editing by Vicki Allen and Mohammad Zargham)

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