- Associated Press - Wednesday, February 29, 2012

WASHINGTON (AP) — Secretary of State Hillary Rodham Clinton insists the United States is moving quickly on new penalties against Iran, but some lawmakers worry the Obama administration won’t be tough enough on financial institutions doing business with Tehran’s Central Bank.

“We should recognize what has been accomplished with the sanctions Congress passed and we are aggressively implementing,” Mrs. Clinton told the House Appropriations subcommittee on foreign operations Wednesday, explaining that the U.S. is relying on pressure and discussion. “Discussion hasn’t gone anywhere, but pressure has been ratcheted up,” she said.

The first round of penalties under legislation that President Barack Obama signed Dec. 31 were to take effect Wednesday, and lawmakers expected to hear from the administration about steps planned to thwart Iran’s disputed nuclear program.

That law says that 60 days after enactment, the president must penalize any privately owned foreign financial institutions that knowingly conduct or facilitate any significant financial transaction with the Central Bank of Iran for any purpose other than the purchase of petroleum or petroleum products from Iran.

The administration indicated it had no plans to mark that deadline by announcing a new round of penalties. A Treasury Department official said the U.S. was interpreting the law to mean that transactions with the Central Bank occurring after the deadline would put financial institutions at risk of penalties.

“Foreign private banks that, after today, engage in significant transactions with the CBI unrelated to the purchase of oil risk losing their correspondent account access to U.S. financial institutions,” said David Cohen, Treasury’s undersecretary for terrorism and financial intelligence.

Also Wednesday, 56 senators were backing a bipartisan resolution calling on Iran to allow free and fair voting when it holds parliamentary elections Friday, the measure’s chief sponsors said.

Sen. John Hoeven, North Dakota Republican, and others said the resolution was designed to show the Iranian people that the United States is on their side, even as the U.S. raises the pressure on their government to abandon its suspected nuclear program.

Mrs. Clinton told the Senate Foreign Relations Committee on Tuesday that the U.S. is “diligently reaching out around the world to get agreements from countries for whom it’s quite difficult to comply with our sanctions. But they are doing the best they can. … We are focused on the toughest form of diplomacy and economic pressure to try to convince Iran to change course, and we have kept every option on the table.”

Sens. Robert Menendez, New Jersey Democrat, and Mark Kirk, Illinois Republican, pushed for the sanctions in the defense bill, and in a rare unanimous vote, the Senate backed them, 100-0.

During Mrs. Clinton’s testimony, Mr. Menendez pressed her on the administration’s enforcement of the new penalties. He raised concerns about the criteria used to determine whether a country had achieved significant reductions in the purchase of petroleum.

The government’s Energy Information Administration planned to issue both classified and unclassified reports Wednesday on the availability and supply of non-Iranian-produced oil, reflecting the current production rate and the total reserve. The reports will be the basis for whether the administration proceeds with the next round of penalties.

“Can I presume that, in the absence of a national security waiver under the law, that all countries will be required to actually make significant reductions in their purchases during each of the 180-day periods?” Mr. Menendez asked.

Mrs. Clinton said the administration expects to see significant reductions. She said the administration has had “very intense and very blunt” conversations with India, China and Turkey.

“Both on their government side and on their business side, they are taking actions that go further and deeper than perhaps their public statements might lead you to believe, and we’re going to continue to keep an absolute foot on the pedal in terms of our accelerated aggressive outreach to them. And they, you know, they are looking for ways to make up the lost revenues, the lost crude oil,” Mrs. Clinton said.

Anne Gearan contributed to this report.

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