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US should reject Iran deal, consider oil exports to keep allies: key Democrat

Washington β€” A key Senate Democrat on Tuesday said the P5+1 should have struck a better nuclear deal with Iran, urging Congress to reject the agreement and the Obama administration to assuage US allies by considering exports of US oil to countries that had previously purchased Iranian crude.

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Senator Bob Menendez of New Jersey, a former chairman of the Senate Foreign Relations Committee, has been one of a handful of Democrats to break from President Barack Obama on the Iran deal.

In a speech at Seton Hall University in his home state, Menendez said Congress should pass a resolution of disapproval on the nuclear pact, and the Obama administration should renegotiate with Iran for more stringent restrictions on its nuclear program.

And as it negotiates, the US should "consider licensing the strategic export of American oil to allied countries struggling with supply because Iranian oil remains off the market," he said.


The US currently restricts almost all exports of its oil under policies enacted in the wake of the Arab oil embargoes of the 1970s.

US producers have been pushing the Obama administration and Congress to lift the restrictions, but so far the White House has allowed only limited exceptions.

Meanwhile, under US sanctions imposed on Tehran's oil sector, Iran's oil exports have nearly halved from 2.6 million b/d in 2011 prior to sanctions to 1.4 million b/d in 2014, according to the US Energy Information Administration.

"It is difficult to believe that the world's greatest powers -- the US, Great Britain, France, Russia, China, Germany and the European Union -- sitting on one side of the table, and Iran sitting alone on the other side, staggering from sanctions and rocked by plummeting oil prices, could not have achieved some level of critical dismantlement," Menendez said.

LOBBYING PUSH ON

Congress is in the midst of a 60-day review that expires September 17, during which it can vote to either approve or disapprove the deal.

Obama has vowed to veto any disapproval resolution, and though he appears just a few votes shy of the 34 senators needed to sustain such a veto, the outcome is still uncertain, with lobbying heavy on both sides.

Menendez, who has sparred with administration officials over the deal during various Senate hearings, became the second high-profile Democrat to declare that he will vote against the agreement and any veto, following Senator Chuck Schumer of New York, who announced his opposition two weeks ago.

The administration has warned that rejecting the deal would cause the rest of the world to back away from supporting US sanctions on Iran, leaving the US less influential and Iran emboldened.

In particular, US rivals China and Russia would be unlikely to agree to abide by restrictions on Iran's oil and banking industries and would be undeterred by unilateral US sanctions, the White House has said.

But Menendez, who has introduced a bill that would impose additional sanctions on Iran, said he doubted that would happen.

"Our P5+1 partners will still be worried about Iran's nuclear weapon desires and the capability to achieve it," he said. "They, and the businesses from their countries and elsewhere, will truly care more about their ability to do business in a US economy of $17 trillion than an Iranian economy of $415 billion."

NO GRANDFATHERING CONTRACTS

He said the administration should reopen negotiations with Iran by agreeing to continue the Joint Plan of Action, in which the US has agreed to stop pressuring China, India, Japan, South Korea, Taiwan and Turkey to reduce their purchases of Iranian oil, among other sanctions relief.

He said he would also consider "a sweetener -- a one-time release of a predetermined amount of funds -- as a good-faith down-payment on the negotiations."

Once Iran returned to the table, the US should insist on an agreement that lasts at least 20 years, instead of the current deal's 10-15 year sunset of restrictions on Iran's nuclear program, Menendez said, along with more comprehensive inspections and other requirements.

And any deal should spell out what sanctions would be snapped back and how in the event Iran does not comply with its terms, as well as explicitly state that contracts entered into with Iran upon the lifting of sanctions would not be grandfathered in if sanctions are reimposed.

Administration officials have insisted that no such grandfather provision exists, but critics have remained doubtful.

"For all those who have said they have not heard from anyone who opposes the agreement a better solution, they're wrong," Menendez said. "I believe there is a pathway to a better deal."

--Herman Wang, herman.wang@platts.com
--Edited by Annie Siebert, ann.siebert@platts.com