WASHINGTON (Reuters) - One of the architects of tough new U.S. sanctions designed to pressure buyers of Iranian oil to slash their purchases said on Thursday he was disappointed the Obama administration had not given a clearer definition of how it would enforce the law.
The new law requires countries to "significantly" reduce their purchases, and Senator Robert Menendez said he had hoped the administration would come up with a "quantitative" definition for what it would consider as a big enough cut to avoid penalties.
Instead, the administration said this week it would make a country-by-country judgment call in assessing how hard each has tried to reduce its imports.
Menendez, a New Jersey Democrat, and Mark Kirk, a Republican senator from Illinois, co-authored the law, aimed at cutting off oil revenues they believe Iran may use to build a nuclear weapon. Iran says its nuclear program is for generating electricity.
Menendez and Kirk had recommended that the Treasury Department define significant as a minimum of an 18 percent reduction in purchases, through cuts to price and volume.
Menendez told Reuters in an interview that Treasury officials told him they were concerned that setting a numerical target could create a "ceiling" for cuts.
"However, I am concerned about the lack of a floor, at the end of the day," Menendez said.
Overall, he said administration officials seemed "headed in the right direction" on implementing the new law and that they had made it clear in diplomatic talks around the world that the law would be enforced.
"I truly get the sense that the administration understands that vigorous enforcement of the sanctions regime that we have established is our last best chance to deter Iran from its march to nuclear weapons," he said.
IMPACT ALREADY SEEN
Menendez said the new law, which begins to take effect on February 29, had already hurt the value of Iran's currency, and prompted Japan, South Korea and other importers to look for alternate sources of oil.
"Even the Chinese, who are not our greatest ally in this regard, seek huge discounts from the Iranians for their purchases, which obviously hurts the Iranian economy," he said.
Oil-related sanctions will be in play starting June 28, after the government takes a closer look at the world oil supply-and-demand situation, as well as how nations have stepped back from buying Iranian oil.
Menendez said he did not expect the administration would grant waivers from the law. "I think they've been pretty firm so far in saying no there's not likely to be waivers here," he said.
MORE SANCTIONS ON HORIZON
The Senate could consider an additional package of sanctions in March, said Menendez, who was part of the Senate Bank Committee's effort to put together the new measures.
The new proposed sanctions would target foreign banks that handle transactions for Iran's national oil and tanker companies, and extend the reach of sanctions to foreign subsidiaries of U.S. companies.
The bill also pushes for the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, to shut out Iranian banks from the electronic system used to move money between banks around the world.
SWIFT is based in Belgium, and most members on its board of directors are from European banks. The United States is pressuring the European Union to take steps to ensure SWIFT expel Iranian banks that are already sanctioned by EU law.
Menendez said he was optimistic the EU and SWIFT would soon take action and that he was slated to discuss the issue with SWIFT's general counsel next week.
But Belgium's Foreign Ministry told Reuters that SWIFT should not be singled out, and said U.S. sanctions should apply to any telecom or Internet company that provides services to Iranian banks.
A European diplomat told Reuters discussions were still going on among member states, and could take several weeks.
"There is no common position in the EU on SWIFT right now, not yet," the diplomat said.