The insurance industry and prominent Democratic lawmakers are attempting to water down a new Iran sanctions bill that would penalize any company that underwrites Iranian affiliates, according to insiders on Capitol Hill.
Sens. Harry Reid (D., Nev.), Tim Johnson (D., S.D.), and others have quietly lobbied to weaken the revamped sanctions language, which has been circulating on Capitol Hill for several months.
The legislation, which is currently working its way through the House, would tighten existing Iran sanctions by punishing any insurance company that underwrites activities that bolster the Iranian oil industry. Insurance providers could be sanctioned for underwriting shipping companies, cargo carriers, or airlines that have been subject to sanctions.
Johnson and Reid have each received nearly half-a-million dollars from individuals and political action committees affiliated with the insurance industry, leading some to wonder whether these lawmakers are doing their corporate donors’ bidding.
Neither lawmaker responded to a request for comment.
"There is significant pressure being brought to bear by the Obama Administration in coordination with the insurance lobby to stop any far-reaching insurance sanctions against Iran," said a congressional source. "Whether money plays a role, who knows, but the pressure is intense and Democrats—and even some House Republicans—appear to be carrying the water."
The Senate in March considered language targeting the insurance sector, but Reid and the Obama administration lobbied at the time to thwart the amendment aimed at targeting those insurance companies dealing with Iran.
The language is missing from Johnson’s Iran Sanctions, Accountability and Human Rights Act of 2012, which still awaits final passage in the Senate.
"It’s disappointing to see a member of Congress oppose sanctions against companies that insure Iranian businesses," one former National Security Council member who has long tracked sanctions legislation told the Free Beacon. "These members should put aside their political allegiances and do the right thing to pressure the Iranian regime."
If the House measure passes, insurance companies could lose business overnight.
Opponents of the language include Johnson, Reid, the National Iranian American Council, and several large insurance companies, according to multiple sources involved with the issue.
"Obviously, the insurance industry has been concerned," said one veteran sanctions expert. "They’ve had their advisers, lawyers, and lobbyists in there trying to water them down and provide loopholes so they face less punitive penalties."
The now-bankrupt law firm Dewey & LeBoeuf is said to have moved aggressively against the measure on behalf of its client Lloyd’s of London, an international insurance group, multiple sources told the Free Beacon.
Lloyd’s did not respond to a request for comment, and attempts to reach former LeBoeuf lobbyists who worked on the issue were unsuccessful.
The Obama administration remains on the side of the insurance industry, insiders said.
"It’s more about the administration’s reluctance to go along with" the sanctions, one of the insiders explained. "The administration’s perspective as they explained it to me … is that [it doesn’t want to tell] our allies, ‘You have to stop doing business with Iran tomorrow.’"
As Tehran continues to flout Western sanctions in its pursuit of nuclear arms, experts warn that time is not on America’s side.
"This is the time to pass the most punishing sanctions possible, while recognizing that no sanctions may pressure Iran to stop its nuclear program," said Mark Dubowitz, executive director of the Foundation for Defense of Democracies. "The reality is right now that Iranian nuclear physics is beating Western pressure."
If insurance companies are forced to abandon their Iranian clientele, the effect could be chilling on the rogue nation’s economy, one activist maintained.
"If these insurers would stop providing that coverage that companies have to support these risks [of dealing with Iran] on their own," explained Nathan Carleton, spokesperson for United Against Nuclear Iran, a nonpartisan advocacy group. "No one should be insuring business with Iran, and if these companies are lobbying to stop these sanctions we would oppose it because it’s not right."