Legislation, which punishes Iran and Libya for their support of terrorism, has 74 cosponsors -- giving it an overwhelmingly bipartisan, veto-proof majority in the Senate US Senators Charles E. Schumer and Gordon Smith today introduced legislation to re-authorize the Iran-Libya Sanctions Act (ILSA) for five years.

ILSA - which expires in August - imposes a broad array of economic sanctions against foreign businesses that invest in Iran and Libya's petroleum sectors in an effort to impair Iran and Libya's ability to fund terrorist activities. US companies are also prohibited from such investments.

"Maintaining a strong sanctions policy sends an unambiguous message of 'zero tolerance' to those who would use terror as a diplomatic tool," Schumer said. "Iran and Libya are among the most active supporters of terrorism in the world and ILSA has been effective in checking their efforts to promote terrorist activities."

In its national energy report, the Bush Administration said it will undertake a comprehensive review of US sanctions policies around the world in an effort to boost oil supplies, and has not ruled out easing ILSA's provisions.

Schumer said that repeal of ILSA would not affect the supply of oil to America since both Libya and Iran are members of OPEC, which bases production decisions on global supply and price conditions rather than the ability of individual member-nations to produce more oil. In addition, Schumer warned that relaxing ILSA's provisions would be viewed by Iran and Libya as a Western concession, undermining pressure on the two countries to halt their sponsorship of terrorist groups.

"While I applaud President Bush for searching for answers to our energy problems, relaxing sanctions will not help increase US oil supplies one iota," said Schumer. "What relaxing sanctions will do, however, is end a successful policy that has weakened Iran and Libya's ability to support for terrorism and fund groups like Hamas and Hezbollah."

Since its enactment in 1995, ILSA has checked Iran's ability to finance terrorist activities. Of the 55 major petroleum development projects for which Iran has sought foreign investment in the last five years, only a half dozen have received any foreign investment, and none have been completed. Without such investment, Iran's ability to pay for expensive weapons programs and sponsor terrorist operations is significantly reduced. However, it still continues to finance Hezbollah, Islamic Jihad and Hamas - reportedly providing them with $100 million annually as well as supplies and munitions. In addition, Iran is actively trying to acquire weapons of mass destruction.

Libya refuses to comply with UN Security Council Resolutions regarding the bombing of Pan Am 103, which require that Tripoli formally renounce terrorism, accept responsibility for the actions of its government officials convicted of masterminding the bombing, provide information about the bombing, and pay appropriate compensation to the families of the victims.
"At a time when tensions are mounting in the Middle East, letting ILSA expire would send the wrong message to Iran and Libya," Schumer said. "In fact, a strong case can be made for actually tightening sanctions -- Iran's so-called reformist government remains the world's number one supporter of terrorism aimed at the United States and its allies, while Libya remains obstinate in its refusal to take responsibility for its role in the Pan Am 103 bombing.

"This is not the time to weaken sanctions and permit foreign investment that can be used to fund terrorist acts like the one we saw in Israel this past weekend."

ILSA requires the President to impose at least two of six possible types of sanctions on foreign companies that make an investment of more than $20 million in one year in Iran's energy sector or $40 million in one year in Libya's energy sector. The menu of sanctions include denying Export- Import Bank loans, credits, or credit guarantees for US exports to the sanctioned firm and US bank loans as well as restricting imports from the sanctioned firm into the US. The President may waive ILSA sanctions on a case-by-case basis if he believes it is in the national interest or, in the case of Iran, the parent country of the violating firm agrees to impose economic sanctions of its own.

Both Iran and Libya can exempt themselves from ILSA's provisions under certain circumstances. For Iran, sanctions would be terminated if it is removed from the State Department's list of state sponsors of terrorism and if it ends its effort to acquire weapons of mass destruction. For Libya, sanctions would be removed if the President determines that its government has fulfilled the requirements of the UN resolutions relating to the Pan Am 103 bombing.