Deal or not, many US states will keep sanctions grip on Iran

The prospect of unwavering sanctions at the state level, or new ones, just as the federal government reaches a landmark agreement with Iran risks widening a divide between states and the federal government on a crucial foreign policy issue.

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WASHINGTON // As the United States and Iran come closer to a historic nuclear deal, many US states are likely to stick with their own sanctions on Iran that could complicate any warming of relations between the long-time foes.

In a little known aspect of Iran’s international isolation, about 24 states have enacted measures punishing companies operating in certain sectors of its economy, directing public pension funds with billions of dollars in assets to divest from the firms and sometimes barring them from public contracts.

In more than half those states, the restrictions expire only if Iran is no longer designated to be supporting terrorism or if all US federal sanctions against Iran are lifted - unlikely outcomes even in the case of a final nuclear accord.

Two states, Kansas and Mississippi, are even considering new sanctions targeting the country.

The prospect of unwavering sanctions at the state level, or new ones, just as the federal government reaches a landmark agreement with Iran risks widening a divide between states and the federal government on a crucial foreign policy issue.

Though US states have often coordinated their measures with federal sanctions on Iran, their divestment actions sometimes take a tougher line on foreign firms with Iran links than is the case under federal policy.

“Our investment sanctions are not tied in any way to President Obama’s negotiatons with the Iranians,” said Don Gaetz, a Republican Florida state senator who sponsored legislation in 2007 punishing companies with investments in Iran’s energy sector.

“They would have to change their behaviour dramatically and we would not be necessarily guided by President Obama or any other president’s opinion about the Iranians,” Mr Gaetz said.

A final accord, which is still being negotiated ahead of a June 30 deadline, would likely lift US sanctions on Iran’s crude oil sales to other countries and loosen restrictions on Iran’s financial system. Federal sanctions on Iran tied to issues such as human rights and terrorism would remain in place.

Among around 12 states contacted, legislators in Georgia, Florida, and Michigan said they had no intention of changing their Iran policies even in light of a federal deal. State officials in Connecticut and Illinois said new local legislation would be needed to change their divestment policies, even if a deal were signed.

Officials in New York and Oregon said they would look to changes in law at the federal level in the case of a nuclear deal to determine how it would affect their policies.

White House spokeswoman Bernadette Meehan did not respond to questions about states’ sanctions policies but stressed that only sanctions related to Iran’s nuclear programme would be affected by a deal.

* Reuters