Whereas last year's sanctions went after oil exports, Iran's primary source of revenue, the new approach focuses on the agricultural, industrial and consumer goods the country imports to ensure manufacturing capacity and the basic functioning of its economy, the congressional aides and others involved said.
Companies from Europe, Asia and elsewhere selling machinery and other products to Iran would have to stop or face being cut off from the U.S. market. Banks whose clients are making transactions with Iran would face a similar penalty if they don't break off relations. And Iranian assets in financial institutions overseas would have to be frozen.
There would be exemptions. The plan envisioned by Kirk and other senators wouldn't affect food, medicine and democracy-promotion goods such as communications equipment, officials said. The 20 countries that have been granted exemptions by the Obama administration to purchase decreasing levels of petroleum from Iran would be permitted to continue doing so.
Kirk prefers providing no new waiver authority for the administration that might allow Germany, for example, to continue selling machine tools or China to continue exporting cheap merchandise to Iran as long as they make significant reductions in the total value of their transactions. The administration likely would demand such flexibility so it can persuade its international partners to get on board, as it did with the petroleum sanctions. Menendez and others in the Senate are considering how to provide them that flexibility, people familiar with the different plans said.
In Tehran, a lawmaker and spokesman for parliament's national security committee said new U.S. sanctions would be a human rights violation. "We hope that Congress will not resort to this," Hossein Naghavi said. He claimed the measures would end up hurting the West's economy, while Iran moves toward self-sufficiency.
Congress has overwhelmingly backed previous efforts by Kirk and Menendez, but the fate of the Senate's defense policy bill is uncertain.
Democrats and Republicans have pressed for the Senate to take it up in the lame-duck session that begins Tuesday, but Majority Leader Harry Reid, D-Nev., wants both sides to agree on limiting the number of amendments, which could exceed 100. It's unclear whether the two parties can reach agreement. As an alternative, the Senate may simply vote on a pared-back, noncontroversial bill that has been worked out in advance with the House.
Mark Dubowitz, a sanctions expert and executive director of the Foundation for Defense of Democracies, described the wider economic offensive against Iran as much-needed. Existing sanctions have done damage, but Iran still has enough in reserves to remain solvent until mid-2014, well after Tehran could cross the "red line" of nuclear progress as outlined by Israeli Prime Minister Benjamin Netanyahu and embraced by some in Congress.
Even if Iran's petroleum exports have declined to 1 million barrels a day from last year's level of 2.5 million barrels a day, Dubowitz said, the government would pull in $37 billion in revenue next year — assuming a market rate of about $100 a barrel. "We're still a long way from an economic cripple date," he cautioned.
Associated Press writers Donna Cassata in Washington and Nasser Karimi in Tehran contributed to this report.