Reuters International

Adam Szubin and his staff (not pictured) meet at the U.S. Treasury Department in Washington March 26, 2014. REUTERS/Gary Cameron

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By Patricia Zengerle

WASHINGTON (Reuters) - Obama administration officials told U.S. lawmakers on Wednesday they would oppose new sanctions on Iran if they interfere with last year's international nuclear agreement, laying the groundwork for a potential fight over any legislation.

"If legislation were to undermine the deal, by taking off the table commitments that we had put on the table, that would be a problem," Adam Szubin, the acting Treasury Department undersecretary for terrorism and financial intelligence, told a House of Representatives hearing.

"Certainly our allies around the world would see us taking back major chunks of the sanctions relief as bad faith," Szubin told a Senate Banking Committee hearing later on Wednesday.

House and Senate members are drafting new sanctions measures, accusing Iran of supporting terrorism, human rights abuses and violating its international commitments by testing ballistic missiles.

They want to renew the Iran Sanctions Act, a broad U.S. law imposing sanctions over Iran's nuclear and missile programs that expires at the end of 2016. Administration officials have urged Congress not to rush to renew the ISA.

Lawmakers argue that new sanctions will help send a message that Washington will take a hard line, despite the nuclear pact. Every Republican in Congress and several of President Barack Obama's fellow Democrats opposed the agreement.

"I feel it's not so terrible to have Congress come up with new sanctions if we feel Iran is violating its agreements," said Representative Eliot Engel, top Democrat on the House Foreign Affairs Committee, who opposed the nuclear pact.

Szubin and Stephen Mull, the State Department's lead coordinator for implementing the nuclear deal, told lawmakers that, so far, the deal announced in July 2015 was being fully implemented. They said the administration was tightly tracking Iran's compliance.

"We believe that we and our allies in the region are considerably safer," Mull said.

Members of Congress recently accused the administration of allowing sanctions workarounds that might provide Iran direct or indirect access to the U.S. financial system.

Szubin reiterated the administration's assurances that it had no such plans.

Despite the easing of nuclear sanctions under the international agreement, Tehran's hopes of rapidly ending its economic isolation have been complicated by companies' concerns that doing business with Iran might violate non-nuclear sanctions that remain in place.

(Reporting by Patricia Zengerle; Editing by Chizu Nomiyama and Peter Cooney)

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