A new Iran sanctions bill cleared its key hurdle in the Senate Thursday, as Congress tries to tighten the financial screws on Teheran at the same time that the Bush administration is making new diplomatic overtures. The Senate banking committee passed legislation sponsored by Chairman Chris Dodd (D-Connecticut) and Ranking Member Richard Shelby (R-Alabama) which expands the scope of sanctions against those dealing with Iran to include financial institutions and insurers and those connected to facilitating the transport of Iranian energy products; penalizes foreign subsidiaries of US companies who conduct business with Iran; and makes it easier for pension and other funds to divest from companies benefiting the Iranian economy, among other measures. "This bipartisan legislation will strengthen America's leadership in the effort to bring peace and stability to the Middle East," Dodd said in welcoming his bill's preliminary passage. Targeted and strategic, the bill is designed to maximize the economic leverage on Iran's leaders to bring them to the negotiating table by tightening economic sanctions and authorizing divestment from companies that do business with Iran's key oil sector. Several pieces of Iran sanctions legislation have been proposed by the current Congress that have not yet passed. A bill with broader provisions than the Dodd-Shelby legislation passed the House last year, but the companion legislation hasn't made much progress through the Senate. The Dodd-Shelby bill looks set to move faster, in part because it doesn't contain some of the most controversial and sweeping measures contained in other bills. Those provisions include a ban on US nuclear deals with countries such as Russia because of its nuclear and military aid to Iran and the deduction of American payments to the World Bank in proportion to loans the bank makes to Iran. The American Israel Public Affairs Committee, which had strongly supported several of the earlier pieces of legislation, has also embraced the new legislation. "This important Congressional effort to put further pressure on Iran's pocketbook is vital, and underscores US leadership on a critical issue facing America's national security interests," said AIPAC spokesman Josh Block. Others, however, worried the legislation could affect the diplomatic opening between the US and Iran. "The legislation sends the wrong signal from Congress just as there seems to be a very significant shift in administration policy on diplomacy with Iran," Carah Ong, Iran policy analyst for the Center for Arms Control and Nonproliferation, wrote on her blog. "This legislation could harm diplomatic efforts not only with Iran, but also harm relations with European allies, Russia, India and others." The banking committee approval comes the day after the Bush administration announced that its number three diplomat, Under Secretary of State for Political Affairs William Burns, will be participating in a meeting this weekend in Geneva with Iranian officials as they meet with a group headed by EU foreign policy chief Javier Solana to assess negotiations over halting Iran's nuclear program. The US had made other signs of an opening towards Iran, which has likewise suggested it might be willing to talk with the Americans. The Bush administration okayed a bridging proposal which would require that Iran freeze its current level of uranium enrichment - rather than halt it entirely - while the international community freezes additional sanctions during a period when the possibility of direct US-Iranian negotiations could be assessed. America would join those only for a halt in uranium enrichment. At the same time, the State Department has been floating the idea of opening an interest section in Iran, a country it has had no official ties with since the Iranian Revolution. Also this week, the House foreign appropriations subcommittee passed $2.38 billion for Israel aid, which will fully fund the new Memorandum of Understanding between the US and Israel when added to the supplemental budget already passed. Subcommittee Chairwoman Nita Lowey (D-New York) hailed the committee passage as providing key funds for pressing national security and foreign issues, but the bill will likely face obstacles getting through the wider Congress.