By Roberta Rampton

WASHINGTON, Nov 30 (Reuters) - The U.S. Senate on Friday

resoundingly approved new sanctions on trade with Iran's energy,

port, shipping and ship-building sectors, its latest effort to

ratchet up economic pressure on Tehran over its nuclear program.

The new package builds on existing U.S. sanctions but keeps

exemptions for countries that have made significant cuts to

their purchases of Iranian crude oil. Senators voted 94-0 to

make the new sanctions part of an annual defense policy bill.

Iran's currency has plunged this year as its oil exports

were slashed by U.S. and European sanctions aimed at pressuring

the country's leadership to stop pursuing nuclear weapons.

Iran says its nuclear program is for peaceful purposes. The

United Nations' nuclear chief said on Thursday his agency has

made no progress in its year-long push to investigate whether

Iran has worked on developing an atomic bomb.

'We must be clear to the Iranians that toughing it out and

waiting it out is not an option, that it will only get worse,'

Democratic Senator Robert Menendez said.

Menendez, of New Jersey, co-authored the package with

Republican Senator Mark Kirk of Illinois and Senator Joseph

Lieberman, an Independent from Connecticut.

The Obama administration has not publicly commented on the

proposals, but has privately raised concerns that it does not

provide enough 'waiver flexibility,' said Carl Levin, chairman

of the Senate Armed Services Committee.

Levin said those concerns may be addressed when the Senate

and House of Representatives work out differences to finalize

the massive defense bill. The House has approved its version of

the bill, and both bodies will need to approve a final version

before it is sent to President Barack Obama to sign into law.

The new sanctions also include measures aimed at stopping

the flow of gold from Turkey to Iran.

The American Israel Public Affairs Committee, a powerful

pro-Israel lobby group, endorsed the measures, which they said

would close a loophole in existing laws.

'In an effort to circumvent international sanctions on the

Central Bank of Iran, some purchasers of Iranian oil and natural

gas have been using gold and other precious metals to pay for

petroleum products,' AIPAC leaders said in a letter to senators

ahead of the vote, urging support for the bill.

Whether an expansion of sanctions can actually slow or stop

Tehran's nuclear program is uncertain.

Paul Pillar, a former CIA analyst for the Persian Gulf

region, said sanctions will not work without solid diplomacy to

accompany them. He said the leadership in Iran is unlikely to

make concessions on the nuclear issue if it expects sanctions to

continue until the regime falls.

'It is a fallacy to believe there is some breaking point at

which the regime in Tehran cries 'uncle' and makes major changes

in policy even if it sees itself as getting nothing in return,'

he said.

Jeff Colgan, a professor at American University who studies

the geopolitics of oil, said the expanded sanctions would

represent a 'continuation of a cat and mouse game.'

'The sanctions get placed, Iran tries to find ways around

them, and the U.S. tries to close the loopholes. But so far, a

dent in the (Iranian) economy has not resulted in a change in

the nuclear program,' Colgan said.

(Additional reporting by Timothy Gardner; Editing by Vicki

Allen)

((roberta.rampton@thomsonreuters.com)(Twitter @robertarampton

@timogard)(+202 898 8360))

(For a factbox on the sanctions, click:)

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