United States sanctions against Iran
United States sanctions against Iran are economic, trade, scientific and military sanctions which have been imposed by the U.S. Office of Foreign Assets Control, or by the international community under U.S. pressure through the UN Security Council. Currently, the U.S. sanctions against Iran include an embargo on dealings with the country by the United States, and a ban on selling aircraft and repair parts to Iranian aviation companies.
On 17 May 2018 the European Commission announced its intention to implement the blocking statute of 1996 to declare the US sanctions against Iran null and void in Europe and ban European citizens and companies from complying with them. The Commission also instructed the European Investment Bank to facilitate European companies' investment in Iran.
In 1979, after the U.S. permitted the exiled Shah of Iran to enter the United States for medical treatment, a group of radical students took action in Tehran by seizing the American Embassy and taking hostage the people inside. The United States responded and President Carter issued Executive Order 12170 in November 1979 freezing about $12 billion in Iranian assets, including bank deposits, gold and other properties. Some assets—Iranian officials say $10 billion, U.S. officials say much less—still remain frozen pending resolution of legal claims arising from the revolution.
After the invasion of Iran by Iraq, the United States increased sanctions against Iran. In 1984, sanctions were approved that prohibit weapons sales and all U.S. assistance to Iran. The Iran Sanctions Act (ISA) that is the basis of the current sanctions against Iran is a revised version of the Iran and Libya Sanctions Act (ILSA) that was signed on 5 August 1996 (H.R. 3107, P.L. 104-172). The act was renamed in 2006 when the sanctions against Libya were terminated.
Rafsanjani and Khatami governments
The term of President Akbar Hashemi Rafsanjani was marked by some of the toughest sanctions against Iran. In March 1995, President Bill Clinton issued Executive Order 12957 prohibiting U.S. trade in Iran's oil industry. In May 1995, President Clinton issued Executive Order 12959 prohibiting any U.S. trade with Iran. Trade with the United States, which had been growing following the end of the Iran–Iraq War, ended abruptly.
In 1995, the United States Congress passed the Iran–Libya Sanctions Act (ILSA). Under ILSA, all foreign companies that provide investments over $20 million for the development of petroleum resources in Iran will have imposed against them two out of seven possible penalties by the U.S.:
- denial of Export-Import Bank assistance;
- denial of export licenses for exports to the violating company;
- prohibition on loans or credits from U.S. financial institutions of over $10 million in any 12-month period;
- prohibition on designation as a primary dealer for U.S. government debt instruments;
- prohibition on serving as an agent of the United States or as a repository for U.S. government funds;
- denial of U.S. government procurement opportunities (consistent with WTO obligations); and
- a ban on all or some imports of the violating company.
In response to the election of Iranian reformist President Mohammad Khatami, President Clinton eased sanctions on Iran. A debate in the U.S. Congress on whether to allow the expiration of ILSA, which some legislators argued hindered bilateral relations, and others argued would be seen as a concession on an effective program, ended on 5 August 2001, with its renewal by the Congress and signing into law by President George W. Bush.
In 2000 the Khatami government managed to reduce the sanctions for some items like pharmaceuticals, medical equipment, caviar or Persian rugs. In February 2004, during the final year of Khatami's presidency, the U.S. Department of the Treasury ruled against editing or publishing scientific manuscripts from Iran, and stated that U.S. scientists collaborating with Iranians could be prosecuted. In response, the Institute of Electrical and Electronics Engineers (IEEE) temporarily stopped editing manuscripts from Iranian researchers and took steps to clarify the OFAC guidelines concerning its publishing and editing activities. In April 2004 IEEE received a response from OFAC which fully resolved that no licenses were needed for publishing works from Iran and that the entire IEEE publication process including peer review and editing was exempt from restrictions. On the other hand, the American Institute of Physics (AIP), the American Physical Society and the American Association for the Advancement of Science, which publishes Science, refused to comply, saying that the prohibition on publishing goes against freedom of speech.
After being elected president in 2005, President Ahmadinejad lifted the suspension of uranium enrichment that had been agreed with the EU3, and the International Atomic Energy Agency reported Iran's non-compliance with its safeguards agreement to the UN Security Council. The U.S. government then began pushing for UN sanctions against Iran over its nuclear program.
In June 2005, President George W. Bush issued Executive Order 13382 freezing the assets of individuals connected with Iran's nuclear program. In June 2007, the U.S. state of Florida enacted a boycott on companies trading with Iran and Sudan, while New Jersey's state legislature was considering similar action.
On June 24, 2010, the United States Senate and House of Representatives passed the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA), which President Obama signed into law July 1, 2010. The CISADA greatly enhanced restrictions in Iran. Such restrictions included the rescission of the authorization for Iranian-origin imports for articles such as rugs, pistachios, and caviar. In response, President Obama issued Executive Order 13553 in September 2010 and Executive Order 13574 in May 2011, and Executive Order 13590 in November 2011.
Iranian financial institutions are barred from directly accessing the U.S. financial system, but they are permitted to do so indirectly through banks in other countries. In September 2006, the U.S. government imposed sanctions on Bank Saderat Iran, barring it from dealing with U.S. financial institutions, even indirectly. The move was announced by Stuart Levey, the undersecretary for treasury, who accused the major state-owned bank in Iran of transferring funds for certain groups, including Hezbollah. Levey said that since 2001 a Hezbollah-controlled organization had received 50 million U.S. dollars directly from Iran through Bank Saderat. He said the U.S. government will also persuade European banks and financial institutions not to deal with Iran. As of November 2007, the following Iranian banks were prohibited from transferring money to or from United States banks:
- Bank Sepah
- Bank Saderat Iran
- Bank Melli Iran
- Bank Kargoshaee (aka Kargosa’i Bank)
- Arian Bank (aka Aryan Bank)
In other words, these banks were placed on the Office of Foreign Assets Control (OFAC) Specially Designated Nationals List (SDN List). The SDN List is a directory of entities and individuals who have been prohibited from accessing the U.S. financial system. Although difficult there are ways to carry out an OFAC SDN List removal.
As of early 2008, the targeted banks, such as Bank Mellat, had been able to replace banking relationships with a few large sanction-compliant banks with relationships with a larger number of smaller non-compliant banks. The total assets frozen in Britain under the EU (European Union) and UN sanctions against Iran are approximately 976,110,000 pounds ($1.64 billion). In 2008, the US Treasury ordered Citigroup Inc. to freeze over $2 billion held for Iran in Citigroup accounts.
For individuals and small businesses, these banking restrictions have created a large opportunity for the hawala market, which allows Iranians to transfer money to and from foreign countries using an underground unregulated exchange system. In June 2010, in the case United States v. Banki, the use of the hawala method of currency transfer led to a criminal conviction against a U.S. citizen of Iranian origin. Banki was sentenced to two and a half years in federal prison, however, on the Federal Sentencing Guidelines, this type of offense could result in imprisonment of up to 20 years.
The United States imposed additional financial sanctions against Iran, effective 1 July 2013. An administration official explained that according to the new Executive Order "significant transactions in the rial will expose anyone to sanctions," and predicted “it should cause banks and exchanges to dump their rial holdings.” This took place as Iran's president-elect Hassan Rouhani was scheduled to take office from August 3, 2013.
Sanctions against third parties
In 2014, American authorities put a $5 million bounty on Chinese businessman Li Fangwei, whom they alleged to have been instrumental in evading sanctions against Iran's missile programs.
In April 2018, the U.S. Justice Department joined the U.S. Treasury Department's Office of Foreign Assets Control, or OFAC, and the Department of Commerce to investigate possible violations of U.S. sanctions against Iran by China's Huawei. The U.S. inquiry stems from an earlier sanctions-violation probe that ultimately led to penalties against another Chinese technology company, ZTE Corporation. Huawei's CFO Meng Wanzhou, daughter of the company's founder Ren Zhengfei, was arrested in Canada on December 1, 2018 based on an extradition request by U.S. authorities.
After the Iran nuclear deal (JCPOA), the United States has imposed several new non-nuclear sanctions against Iran, some of which are being condemned by Iran as a violation of the deal. The United States has been considering new penalties, which reportedly seek to punish several companies and individuals from Iran.
These treasury and other arms of the government, both under Obama and Trump, have basically weakened the JCPOA extensively, which has kept a lot of the sanctions regime intact. In August 2018 the Trump administration reimposed the sanctions and warned that anyone doing business with Iran will not be able to do business with the United States. However, the US will be granting waivers to certain countries. For example, Iraq was granted a waiver that would allow the country to continue purchasing gas, energy and food products from Iran on the condition that the purchases were not paid for in US dollars.
In 2018, the United Nations International Court of Justice "ordered" the United States to stop the sanctions. The decision was unanimous, and was based on the 1955 U.S.-Iran "Friendship Treaty" that was signed with the government overthrown by the 1979 Islamic Revolution. In response, United States withdrew from two international agreements.
Effects and criticism
According to an Iranian journalist, the effects of sanctions in Iran include expensive basic goods and an aging and increasingly unsafe aircraft fleet. "According to reports from Iranian news agencies, 17 planes have crashed over the past 25 years, killing approximately 1,500 people."
The U.S. forbids aircraft manufacturer Boeing to sell aircraft to Iranian aviation companies. However, there are some authorizations for the export of civil aviation parts to Iran when those items are required for the safety of commercial aircraft. An analysis by The Jerusalem Post found that a third of the 117 Iranian planes designated by the U.S. had experienced accidents or crashes.
A 2005 report, presented at the 36th session of the International Civil Aviation Organization, reported that the U.S. sanctions had endangered the safety of civil aviation in Iran because it prevented Iran from acquiring parts and support essential for aviation safety. It also stated that the sanctions were contrary to article 44 of the Chicago convention (to which the US is a member). The ICAO report said aviation safety affects human lives and human rights, stands above political differences, and that the assembly should bring international public pressure on the United States to lift the sanctions against Iran.
The European Union had been critical of most of the U.S. trade sanctions against Iran. Some EU member states have criticized ILSA as a "double standard" in U.S. foreign policy, in which the United States vigorously worked against the Arab League boycott of Israel while at the same time promoted a worldwide boycott of Iran. The EU member states had threatened formal counter-action in the World Trade Organization.[dead link]
According to a study by Akbar E. Torbat, "overall, the sanctions' economic effect" on Iran "has been significant, while its political effect has been minimal."
According to the U.S. National Foreign Trade Council, in the medium-term, lifting US sanctions and liberalizing Iran’s economic regime would increase Iran's total trade annually by as much as $61 billion (at the 2005 world oil price of $50/bbl), adding 32 percent to Iran’s GDP. In the oil-and-gas sector, output and exports would expand by 25-to-50 percent (adding 3 percent to world crude oil production).
Iran could reduce the world price of crude petroleum by 10 percent, saving the United States annually between $38 billion (at the 2005 world oil price of $50/bbl) and $76 billion (at the proximate 2008 world oil price of $100/bbl). Opening Iran’s market place to foreign investment could also be a boon to competitive US multinational firms operating in a variety of manufacturing and service sectors.
In 2009, there was discussion in the U.S. of implementing "crippling sanctions" against Iran, such as the Iran Refined Petroleum Sanctions Act of 2009, "if diplomatic overture did not show signs of success by the autumn". Professor Hamid Dabashi, of Columbia University, said in August 2009 that this was likely to bring "catastrophic humanitarian consequences", while enriching and strengthening the "security and military apparatus" of "the Pasdaran and the Basij," and having absolutely no support from "any major or even minor opposition leader" in Iran. According to Bloomberg News, Boeing and Exxon have said that new Iran sanctions would cost $25 billion in U.S. exports.
It has also been argued the sanctions have had the counter effect of protecting Iran in some ways, for example the 2007 imposition of U.S. sanctions against Iranian financial institutions to a high degree made Iran immune to the then emerging global recession. Iranian officials argued that the sanctions created new business opportunities for Iranian companies to develop in order to fill the gap left by foreign contractors. According to U.S. officials, Iran may lose up to $60 billion in energy investments due to global sanctions.
On 18 January 2012 Russian Foreign Minister Sergey Lavrov warned that sanctions are aimed at strangling the economy of Iran and would create much discontent toward Western nations, and potentially provoke a negative recourse.
On 13 August 2018 Iran Supreme leader, Ayatollah Ali Khamenei, said that "mismanagement" harmed Iran more than U.S. sanctions did. "More than the sanctions, economic mismanagement (by the government) is putting pressure on ordinary Iranians ... I do not call it betrayal but a huge mistake in management," Khamenei was quoted as saying.
On 22 August 2018, United Nations Special Rapporteur Idriss Jazairy described the sanctions against Iran as "unjust and harmful". "The reimposition of sanctions against Iran after the unilateral withdrawal of the United States from the Iran nuclear deal, which had been unanimously adopted by the Security Council with the support of the US itself, lays bare the illegitimacy of this action," said Jazairy. According to Jazairy, "chilling effect" caused by the "ambiguity" of recently reimposed sanctions, would lead to "silent deaths in hospitals".
In December 2010 it was reported that the U.S. Treasury Department's Office of Foreign Assets Control had approved nearly 10,000 exceptions to U.S. sanctions rules worldwide over the preceding decade by issuing special licenses for American companies.
European and U.S. sanctions do not affect Iran's electricity exports, which creates a loophole for Iran's natural gas reserves.
- Sanctions against Iran
- Iran and Libya Sanctions Act of 1996
- Iran Freedom and Support Act of 2006
- Iran Sanctions Enhancement Act of 2007 (never passed)
- Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010
- National Defense Authorization Act for Fiscal Year 2012
- Countering America's Adversaries Through Sanctions Act
- Chicago's Persian heritage crisis
- Iran–United States relations
- Anti-Iranian sentiment
- Foreign direct investment in Iran
- Economy of Iran
- Iran and weapons of mass destruction
- Haidar, J.I., 2015."Sanctions and Exports Deflection: Evidence from Iran," Paris School of Economics, University of Paris 1 Pantheon Sorbonne, Mimeo
- "EU to reactivate ′blocking statute′ against US sanctions on Iran for European firms". Deutsche Welle. 17 May 2018. Retrieved 17 May 2018.
- "EU to start Iran sanctions blocking law process on Friday". Reuters. 17 May 2018. Retrieved 17 May 2018.
- "EU moves to block US sanctions on Iran". Al Jazeera. 17 May 2018. Retrieved 17 May 2018.
- Moin Khomeini, (2000), p.220
- Katzman, Kenneth (13 June 2013). "Iran Sanctions" (PDF). Federation of American Scientists. Congressional Research Service. Retrieved 29 July 2013.
- "Tehran is changing, pity about DC". The Hindu. Chennai, India. 9 August 2013. Retrieved 9 August 2013.
- Wright, Steven. The United States and Persian Gulf Security: The Foundations of the War on Terror, Ithaca Press, 2007 ISBN 978-0863723216
- "Archived copy" (PDF). Archived from the original (PDF) on 2017-06-27. Retrieved 2017-06-25.
- "US Reverses Journal Embargo", The Scientist, 7 April 2004
- "Publishers split over response to US trade embargo ruling", Nature, 19 February 2004
- Kessler, Glenn (18 December 2008). "U.S. Links Iranian Bank to Fifth Avenue Building". Washington Post. Retrieved 26 May 2010.
- "Iraq prime minister to visit Iran". Al Jazeera. 9 September 2006. Archived from the original on 18 April 2010.
- "New Jersey mulls banning Iran investments". The Jerusalem Post. Associated Press. 14 June 2007.[permanent dead link]
- U.S. imposes sanctions on Iranian bank, People's Daily, 9 September 2006
- John B. Reynolds, III, Amy E. Worlton and Cari N. Stinebower, "U.S. Dollar Transactions with Iran are Subject to New Restrictions – Tough Policy Decisions Face International Financial Institutions", Wiley Rein LLP, 28 November 2007
- "OFAC SDN List removal".
- "Iran gets around US bank sanctions", By Najmeh Bozorgmehr in Tehran, Financial Times, August 21, 2008.
- "Over $1.6 bn of Iranian assets frozen in Britain", PressTV, June 18, 2009
- "U.S. froze $2 billion held for Iran in Citibank: report". Reuters. 12 December 2009.
- Solomon, Jay (30 December 2011). "Iran to File Motion in U.S. Court to Unfreeze Funds". The Wall Street Journal. Retrieved 6 April 2013.
- Farnaz Fassihi and Chip Cummins, "Iranians scheme to elude sanctions", Wall Street Journal, 6 February 2008
- Gladstone, Rick (3 June 2013). "U.S. Adds to Its List of Sanctions Against Iran". The New York Times.
- "Iran's next president, Hassan Rouhani, seen as best hope for ending nuclear standoff with West". The Washington Post.
- Arrouas, Michelle (30 April 2014). "Wanted: Li Fangwei, Alias Karl Lee. Reward: $5 Million". Time. Retrieved 5 May 2014.
- Sheridan Prasso (25 April 2018). "Huawei Said to Be Probed by FBI for Possible Iran Violations". Bloomberg Technology. Retrieved 9 August 2018.
- Wakabayashi, Daisuke; Rappeport, Alan (2018-12-05). "A Top Huawei Executive Is Arrested in Canada for Extradition to the U.S." The New York Times. Retrieved 2018-12-06.
- "Plane with freed Americans leaves Iran; U.S. imposes new sanctions". Washington Post.
- Feb 03, 2017, U.S. Announces New Sanctions on Iran Over Ballistic Missile Test, Haaretz.
- "Why are people protesting in Iran?". www.aljazeera.com.
- Trump signs order reimposing sanctions on Iran - a move the EU said it 'deeply' regrets, The Independent.
- Iran sanctions: Trump warns trading partners, BBC.
- "U.S. to grant Iraq waiver over Iran sanctions for gas, food items:..." Reuters. 2018-11-02. Retrieved 2018-11-08.
- "US ordered to halt 'humanitarian' Iran sanctions in blow for Donald Trump". Times of India. Agence France Presse. 3 October 2018. Retrieved 4 October 2018.
Judges in The Hague unanimously ruled that the sanctions on some goods breached a 1955 "friendship treaty" between Iran and the US that predates Iran's Islamic Revolution.
- "U.S. withdraws from international accords, says U.N. world court 'politicized'". Reuters. 4 October 2018. Retrieved 10 October 2018.
- Sara Shams|Tehran|29 January 2009 Archived February 4, 2009, at the Wayback Machine.
- Aircraft, November 2001, Iran Air Rare and Exclusive, Kian Noush, p.68
- Aircraft Safety in Iran: OFAC is Not (Entirely) in The Way Archived 2011-07-16 at the Wayback Machine. Sanction Law. 7 April 2010. Retrieved 17 February 2014.
- Tracking the impact of U.S. sanctions on Iran civil aviation The Jerusalem Post. 21 March 2014. Retrieved 21 March 2014.
- The safety deficiencies arising out of the United States sanctions against the civil aviation of the Islamic Republic of Iran, International Civil Aviation Organization, 20 September 2007.
- Akbar E. Torbat, "Impacts of the US Trade and Financial Sanctions on Iran", The World Economy, Vol. 28, No. 3, pp. 407–434, March 2005.
- Dean A. DeRosa & Gary Clyde Hufbauer, "Normalization of Economic Relations", National Foreign Trade Council, 21 November 2008
- Hamid Dabashi, Commentary: Huge risks in Iran sanctions, CNN. 5 August 2009.
- "Boeing, Exxon say Iran sanctions would cost $25 billion". Payvand. 10 May 2009. Retrieved 6 April 2013.
- Massoud Parsi (22 May 2010). "The tragicomedy of Iran sanctions". Al Jazeera. Retrieved 6 April 2013.
- "Sanctions an 'opportunity' for local companies: Iran". AFP via Google. 14 October 2010. Retrieved 6 April 2013.
- "Sanctions should be taken as opportunity: Larijani". 29 September 2010.
- [dead link]
- "Russia: Iran Attack Would Cause Catastrophe". Huffington Post. 18 January 2012.
- "Khamenei says mismanagement hurts Iran more than US sanctions". The Business Times. Retrieved 14 August 2018.
- "Iran sanctions are unjust and harmful, says UN expert warning against generalised economic war". OHCHR. United Nations High Commissioner for Human Rights. Archived from the original on 23 August 2018. Retrieved 23 August 2018.
- "US Iran business". Yahoo. 24 December 2010. Retrieved 6 April 2013.[dead link]
- Mirsaeedi-Glossner, Shabnam (15 July 2013date=2013). "Iran's Flourishing Regional Influence: Electricity Exports as a Loophole to Sanctions". Science & Diplomacy. 2 (3). Check date values in:
- Iran Sanctions - Factbox (Summary and list of all sanctions on Iran since 1979)
- Iran Sanctions[permanent dead link] – US Congressional Research Service (April 2011)
- Iran's Economy – US Congressional Research Service (June 2008)
- What sanctions mean for Iran's economy - CFR
- Iran Primer: U.S. Sanctions – PBS website
- Iran Sanctions: Strategy, Implementation, and Enforcement: Hearing before the Committee on Foreign Affairs, House of Representatives, One Hundred Twelfth Congress, Second Session, 17 May 2012
- Iran Sanctions Book - First practice book devoted to US sanctions against Iran