U.S. Foreign Policy Sanctions: Iran
In 2010-2012, Iran has been the target of steadily escalating unilateral and extraterritorial U.S. economic sanctions, in addition to multilateral sanctions. The logic of all of these programs is to gain leverage on Iran's nuclear development program via the immiseration of the Iranian civilian population. The programs postulate a causal link between a reduction of regime resources and/or popular discontent over worsening economic conditions and significant changes in Iran's nuclear program.
The basic U.S. Iran sanctions law is the Iran Sanctions Act (ISA) of 1996, amended to include Libya and then amended in 2004 to exclude Libya, and renewed in 2006. ISA provides for extraterritorial sanctions on foreign companies investing more than $20 million in Iran's energy sector. Presidents Clinton and George W. Bush exercised ISA's waiver provision and did not sanction non-U.S. companies. Partly as a result of congressional dissatisfaction with the failure of successive administrations to implement the statute, President Obama issued an executive order in November 2011, to direct the Secretary of State to impose at least one of nine available sanctions on foreign firms that provide goods and services to Iran's energy sector of $1 million (or $5 million in a year), and also on firms that provide $250,000 worth of goods or services (or $1 million in a year) to Iran to maintain or expand its oil sector.
In 2010, Congress passed the Comprehensive Iran Sanctions Divestment and Accountability Act (CISADA), which directs the president to impose three of nine sanctions under ISA on foreign firms investing more than $20 million in one year in Iran's energy sector. The definition of investment includes any contract for the development of Iran's oil resources. CISADA also directs the president to impose three of the nine sanctions on foreign firms that sell Iran $5 million in a year of refined petroleum and aviation fuels, as well as sales to Iran of equipment or services to refine or import refined petroleum.
Once an entity is determined to be in violation, the original version of ISA required the imposition of two of a menu of six sanctions on that entity, unless waived by the president. CISADA added three new sanctions to the menu and required the imposition of at least three out of the nine against entities found to be in violation. The nine sanctions are:
• Denial of Export-Import Bank loans, credits, or credit guarantees for U.S. exports to the sanctioned entity;
• Denial of licenses for the U.S. export of military or militarily useful technology to the entity;
• Denial of U.S. bank loans exceeding $10 million in one year to the entity;
• If the entity is a financial institution, a prohibition on its service as a primary dealer in U.S. government bonds; and/or a prohibition on its serving as a repository for U.S. government funds;
• Prohibition on U.S. government procurement from the entity;
• Prohibition in transactions in foreign exchange by the entity;
• Prohibition on any credit or payments between the entity and any U.S. financial institution;
• Prohibition of the sanctioned entity from acquiring, holding, using, or trading any U.S.-based property which the sanctioned entity has a (financial) interest in; and
• Restrictions on imports from the sanctioned entity, in accordance with the International Emergency Economic Powers Act.
ISA, as amended by CISADA, also includes a so-called "good faith" provision that allows the administration to forego sanctions on entities that have made sanctionable investments in Iran's energy sector, but have informed the administration that they are in the process of divestment. Several European energy firms have availed themselves of this provision.
The accelerating tension between the United States and Iran has increased the importance of Iran's relations with China and China's role in Iran's energy sector. Given the importance of Chinese cooperation with sanctions programs, the United States has not identified any of China's three large oil companies for sanctions. China did support the 2010 UN sanctions on Iran and has limited new investments in Iran's energy sector. At the same time, bipartisan congressional support for sanctioning Chinese oil companies has increased.
The 2012 Defense Authorization Act, enacted in December 2011, requires the president to reduce Iran's crude oil exports by sanctioning Iran's central bank. The president is to prohibit or impose strict conditions on correspondent accounts with foreign financial institutions that have dealings with the Central Bank of Iran. This applies to transactions with all foreign financial institutions that engage in transactions for the sale or purchase of Iranian petroleum or petroleum products.
Although the provision includes waiver authority, in February 2012, President Obama signed an executive order freezing all Iranian government assets held or traded in the United States and sanctioning foreign financial institutions that conduct transactions through Iran's central bank for oil imports. In August 2012, President Obama signed the Iran Threat Reduction Act and Syria Human Rights Accountability Act (ITRA), an extraterritorial sanction which cuts off access to the U.S. market for companies that do business with Iran's energy sector and expands the scope of financial sanctions. Among other measures, ITRA freezes U.S. assets of persons facilitating repatriation of Iranian oil revenues, as well as insurers and lenders to the Iranian National Oil Company and the Iranian National Tanker Company. ITRA sanctions persons connected to Iran's nuclear program and financial institutions that aid them, as well as those with connections to the Iranian Revolutionary Guard Corps. In October 2012, President Obama issued an executive order implementing ITRA by extending sanctions to cover foreign subsidiaries of U.S. companies doing business in Iran. ITRA does provide an exemption for exports of food and medicine. Both CISADA and ITRA are amendments to the ISA.
Nearly 60 percent of Americans say that U.S. diplomacy with Iran is needed
Americans from both parties think the U.S. government should build better relations with the Iranian government rather than try to change its behavior through implied military threats (Republicans 56%, Democrats 88%)