Sanctions Against Iran

Definition of International Sanctions

(International) sanctions are “policies of an economic nature adopted by one government to induce policy changes by another government,” including “boycotts, embargos, subsidies, imposition of tariffs, quotas, or other import and export controls, denial of licenses, most-favored-nation treatment, national treatment, membership in a trade agreement, suspension of aid or loans, freezing or seizure of assets, and blacklisting.” (Globalization: Encyclopedia of Trade, Labor, and Politics)

History of sanctions against Iran

The United States has imposed economic sanctions on Iran since the 1979 hostage crisis and completely banned the import of Iranian goods in 1987. The U.S., EU, and UN have been imposing escalating rounds of sanctions against Iran since the mid-2000s to coerce the Iranian government to live up to its obligations under the Nuclear Nonproliferation Treaty, IAEA safeguards agreements, and UN Security Council Resolutions—and to prevent the country from acquiring a nuclear weapon.

Sanctions imposed since 2010 target Iran’s ability to sell crude oil on the world market, to import refined petroleum products, and make it more difficult for Iran’s Central Bank and other financial institutions to engage in transactions abroad.

According to Dr. Aaron Arnold, the “last five years have seen a remarkable increase in the use of financial sanctions to limit Iran’s access to the international banking system. In 2012, for example, the EU imposed a ban on Iranian banks from using the Belgium-based global financial messaging system, SWIFT. While this move severely reduced Iran’s ability to conduct transactions, Iran has adapted, in part, by using alternative messaging systems, albeit at a slower and costlier pace. The SWIFT ban is believed to be so severe, that Tehran supposedly requested the ban be one of the first sanctions lifted, should negotiations succeed in reaching an agreement.

Emerging alternatives to SWIFT, however, threaten to undermine the leverage that financial sanctions provide, and may be further indicative of growing weakness within the overall sanctions framework.”

U.S., EU, and UN sanctions since 2005

By Date, Authority and Description:

• June 29, 2005 (U.S. Executive Order 13382): Granted president authority to freeze assets of WMD proliferators and their supporters. Sanctioned individuals connected to Iranian nuclear program.
• Sep. 30, 2006 (Renewal of Iran Sanctions Act (ISA) of 1996): Extended ISA for five years (replaced by CISADA in 2010). Prohibited U.S. companies from investing more than $20 million/year in Iran’s energy sector.
• Dec. 28, 2006 (UNSCR 1737): Prohibited supply of nuclear technology or related equipment to Iran. Froze assets of select individuals involved in nuclear program.
• Mar. 24, 2007 (UNSCR 1747): Embargoed Iranian weapons exports. Barred future bank loans to Iran and froze assets of select IRGC members.
• Oct. 25, 2007 (U.S. Executive Order 13382 (expansion)): Sanctioned Bank Mellat, Bank Melli, and IRGC. Dubbed IRGC “proliferator of WMD.”
• Mar. 3, 2008 (UNSCR 1803): Banned sale of dual-use items to Iran and authorized inspections of Iran-bound shipments. Sanctioned 12 additional companies and 13 individuals.
• June 9, 2010 (UNSCR 1929): Imposed arms embargo on Iran. Expanded sanctions on nuclear and banking sectors and individuals connected to nuclear program.
• June 17, 2010 (EU energy sanctions -1): Banned European investment in or assistance with Iranian oil or gas industry. Prohibited providing insurance and re-insurance to government entities.
• July 1, 2010: U.S. Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA): Consolidated previous sanctions. Added sanctions on U.S. companies or individuals that provide gasoline, or associated equipment/services (including pipelines), to Iran’s energy sector.
• Nov. 10, 2010: U.S. ban on “U-turn” transactions: Banned US companies from conducting transactions with Iran through third-parties.
• Dec. 31, 2011 (Section 1245, US National Defense Authorization Act (NDAA)): Sanctioned financial institutions conducting transactions with Central Bank or other previously blocked Iranian banks. Came into force 6/28/2012.
• Feb. 6, 2012 (US Executive Order 13599): Seized property of Iranian government and Central Bank in the United States.
• Mar. 17, 2012 (SWIFT sanctions): Global financial messaging system essential for bank transfers shut off access to Iranian banks, including Central Bank.
• April 23, 2012 (Executive Order): EO freezed the assets of persons who facilitate Iran’s ability to commit human rights abuses by disrupting computers and networks.
• May 1, 2012 (Executive Order): EO targets persons engaging in deceptive practices to obscure or withhold information about Iranian links to financial transactions.
• July 1, 2012 (EU energy sanctions -2): Implemented oil embargo and froze Central Bank assets within the EU. Barred companies from insuring Iranian oil shipments.
• July 12, 2012 (NITC and “front” company sanctions): U.S. sanctioned National Iranian Tanker Co., including 27 of its entities and 58 tankers, and 11 front companies in Europe, SE Asia, and UAE.
• July 30, 2012 (U.S. Executive Order; additional sanctions under CISADA): EO banned foreign entities, using any payment mechanism, from transactions facilitating purchase of Iranian oil, petroleum products or petrochemicals. CISADA sanctions targeted one Chinese and one Iraqi bank for conducting transactions with previously-sanctioned Iranian banks.
• October 9, 2012 (U.S. Executive Order): EO banned non-U.S. entities owned or controlled by U.S. persons from engaging in economic activity with Iran to the same extent that U.S. persons are so prohibited from doing so under US law and regulation.
• July 1, 2013 (U.S. Executive Order): EO discourages non-U.S. persons from doing business in Iran, particularly with Iran’s governing elite and critical industrial sectors, by enabling the government to freeze that person’s US-based assets. (1)

Impact of the Sanctions

From “Iran Matters” (Harvard University):

Sanctions have caused significant harm to Iran’s economy. In particular:

• They contributed to a significant drop in Iranian oil exports, from 2.5 million barrels per day in 2011 to about 1 million barrels per day in 2013. As a result, Iran’s revenue from oil exports has declined 55% from its peak in 2011.
• They played a role in the steep drop in the value of Iran’s currency against the dollar and in the steep increase in consumer prices.
• However, since the election of President Rouhani in June, the Iranian rial has strengthened by 20% against the dollar and Tehran’s stock market is up 65%.

Iranian people thinking about sanctions

According to Gallup:

• Over 85% of Iranians say that sanctions have hurt their personal livelihoods, including 50% who say that sanctions have hurt them personally great deal. (Gallup, 11/6/13).
• Nonetheless, 68% of Iranians still believe that Iran should develop nuclear power; 56% say for non-military purposes, while 34% say for military purposes. (Gallup, 10/14/13)
• 46% of Iranians blame the U.S. for the sanctions, while 13% believe that their own government is primarily responsible. (Gallup, 11/6/13).
• Half of Iranians have not had enough money to pay for adequate food or shelter within the past year; 34% say that their standard of living is deteriorating. (Gallup, 7/1/13)

Iran: U.S. Sanctions and Other Controls in 2013

United States views on international law [1] in relation to Iran: U.S. Sanctions and Other Controls: In 2013, President Obama again continued the national emergency under IEEPA with respect to Iran (78 Fed. Reg. 16,395 (Mar. 14, 2013)), thereby maintaining the existing sanctions program. The United States also implemented additional sanctions intended to pressure Iran to comply with its international obligations. One new executive order was issued. Additional sanctions specific to Iran are described below. Further information on Iran sanctions is available at (Secretary of State website) state.gov/e/eb/tfs/spi/iran/index.htm and (link resource) treasury.gov/resource-center/sanctions/Programs/Pages/iran.aspx.

Some Aspects of Iran: U.S. Sanctions and Other Controls

(1) E.O. 13553

President Obama issued Executive Order 13553, “Blocking Property of Certain Persons With Respect to Serious Human Rights Abuses by the Government of Iran and Taking Certain Other Actions” in 2010. See this world legal encyclopedia (in relation to issues that took place in the year 2010) at 656-60. On May 30, 2013, OFAC designated one individual pursuant to E.O. 13553, Asghar MIR-HEJAZI. 78 Fed. Reg. 39,064 (June 28, 2013). A May 30, 2013 State Department press statement, available at (Secretary of State website) state.gov/r/pa/prs/ps/2013/05/210102.htm, describes the basis for designating Mir-Hejazi:

Asghar Mir-Hejazi is being designated pursuant to E.O. 13553 for supporting the commission of serious human rights abuses in Iran on or after June 12, 2009, as well as providing material support to the IRGC and the Ministry of Intelligence and Security (MOIS). Mir-Hejazi is the Deputy Chief of Staff to the Supreme Leader, and is closely involved in all discussions and deliberations related to military and foreign affairs. After the disputed 2009 election, Mir-Hejazi played a leading role in suppressing the unrest in Iran.

Developments

(2) E.O. 13599

President Obama issued Executive Order 13599, “Blocking Property of the Government of Iran and Iranian Financial Institutions,” in 2012. See this world legal encyclopedia (in relation to issues that took place in the year 2012) at 504-06. On February 20, 2013, OFAC published in the Federal Register a list of 110 entities and vessels identified as the Government of Iran, Iranian financial institutions, or property or interest in property of the Government of Iran under the Iranian Transactions and Sanctions Regulations (the “ITSR”), 31 CFR part 560, and Executive Order 13599. 78 Fed. Reg. 11,950 (Feb. 20, 2013). On February 22, 2013, OFAC published a list of 37 vessels identified as property owned or controlled by the Government of Iran under the ITSR and E.O. 13599. 78 Fed. Reg. 12,420 (Feb. 22, 2013).

Effective March 14, 2013, OFAC identified one individual and fourteen entities as the Government of Iran, and eight vessels as the property of the Government of Iran pursuant to E.O. 13599. 78 Fed. Reg. 19,075 (Mar. 28, 2013). On May 9, 2013 OFAC identified eight vessels as property in which the Government of Iran has an interest that is blocked pursuant to E.O. 13599. 78 Fed. Reg. 29,813 (May 21, 2013). Also on May 9, 2013, OFAC identified another entity as meeting the definition of the Government of Iran under the ITSR and E.O. 13599: Sambouk Shipping FZC. 78 Fed. Reg. 30,397 (May 22, 2013). On May 23, 2013, OFAC identified six additional individuals as meeting the definition of the Government of Iran pursuant to E.O. 13599 and the ITSR. 78 Fed. Reg. 33,470 (June 4, 2013). On June 4, 2013, OFAC identified 38 entities as meeting the definition of the Government of Iran pursuant to E.O. 13599 and the ITSR. 78 Fed. Reg. 37,664 (June 21, 2013).

On September 6, 2013, OFAC identified six individuals and four companies as meeting the definition of the Government of Iran pursuant to the Order and the ITSR: Seyed Nasser Mohammad SEYYEDI; Reza PARSAEI; Seyyed Mohammad Ali Khatibi TABATABAEI; Mahmoud ZIRACCHIAN ZADEH; Seyed Mahmoud MOHADDES; Mohammad MOINIE; Swiss Management Services SARL; KASB International LLC; Petro Royal FZE; AA Energy FZCO. 78 Fed. Reg. 57,001 (Sep. 16, 2013).

Details

(3) Iran Sanctions Act, as amended

(As reviewed in this legal encyclopedia in relation to international law issues in the year 2012) at 509-11, Congress amended the Iran Sanctions Act (“ISA”) in 2012 with passage of the Iran Threat Reduction Act and Syria Human Rights Act of 2012 (“TRA”) (Pub. L. 112–158). OFAC amended the Iranian Financial Sanctions Regulations (“IFSR”) to implement sections 503 and 504 of the TRA, which amended section 1245 of the National Defense Authorization Act for Fiscal Year 2012; and section 1, portions of section 6, and other related provisions of Executive Order 13622 of July 30, 2012. E.O. 13622 is discussed in this world legal encyclopedia (in relation to issues that took place in the year 2012) at 507-9. Excerpts below are from the background section of the Federal Register Notice of the IFSR amendments. 78 Fed. Reg. 16,403 (Mar. 15, 2013).

The Department of the Treasury's Office of Foreign Assets Control (“OFAC”) originally published the Iranian Financial Sanctions Regulations, 31 CFR part 561 (the “IFSR”), on August 16, 2010 (75 FR 49836), to implement subsections 104(c) and (d) and other related provisions of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (Pub. L. 111195) (22 U.S.C. 8501-8551) (“CISADA”), which had been signed into law by the President on July 1, 2010. Subsection 104(c) of CISADA requires the Secretary of the Treasury to prescribe regulations to prohibit, or impose strict conditions on, the opening or maintaining in the United States of a correspondent account or a payable-through account for a foreign financial institution that the Secretary finds knowingly engages in specified sanctionable activities.

More

On February 27, 2012, OFAC amended the IFSR and reissued them in their entirety (77 FR 11724), in order to implement section 1245(d) of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-81) (22 U.S.C. 8513a) (“NDAA”), which had been signed into law by the President on December 31, 2011. Section 1245(d)(1) of the NDAA provides for the President to prohibit the opening, and prohibit or impose strict conditions on the maintaining, in the United States of a correspondent account or a payable-through account by a foreign financial institution that the President determines has knowingly conducted or facilitated any significant financial transaction with the Central Bank of Iran or another Iranian financial institution designated by the Secretary of the Treasury pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (“IEEPA”).

More

Section 1245(d)(2) of the NDAA excepted transactions for the sale of food, medicine, or medical devices to Iran from the imposition of sanctions under section 1245(d)(1). Section 1245(d)(3) of the NDAA limited the imposition of sanctions pursuant to section 1245(d)(1) on foreign financial institutions owned or controlled by the government of a foreign country, including the central bank of a foreign country, to significant transactions for the sale or purchase of petroleum or petroleum products to or from Iran. Section 1245(d)(4)(D) of the NDAA provided for an exception from the imposition of sanctions pursuant to section 1245(d)(1) on any foreign financial institution if the President determines and periodically reports to Congress that the country with primary jurisdiction over that foreign financial institution has significantly reduced its crude oil purchases from Iran during the 180-day period preceding the report.

Resources

Notes

1. Iran: U.S. Sanctions and Other Controls in the Digest of United States Practice in International Law

Resources

Notes

1. “Iran Matters” website (Harvard University)