Iran V: Sanctions
March 13, 2012
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EXECUTIVE SUMMARY This report analyzes US and Iranian strategic competition in four key areas—sanctions, energy, arms control, and regime change. It shows that shifts in the nature and intensity of sanctions on Iran have radically changed this aspect of US and Iranian competition since the Fall of 2011. This escalation has been spurred by Iran’s ongoing missile deployments and nuclear programs, as reported in sources like the November 2011 IAEA report highlighting the probable military dimensions of Iran’s nuclear program. It has also been spurred by incidents like an Iranian assassination plot against the Saudi Ambassador to the US, an Iranian-government-sponsored mob attack on the British Embassy in Tehran on November 30, 2011, and Iranian threats to “close” the Gulf to oil exports. A New Round of Sanctions Iran’s steady progress towards the capability to build nuclear weapons has led to a new round of sanctions from the US and its allies. Washington has sought to further isolate Iran economically through new US sanctions on the Iranian Central Bank and Iranian companies involved in its nuclear industry, including the petrochemical and oil industry. Iran’s primary source of revenue—crude oil exports—is further threatened by a unanimous decision by the European Union on January 23rd to impose a full embargo on the import of Iranian oil and petrochemicals. US and European actions since the latter half of 2011 have supported this strategy by steadily ratcheting up the pressure on Iran.
In March 2012, as reports of Iran’s deepening economic conditions emerged, the government in Tehran came under increased economic pressure from the US Congress. On March 8, the House Foreign Affairs Committee reinforced earlier legislation by introducing with H.R. 4179, “The Iran Financial Sanctions Improvement Act of 2012”, expanding sanctions to cover other energy-related commerce. Concurrently, the same committee introduced H.R. 4173, designed to “direct the President to appoint a high-level United States Representative or special envoy for Iran” for the purposes of pursuing diplomatic means “to prevent Iran from acquiring a nuclear weapon”.1
On February 2, 2012, the US Senate Banking Committee unanimously approved a new set of sanctions on Iran “targeting the global financial telecommunications network that nearly all banks depend on to conduct their daily business”. If the Senate Banking bill becomes law, it would direct the White House to demand the Society for Worldwide Interbank Financial Telecommunication (SWIFT) to eject Iran’s central bank, shutting Iran out of the system used to move money between banks worldwide, denying Iran from billions of dollars routed through the SWIFT banking system. 2
Additionally, at the end of February 2012, the U.S. Department of Treasury strengthened the preexisting Iranian Financial Sanctions Regulations (IFSR) with the implementation of subsection 1245(d). The amendment moves to extend punishment against “foreign financial institutions that knowingly conduct or facilitate certain significant financial transactions with the Central Bank of Iran (CBI) or a U.S.-designated Iranian financial institution”. In accordance with these actions, the Secretary of Treasury will impose
Text of House of Representative bills H.R. 4173 and H.R. 4179, from the Second Session of the 112 th U.S. Congress, introduced on March 8, 2012. 1
“Senate Panel Approves Potentially Toughest Penalty Yet Against Iran’s Wallet”, Rick Gladstone, The New York Times, February 2, 2012. 2
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