Order Code RL32048
Iran: U.S. Concerns and
Specialist in Middle Eastern Affairs
Foreign Affairs, Defense, and Trade Division
Iran: U.S. Concerns and Policy Responses
The Bush Administration characterizes Iran as a “profound threat to U.S.
national security interests.” The Administration perception is generated primarily
by Iran’s nuclear program but is increasingly focused on Iran’s military assistance to
armed groups in Iraq, which is resulting in U.S. battlefield losses. Iranian aid to the
Palestinian group Hamas and Lebanese Hezbollah is also considered a key threat to
U.S. interests. The threat assessment of some other governments was lessened by
the December 3, 2007 key judgements of a National Intelligence Estimate (NIE)
that indicates that Iran is likely not on a drive to develop an actual nuclear weapon,
although Administration officials say that this finding was not the main thrust of the
NIE, which judged Iran to be continuing uranium enrichment.
The Bush Administration argues that the NIE at least partly validates its
approaches to containing the potential threat posed by Iran — strengthening
international economic and political isolation of Iran to compel it to comply with
international demands that it end its enrichment of uranium. Three U.N.
resolutions (1737 and 1747) ban weapons of mass destruction (WMD) -related
trade with Iran, freeze the assets of Iran’s nuclear and related entities and
personalities, prevent Iran from transferring arms outside Iran, and require reporting
on international travel by named Iranians . Resolution 1803 calls for inspections of
some Iranian sea and airborne cargo shipments and for voluntarily restrictions on
dealings with some Iranian banks. Separate U.S. efforts, showing some success,
have included trying to persuade European governments to curb trade, investment,
and credits to Iran; and pressuring foreign banks not to do business with Iran. At the
same time, there is increasing recognition in the Administration that sanctions alone
have not compelled Iran to suspend uranium enrichment. The Administration and
its partners are formulating an enhanced package of incentives that might encourage
Iran to cooperate, although the Administration is said to remain skeptical that Iran
would respond positively to inducements.
To strengthen its diplomacy, the Administration has maintained a substantial
naval presence in the Persian Gulf.
The Administration has strongly denied
widespread speculation that it plans military action against Iran, but has refused to
rule it out if no other efforts to curb Iran’s uranium enrichment program succeed.
Some believe that the Administration might take military action to curb Iran’s
“malign” influence in Iraq. Others believe that only a change of Iran’s regime would
end the threat posed by Iran, although regime change is not currently a prominent
feature of Administration policy toward Iran.
For further information, see CRS Report RS20871, The Iran Sanctions Act
(ISA), and CRS Report RS22323, Iran’s Activities and Influence in Iraq, both by
Kenneth Katzman, and CRS Report RS21592, Iran’s Nuclear Program: Recent
Developments. This report is updated regularly.
Political History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Regime Stability, Human Rights, and Recent Elections . . . . . . . . . . . . . . . . . . . . 2
The Rebound of the Conservatives and the 2005 Election of Mahmoud
Ahmadinejad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Ahmadinejad’s Policies and Political Position . . . . . . . . . . . . . . . . . . . 5
March 2008 Majles Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Human Rights Practices and the Opposition . . . . . . . . . . . . . . . . . . . . . . . 10
Prominent Dissidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Exile Groups: People’s Mojahedin Organization of Iran (PMOI) . . . . 12
The Son of the Former Shah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Other Exiled Activists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Iran’s Strategic Capabilities and Weapons of Mass Destruction Programs . . . . . 14
Conventional Military/Revolutionary Guard/Qods Force . . . . . . . . . . . . . . 14
Nuclear Program and Related Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Establishment of “P5+1” Contact Group/June 2006 Incentive
Package . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Resolution 1696 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Resolution 1737 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Resolution 1747 and Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Resolution 1803 and New Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Chemical Weapons, Biological Weapons, and Missiles . . . . . . . . . . . . . . . 24
Ballistic Missiles/Warheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Foreign Policy and Support for Terrorist Organizations . . . . . . . . . . . . . . . . . . . 26
Relations with the Persian Gulf States . . . . . . . . . . . . . . . . . . . . . . . . . 26
Iranian Policy in Iraq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Supporting Palestinian Militant Groups . . . . . . . . . . . . . . . . . . . . . . . 30
Lebanese Hezbollah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Central Asia and the Caspian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Afghanistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Al Qaeda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
U.S. Policy Responses, Options, and Legislation . . . . . . . . . . . . . . . . . . . . . . . . 35
Overview of Bush Administration Iran Policy . . . . . . . . . . . . . . . . . . . . . . . 36
Containment and Possible Military Action . . . . . . . . . . . . . . . . . . . . . . . . . 36
Iranian Retaliatory Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Containment and the Gulf Security Dialogue . . . . . . . . . . . . . . . . . . . 39
Presidential Authorities and Legislation . . . . . . . . . . . . . . . . . . . . . . . 40
Regime Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Further International and Multilateral Sanctions . . . . . . . . . . . . . . . . . . . . . 45
European/Japanese/Other Foreign Country Policy on Sanctions and
Trade Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Foreign Banking and Financing Limitations . . . . . . . . . . . . . . . . . . . . 47
World Bank Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
U.S. Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Terrorism/Foreign Aid Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Proliferation Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Counter-Narcotics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
U.S. Trade Ban/Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
The Iran Sanctions Act (ISA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Pending Sanctions Legislation: H.R. 1400 and S. 970 . . . . . . . . . . . . 55
Travel-Related Guidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Status of Some U.S.-Iran Assets Disputes . . . . . . . . . . . . . . . . . . . . . . 56
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
List of Figures
Figure 1. Structure of the Iranian Government . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Figure 2. Map of Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
List of Tables
Table 1. Major Factions and Personalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Table 2. Factions in the Eighth Majles (Elected March 14 - April 25, 2008) . . . . 7
Table 3. Selected Economic Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Table 4. Human Rights Practices and Dissent . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Table 5. Iran’s Conventional Military Arsenal . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table 6. Summary of Provisions of U.N. Resolutions on Iran Nuclear Program
(1737, 1747, and 1803) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Table 7. Iran’s Ballistic Missile Arsenal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Table 8. Iran Democracy Promotion Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Table 9. Entities Sanctioned by U.N. Resolutions and Executive Order 13382 . 59
Iran: U.S. Concerns and
Much of the debate over U.S. policy toward Iran has centered on the nature of
the current regime; some believe that Iran, a country of almost 70 million people, is
a threat to U.S. interests because hardliners in Iran’s regime dominate and set a policy
direction intended to challenge U.S. influence and allies in the region. President
Bush, in his January 29, 2002, State of the Union message, labeled Iran part of an
“axis of evil” along with Iraq and North Korea.
The United States was an ally of the late Shah of Iran, Mohammad Reza Pahlavi
(“the Shah”), who ruled from 1941 until his ouster in February 1979. The Shah
assumed the throne when Britain and Russia forced his father, Reza Shah Pahlavi
(Reza Shah), from power because of his perceived alignment with Germany in World
War II. Reza Shah had assumed power in 1921 when, as an officer in Iran’s only
military force, the Cossack Brigade (reflecting Russian influence in Iran in the early
20th century), he launched a coup against the government of the Qajar Dynasty. Reza
Shah was proclaimed Shah in 1925, founding the Pahlavi dynasty. The Qajars had
been in decline for many years before Reza Shah’s takeover. That dynasty’s
perceived manipulation by Britain and Russia had been one of the causes of the 1906
constitutionalist movement, which forced the Qajars to form Iran’s first Majles
(parliament) in August 1906 and promulgate a constitution (December 1906). Prior
to the Qajars, what is now Iran was the center of several Persian empires and
dynasties. Iran adopted Shiite Islam under the Safavid Dynasty (1500-1722), which
brought Iran out from a series of Turkic and Mongol conquests.
The Shah was anti-Communist, and the United States viewed his government
as a bulwark against the expansion of Soviet influence in the Persian Gulf. In 1951,
under pressure from nationalists in the Majles (parliament) who gained strength in
the 1949 Majles elections, he appointed a popular nationalist parliamentarian, Dr.
Mohammad Mossadeq, as Prime Minister. Mossadeq was widely considered leftleaning, and the United States was wary of his policies, which included his drive for
nationalization of the oil industry. Mossadeq’s followers began an uprising in August
1953 when the Shah tried to dismiss Mossadeq, and the Shah fled. The Shah was
restored in a successful CIA-supported uprising against Mossadeq.
The Shah tried to modernize Iran and orient it toward the West, but in so doing
he also tried to limit the influence of Iran’s Shiite clergy. He exiled Ayatollah
Ruhollah Khomeini in 1964 because of Khomeini’s active opposition to the Shah,
opposition based on the Shah’s anti-clerical policies and what Khomeini alleged was
the Shah’s forfeiture of Iran’s sovereignty to his patron, the United States. Khomeini
fled to and taught in Najaf, Iraq, a major Shiite theological center that contains the
Shrine of Imam Ali, Shiism’s foremost figure. There, he was a peer of senior Iraqi
Shiite clerics and, with them, advocated direct clerical rule or velayat-e-faqih (rule
by a supreme Islamic jurisprudent). In 1978, three years after the March 6, 1975,
Algiers Accords between the Shah and Iraq’s Baathist leaders, which settled
territorial disputes and required each party to stop assisting each other’s
oppositionists, Iraq expelled Khomeini to France, from which he stoked the Islamic
revolution. Mass demonstrations and guerrilla activity by pro-Khomeini forces, allied
with a broad array of anti-Shah activists, caused the Shah’s government to collapse
in February 1979. Khomeini returned from France and, on February 11, 1979,
declared an Islamic Republic of Iran, as enshrined in the constitution that was
adopted in a public referendum in December 1979 (and amended in 1989). Khomeini
was strongly anti-West and particularly anti-U.S., and relations between the United
States and the Islamic Republic turned hostile even before the November 4, 1979,
seizure of the U.S. Embassy by pro-Khomeini radicals.
Regime Stability, Human Rights,
and Recent Elections
About a decade after founding the Islamic republic, Ayatollah Ruhollah
Khomeini died on June 3, 1989. The regime he established appears relatively stable,
despite internal schisms, occasional unrest in areas inhabited by minorities, and
substantial unpopularity among intellectuals, students, educated elites, and many
women. Upon his death, one of his disciples, Ayatollah Ali Khamene’i, a two term
president (1981-1989), was selected Supreme Leader by an “Assembly of Experts”
(an elected body).1 The fourth election for the Assembly of Experts, which is
empowered to oversee the work of the Supreme Leader and replace him if necessary,
as well as to amend the constitution, was held on December 15, 2006. After that
election, Akbar Hashemi-Rafsanjani, still a major figure having served two terms as
president himself (1989-1997), was elected deputy chief of the Assembly of Experts,
positioning him for elevation to leader following the August 2007 death of the
existing chief, Ayatollah Ali Meshkini. Rafsanjani was voted head of the Assembly
of Experts on September 4, 2007, defeating the harder line Ayatollah Ahmad Jannati.
Khamene’i has vast formal powers as Supreme Leader — he is Commander in
Chief of the armed forces, appoint commanders, and has a representative on the
highest national security body, the Supreme National Security Council, composed of
top military and civilian security officials. The Supreme Leader appoints half of the
twelve-member Council of Guardians;2 and the members of Iran’s Supreme Judicial
Council, but he does not appoint the cabinet, which is named by the President and
confirmed by the Majles (parliament). Headed by Jannati, the conservative-
The Assembly also has the power to amend Iran’s constitution.
The Council of Guardians consists of six Islamic jurists and six secular lawyers. The six
Islamic jurists are appointed by the Supreme Leader. The six lawyers on the Council are
selected by the judiciary but confirmed by the Majles (parliament).
controlled Council of Guardians reviews legislation to ensure it conforms to Islamic
law, and it screens election candidates. Khamene’i also has the power, under the
constitution, to remove the elected President if either the Supreme Judicial Council
or the elected Majles (parliament) say the President should be removed, with cause.
The Supreme Leader also appoints members of the 42-member Expediency Council,
set up in 1988 to resolve legislative disagreements between the Majles (parliament)
and the Council of Guardians. Expediency Council members serve five-year terms.
The Council, appointed most recently in February 2007, is still headed by
Rafsanjani; its executive officer is former Revolutionary Guard commander-in-chief
Table 1. Major Factions and Personalities
Has all the formal powers but none of the undisputed authority of his
predecessor, founder of the revolution Ayatollah Ruhollah Khomeini.
Widely considered moderate-conservative despite frequent hardline
rhetoric - seeks to challenge U.S. hegemony while avoiding isolating
Iran or provoking military confrontation. Generally supportive of the
business community (bazaaris), and opposes major state intervention
in the economy.
Key strategist of the regime, longtime advocate of “grand bargain” to
resolve all outstanding issues with United States, although on Iran’s
terms. Leads both Expediency Council and Assembly of Experts.
Leads moderate-conservative faction known as Executives of
Construction. Was Majles (parliament) speaker during 1981-89 and
President 1989-1997. One of Iran’s richest men, family owns large
share of Iran’s total pistachio nut production.
Leads faction of younger, harder line conservatives associated with
Revolutionary Guard, revolutionary institutions, and provincial
governments, who comprise much of his cabinet. Generally supports
state control of the economy, subsidies, and social welfare programs
for lower classes. Particularly popular in rural areas.
Relative by marriage of Khamene’i, controls largest conservative
faction in the Majles. Associated with faction known as “Builders of
Islamic Iran” which supports Ahmadinejad, but has sometimes
challenged Ahmadinejad’s nominees and budget proposals.
Former state broadcasting head, was head of Supreme National
Security Council and is chief nuclear negotiator until October 2007
resignation. Considered hardline but politically close to Khamene’i,
he still serves as Khamene’i’s representative on the Supreme National
Security Council. Sought to avoid U.N. Security Council isolation.
Overwhelming winner for Majles seat from Qom on March 14 and a
top candidate for Majles Speaker.
Former Revolutionary Guard Air Force commander and police chief,
but a moderate-conservative and rival of Ahmadinejad. Supporters
won nine out of 15 seats on Tehran city council in December 2006
elections, defeating Ahmadinejad supporters, propelling him to mayor
With Larijani and former Revolutionary Guard
Commander-in-Chief Mohsen Reza’i, recruited moderate
conservatives for March 14 Majles election. Probable presidential
challenger to Ahmadinejad in 2009.
Founder of the hardline Haqqani school, and spiritual mentor of
Ahmadinejad. Fared poorly in December 2006 elections for 86-seat
“Assembly of Experts” that can amend the constitution, oversee
Khamene’i’s performance, and determine his successor, but did win
a seat. An assertive defender of the powers of the Supreme Leader and
a proponent of an “Islamic state” rather than the current “Islamic
republic,” and advocates isolation from the West. Some believe
Mesbah-Yazdi harbors ambition to replace Khamene’i.
An Ayatollah, has headed the Supreme Judicial Council since 1999.
Ally of Khamene’i and Rafsanjani, has supported repeated
crackdowns on independent media critical of the regime. But, has
cracked down on judicial corruption and on mistreatment of prisoners.
Politically close to Shiite Islamist parties in Iraq and has criticized
Ahmadinejad’s economic policies.
Longtime organization of hardline clerics. Not to be confused with
an organization with almost the same name, below.
Reformist president during 1997-2005. Elected May 1997, with 69%
of the vote; re-elected June 2001with 77%. Rode wave of sentiment
for easing social and political restrictions among students,
intellectuals, youths, and women that seeks reform but not outright
replacement of the Islamic republican regime. Khatemi supporters held
about 70% of the 290 seats in the 2000-2004 Majles. Now heads
International Center for Dialogue Among Civilizations and remains a
public figure in Iran. Visited U.S. in September 2006 to speak at
Harvard and the Washington National Cathedral on “dialogue of
civilizations.” Reformist Mostafa Moin finished fifth in the first round
of presidential elections on June 17, 2005. Reformists regrouped and
won four of fifteen Tehran city council seats in December 2006 local
Reformist grouping once led by Mehdi Karrubi. Karrubi formed a
separated “National Trust” grouping after his 2005 loss in the
Hardline reformists. Originally strong Khatemi supporters, but
turned against him for failing to challenge hardliners, particularly
after July 1999 violent crackdown on student riots, in which four
students were killed. Generally dispersed and repressed under
conservative presidency of Ahmadinejad.
The most prominent and best organized pro-reform grouping. Its
leaders include Khatemi’s brother, Mohammad Reza Khatemi (a
deputy speaker in the 2000-2004 Majles) and Mohsen Mirdamadi.
Composed mainly of left-leaning Iranian figures who support state
control of the economy, but want greater political pluralism and
relaxation of rules on social behavior. Its leader is former Heavy
Industries Minister Behzad Nabavi.
The Rebound of the Conservatives and the 2005 Election of
Mahmoud Ahmadinejad. After suffering several election defeats at the hands
of Mohammad Khatemi and the reformists during 1997-2000 — and losing the grip
on power they held while Khomeini was alive — the conservative camp gained
strength after the February 28, 2003, municipal elections, when reformists largely
boycotted. The conservatives gained additional strength from the February 20, 2004,
Majles elections, in which the Council of Guardians disqualified about 3,600 mostly
reformist candidates, including 87 members of the incumbent Majles, enabling the
conservatives to win about 155 out of the 290 seats on turnout of about 51%. The
Administration and the Senate (S.Res. 304, adopted by unanimous consent on
February 12, 2004) criticized the elections as unfair because of the screening.
As the reformist faction suffered setbacks, Rafsanjani regained prominence and
ran in the June 2005 presidential elections. (He was constitutionally permitted to run
because a third term would not have been consecutive with his previous two terms.)
After the Council of Guardians narrowed the field of candidates to 8 out of the 1,014
persons who filed,3 Rafsanjani had several opponents more hardline than he is —
three had ties to the Revolutionary Guard: Ali Larijani (see Table 1); Mohammad
Baqer Qalibaf (see Table 1); and Tehran mayor Mahmoud Ahmadinejad. In the
June 17, 2005 first round, turnout was about 63% (29.4 million votes out of 46.7
million eligible voters). With 21% and 19.5%, respectively, Rafsanjani and
Ahmadinejad moved to a run-off. Ahmadinejad won a landslide victory in the June
24 runoff, receiving 61.8% to Rafsanjani’s 35.7%. Turnout was 47%, less than the
first round. He took office on August 6, 2005.
Ahmadinejad’s Policies and Political Position. Since taking office,
Ahmadinejad has inflamed world opinion with several anti-Israel statements, the
first of which was stated at an October 26, 2005, Tehran conference entitled “A
World Without Zionism” that “Israel should be wiped off the map” and that
“anybody who recognizes Israel will burn in the fire of the Islamic nations’ fury.”
A similar point of contention was his insistence on the holding of a December 2006
conference in Tehran questioning the Holocaust, a theme he has returned to several
times since, including at a September 2007 speech at Columbia University, a forum
where he also denied that Iran had any homosexuals. A U.N. Security Council
statement and Senate and House resolutions (H.Res. 523 and S.Res. 292), passed in
their respective chambers, condemned the statement. On June 21, 2007, the House
passed H.Con.Res. 21, calling on the United Nations Security Council to charge
Ahmadinejad with violating the 1948 Convention on the Prevention and Punishment
of the Crime of Genocide; the Convention includes “direct and public incitement”
to commit genocide as a punishable offense. More recently, on April 17, 2008,
Ahmadinejad said the September 11 attacks were a “pretext” for the United States
to invade Afghanistan and Iraq.
Some Iranian leaders, both conservative and reformist, and portions of the
population, have been concerned that Ahmadinejad’s defiance of the international
In the 2001 presidential election, the Council permitted 10 out of the 814 registered
community on the nuclear issue were isolating Iran. Several experts believe that
Supreme Leader Khamene’i wants to curb Ahmadinejad’s authority in order to limit
confrontation with the international community. The first decision that strengthened
this view was the October 2005 grant of new governmental supervisory powers to the
Expediency Council. Another was the July 2006 creation of a ten-person advisory
“Foreign Policy Committee” consisting of former defense and foreign ministers. In
January 2007, an Iranian newspaper owned by Khamene’i admonished Ahmadinejad
to remove himself from the nuclear issue. A shakeup in the nuclear negotiating team
in October 2007 represented a further indication of splits in the leadership on that
issue, especially because the former negotiator, Ali Larijani, continues to undertake
official visits representing the Supreme Leader, such as a visit to Egypt in January
2008. In April 2008, Ahmadinejad fired two cabinet ministers, including the Interior
Minister Mustafa Pour-Mohammadi who is close to Khamene’i.
Ahmadinejad’s ties to the Revolutionary Guard and other revolutionary institutions,
as well as his ties to the emerging new generation of senior leaders, likely positions
him to weather criticism from more senior leaders.
March 2008 Majles Elections.
The December 15, 2006, municipal
council and Assembly of Experts elections led experts to believe that proAhmadinejad candidates would be on the defensive in the March 14, 2008 Majles
elections. In the municipal elections, his supporters won only 3 out of the 15 seats
on the Tehran city council, with similar results in other major cities. Ahmadinejad’s
political standing appeared further undermined by the June 2007 rationing of
gasoline — a move intended to curb consumption that forces Iran to import refined
gasoline. The rationing harmed poorer Iranians in the urban areas who sometimes
use their cars as unofficial taxis, although it did reduce dependence on imported
gasoline, according to industry experts. Some protests took place, including attacks
on gas stations, although the unrest eased when the government offered to hand out
six months worth of gas rations in advance. In addition, some Iranians received a
windfall by selling excess ration coupons to other Iranians. The Oil Minister
resigned in August 2007, probably because of the unpopularity of the program
among some. In January 2008, the Supreme Leader ordered Ahmadinejad to
implement Majles legislation requiring the government to give natural gas to remote
villages hard hit by cold weather.
Maneuvering increased in advance of the Majles elections and presidential
elections in March 2009, in which Ahmadinejad is expected to run for a second term.
About 7,600 persons filed to run for the 290 total seats, of which 30 are in Tehran.
Of these, about 2,000 mostly reformist candidates, including 103 Majles incumbents,
were disqualified by the Council of Guardians. The outcome is in the table below,
and a key indicator of political strength will be whether or not Ali Larijani, leader of
the “moderate-conservative” faction, is selected Majles Speaker.
Table 2. Factions in the Eighth Majles (Elected March 14 - April
Pro-Ahmadinejad Conservatives (United Front of Principalists)
Anti-Ahmadinejad Conservatives (Coalition of Principalists)
Reformists (39 seats in eighth Majles)
Seats annulled or voided
Ahmadinejad has tried to solidify his position with the lower classes and rural
votes by raising some wages and lowering interest rates for poorer borrowers,
cancelling some debts of farmers, and increasing social welfare payments and
subsidies. Some analysts believe these moves have backfired, to some extent, by
causing increased inflation, but rural Iranians see him as attentive to their economic
plight. The Supreme Leader is said by press reports to be increasingly critical, in
private, of Ahmadinejad’s economic performance, particularly the increasing
inflation. Ahmadinejad apparently believes that his distributive policies can still be
supported by high oil prices. The relative health of Iran’s budget is helping Iran
minimize the effects of international sanctions resulting from Iran’s nuclear
defiance, although some business owners say the difficulty obtaining credit from
foreign banks is hurting their ability to operate. Still, Ahmadinejad has not moved
to correct economic structural imbalances, such as the dependence on oil revenues,
which account for about 20% of Iran’s gross domestic product (GDP), and its
extensive imports of refined gasoline. Major economic sectors or markets are
controlled by the quasi-statal “foundations” (bonyads), run by powerful former
officials, and there are special trading privileges for them and the bazaar merchants,
a key constituency for some conservatives. The same privileges reportedly apply to
businesses run by the Revolutionary Guard, as discussed below. As an indication
of his relative unpopularity with well educated Iranians, students protested
Ahmadinejad during a speech at Tehran’s Amir Kabir University in November 2006.
Other student protests against him took place on October 8, 2007, and since.
First non-cleric to be president of the Islamic republic since the assassination of then
president Mohammad Ali Rajai in August 1981. About 52, he campaigned as a “man of
the people,” the son of a blacksmith who lives in modest circumstances, who would
promote the interests of the poor and return government to the principles of the Islamic
revolution during the time of Ayatollah Khomeini. His official biography says he served
with the “special forces” of the Revolutionary Guard, and he served subsequently (late
1980s) as a deputy provincial governor. A part of the “Isargaran” faction composed of
former Guard and Basij (volunteer popular forces) leaders and other hardliners. U.S.
intelligence reportedly determined he was not, as was thought by some, one of the holders
of the 52 American hostages during November 1979-January 1981. Other accounts say
Ahmadinejad believes his mission is to prepare for the return of the 12th “Hidden” Imam,
whose return from occultation would, according to Twelver Shiite doctrine, be
accompanied by the establishment of Islam as the global religion. In an October 2006
address, Ahmadinejad said, “I have a connection with God.” For more information, see
CRS Report RS22569, Iran: Profile and Statements of President Mahmoud Ahmadinejad,
by Hussein Hassan.
Table 3. Selected Economic Indicators
4.3% ( 2006 est.)
Per Capita Income
$8,100/yr purchasing power parity
Proven Oil Reserves
135 billion barrels (highest after Russia and Canada)
4.1 million barrels per day (mbd)/ 2.4 mbd exports. Exports could shrink
to zero by 2015-2020 due to accelerating domestic consumption.
China — 300,00 barrels per day (bpd); about 4% of China’s oil imports;
Japan — 600,000 bpd, about 12% of oil imports; other Asia (mainly
South Korea) — 450,000 bpd; Italy — 300,000 bpd; France — 210,000
bpd; Netherlands 40,000 bpd; other Europe — 200,000 bpd; India —
150,000 bpd (10% of its oil imports; Africa — 200,000 bpd. Turkey —
gas: 8.6 billion cubic meters/yr
Imports were $5 billion value per year in 2006, but now about $4 billion
per year after rationing. 60% is supplied by European oil trader Vitol,
(other traders include Russia’s Lukoil). Direct suppliers include
refineries in: India, Kuwait, UAE, Turkey, Venezuela, Singapore,
Netherlands, China, Turkmenistan, Azerbaijan. Iran planning at least
eight new or upgrade refinery projects to expand capacity to about 3
million barrels per day from 1.5 mbd.
Japan ($9.9 billion); China ($9.2 billion); Turkey ($5.1 billion); Italy
($4.45 billion); South Korea ($4 billion); Netherlands ($3.2 billion);
France ($2.7 billion); South Africa ($2.7 billion); Spain ($2.3 billion);
Greece ($2 billion)
Major Imports From
Germany ($5.6 billion); China ($5 billion); UAE ($4 billion); S. Korea
($2.9 billion); France ($2.6 billion); Italy ($2.5 billion); Russia ($1.7
billion); India ($1.6 billion); Brazil ($1.3 billion); Japan ($1.3 billion).
Germany $715 million, down from $2 billion in 2005; France — $3.8
billion, down from $5.7 billion in 2005.
Renault (France) and Mercedes (Germany)- automobile production in
Karaj, Iran — valued at $370 million; Renault (France), Peugeot (France)
and Volkswagen (Germany) — auto parts production; Turkey — Tehran
airport, hotels; China — shipbuilding on Qeshm Island, aluminum factory
in Shirvan, cement plant in Hamadan; UAE financing Esfahan Steel
Company; India — steel plant, petrochemical plant; S. Korea — steel
plant in Kerman Province; S. Korea and Germany — $1.7 billion to
expand Esfahan refinery.
Trade With U.S.
$242 million (trade is severely restricted by U.S. sanctions). Exports to
U.S. — $157 million (large categories: pomegranate juice, caviar,
pistachio nuts, carpets, medicines, artwork). Imports from U.S. — $85
million (food, medicines, tobacco products).
$19 billion (2005 est.)
2003 (latest available): $136 million grant aid. Biggest donors: Germany
($38 million); Japan ($17 million); France ($9 million).
18%+ (2007), according to Iranian economists.
Source: CIA World Factbook, various press, IMF, Iran Trade Planning Division (2006), press
Human Rights Practices and the Opposition
The regime appears to have a relatively firm grip on power, in part because
Iran’s leaders have taken numerous steps to suppress dissent. However, Iranian
opinion is hard to gauge and even seemingly low level unrest has the potential to
spiral into a potential threat to the regime. Successive U.S. administrations have not
generally considered Iran’s human rights practices as a strategic threat to U.S.
interests, but the Bush Administration has highlighted Iran’s human rights record in
order to build international consensus to pressure Iran. The State Department’s
human rights report for 2007, released March 11, 2008, said Iran’s already poor
human rights record “worsened” during the year – a formulation similar to that used
in the report for 2006. The latest human rights report, and the 2007 State
Department “religious freedom” report (released September 14, 2007), cites Iran for
widespread serious abuses, including unjust executions, politically motivated
abductions by security forces, torture, arbitrary arrest and detention, and arrests of
women’s rights activists.
Table 4. Human Rights Practices and Dissent4
Regime Practice/Recent Developments
Persians are about 51% of the population, and Azeris (a Turkic people) are about
24%. Kurds are about 7% of the population, and about 3% are Arab. Of religions,
Shiite Muslims are about 90% of the Muslim population and Sunnis are about
10%. About 2% of the population is non-Muslim, including Christians,
Zoroastrians (an ancient religion in what is now Iran), Jewish, and Baha’i.
Since 2000, judicial hardliners have closed hundreds of reformist newspapers,
although many have tended to reopen under new names. During March 26 - March
2007, authorities banned more than 20 publications. Iran also has blocked
hundreds of pro-reform websites. During 2007, regime increased controls over use
of the internet because citizens have increasingly turned to that medium as a source
for news and political debate. In August 2007, the government closed a major
reformist daily newspaper, Shargh, which had previously been suspended
repeatedly. In February 2008, the regime closed the main women’s magazine,
Zanan (women in Farsi) for allegedly highlighting gender inequality in Islamic law.
Unions are technically not independent, but under a state-controlled “Workers’
House” umbrella. However, some activists show independence and, in 2007, the
regime arrested labor activists for teachers’ associations, bus drivers’unions, and
a bakery workers’ union. The regime reportedly also dissolved student unions and
replaced them with regime loyalists following student criticism of Ahmadinejad.
H.Con.Res. 203 condemns Iran’s July 2007 arrests of several union officers.
Sources: State Department reports on human rights and on religious freedom.
Regime Practice/Recent Developments
Regime strictly enforcing requirement that women fully cover themselves in public,
generally with a garment called a chador, including through detentions. In March
2007, the regime arrested 31 women activists who were protesting the arrest in
2006 of several other women’s rights activists; all but 3 of the 31 were released by
March 9. In May 2006, the Majles passed a bill calling for increased public
awareness of Islamic dress, an apparent attempt to persuade women not to violate
the dress code or wear Western fashion. The bill did not contain a requirement
that members of Iran’s minority groups wear badges or distinctive clothing. In
April 2006, Ahmadinejad directed that women be allowed to attend soccer
matches, but the Supreme Leader reversed that move. Women can vote and run
in parliamentary elections, but their candidacies for president have routinely been
barred by the Council of Guardians. Iranian women can drive, and many work
outside the home, including owning and running their own businesses. There are
nine women in the 290-seat Majles, down from 13 in the previous Majles.
Each year since 1999, the State Department religious freedom report has named
Iran as a “Country of Particular Concern” under the International Religious
Freedom Act, and continued deterioration in Iran’s practices on this issue was
noted in the International Religious Freedom report for 2007. (No sanctions have
been added because of this designation, on the grounds that Iran is already subject
to extensive U.S. sanctions.)
Iran repeatedly cited for repression of the Baha’i community, which Iran’s Shiite
Muslim clergy views as a heretical sect. In the 1990s, several Baha’is were
executed for apostasy (Bahman Samandari in 1992; Musa Talibi in 1996; and
Ruhollah Ruhani in 1998). Another, Dhabihullah Mahrami, was in custody since
1995 and died of unknown causes in prison in December 2005. In February 2000,
Iran’s Supreme Court set aside the death sentences against three other Baha’is. A
wave of Baha’i arrests occurred in May 2006 and two-thirds of university students
of the Baha’i faith were expelled from university in 2007. Several congressional
resolutions have condemned Iran’s treatment of the Baha’is, including in 1982,
1984, 1988, 1990, 1992, 1994, 1996, 2000, and 2006. In the 110th Congress,
H.Res. 1008 condemns Iran’s treatment of the Baha’is.
Along with Christians, a “recognized minority,” with one seat in the Majles, the
30,000-member Jewish community (the largest in the Middle East aside from
Israel) enjoys somewhat more freedoms than Jewish communities in several other
Muslim states. However, in practice the freedom of Iranian Jews to practice their
religion is limited, and Iranian Jews remain reluctant to speak out for fear of
reprisals. During 1993-1998, Iran executed five Jews allegedly spying for Israel.
In June 1999, Iran arrested 13 Jews (mostly teachers, shopkeepers, and butchers)
from the Shiraz area that it said were part of an “espionage ring” for Israel. After
an April-June 2000 trial, ten of the Jews and two Muslims accomplices were
convicted (July 1, 2000), receiving sentences ranging from 4 to 13 years. An
appeals panel reduced the sentences, and all were released by April 2003.
The State Department reports note other discrimination against Sufis and Sunni
Muslims, although abuses against Sunnis could reflect that minority ethnicities,
including Kurds, are mostly Sunnis. In addition, the regime repressed 2006 unrest
among the minority Azeri population, as well as Arabs in the southern province of
The June 12, 2007 (latest annual), State Department “Trafficking in Persons”
report continues to place Iran in Tier 3 (worst level) for failing to take action to
prevent trafficking in persons. Girls purportedly are trafficked for sexual
exploitation within Iran and from Iran to Turkey, Pakistan, and the Gulf states.
Prominent Dissidents. The regime is highly concerned about dissidents
who previously held senior regime positions. These dissidents are popular inside
Iran, but their ascendancy, were it to occur, might not fundamentally alter Tehran’s
foreign or defense policies. One such figure, Ayatollah Hossein Ali Montazeri, was
released in January 2003 from several years of house arrest, but he remains under
virtual house arrest. He had been Khomeini’s designated successor until 1989, when
Khomeini dismissed him for allegedly protecting intellectuals and other opponents
of clerical rule. Another senior cleric who takes similar positions, Ayatollah
Mohammad Kazemeni Boroujerdi, was arrested on October 8, 2006. Dissidents
with similar views include theoretician Abd al-Karim Soroush, former Interior
Minister Abdollah Nuri, and former hostage-holder Abbas Abdi, who had been
arrested in 2002 for publishing an opinion poll purporting to show that the Iranian
public favors restoring relations with the United States.
Other, less prominent dissidents have sought to challenge or expose the
regime’s practices from inside Iran. Journalist Akbar Ganji conducted hunger
strikes to protest regime oppression; he was released on schedule on March 18, 2006
after sentencing in 2001 to six years in prison for alleging high-level involvement in
a series of murders of Iranian dissident intellectuals that the regime had blamed on
“rogue agents” in the security apparatus. The Bush Administration issued a
statement calling for his release on July 12, 2005. Canadian journalist (of Iranian
origin) Zahra Kazemi died in detention in 2003, allegedly of beating. She had been
detained in July 2003 for filming outside Tehran’s Evin prison. An intelligence
agent who allegedly conducted the beating was acquitted on July 25, 2004, prompting
accusations that the investigation and trial were unfair. The prosecutor in her case,
Saeed Mortazavi, allegedly responsible for numerous human rights abuses, was Iran’s
representative to the inaugural meeting of the U.N. Human Rights Council.
Exile Groups: People’s Mojahedin Organization of Iran (PMOI). Of
the groups seeking to replace the regime outright, one of the best known is the
People’s Mojahedin Organization of Iran (PMOI).5 Secular and left-leaning, it was
formed in the 1960s to try to overthrow the Shah of Iran and advocated Marxism
blended with Islamic tenets. It allied with pro-Khomeini forces during the Islamic
revolution and supported the November 1979 takeover of the U.S. Embassy in
Tehran but was later driven into exile. Even though it is an opponent of Tehran,
since the late 1980s the State Department has refused contact with the PMOI and its
umbrella organization, the National Council of Resistance (NCR). The State
Department designated the PMOI as a foreign terrorist organization (FTO) in October
19976 and the NCR was named as an alias of the PMOI in the October 1999 redesignation. The FTO designation was prompted by PMOI attacks in Iran that
sometimes kill or injure civilians — although the group does not appear to purposely
target civilians. In August 14, 2003, the State Department designated the NCR
offices in the United States an alias of the PMOI, and NCR and Justice Department
authorities closed down those offices. In June 2003, France arrested about 170
Other names by which this group is known is the Mojahedin-e-Khalq Organization (MEK
or MKO) and the National Council of Resistance (NCR).
The designation was made under the authority of the Anti-Terrorism and Effective Death
Penalty Act of 1996 (P.L. 104-132).
PMOI members, including its co-leader Maryam Rajavi (wife of PMOI founder
Masoud Rajavi, whereabouts unknown); she was released and remains based in
France, and is occasionally received by European parliamentarians and other
politicians. In December 2006, a European Union (EU) court struck down EU’s
freezing of the PMOI’s assets in Europe.
The State Department report on international terrorism for 2007 asserts that the
organization — and not just a radical element of the organization as the group asserts
— was responsible for the alleged killing of seven American defense advisers to the
former Shah in 1975-1976. The State Department report again notes the group’s
promotion of women in its ranks and again emphasizes the group’s “cult-like”
character, including indoctrination of its members and separation of family
members, including children, from its activists.
The group’s alliance with Saddam Hussein’s regime in the 1980s and 1990s
contributed to the U.S. shunning of the organization. U.S. forces attacked PMOI
military installations in Iraq during Operation Iraqi Freedom and negotiated a
ceasefire with PMOI military elements in Iraq, requiring the approximately 3,350
PMOI fighters to remain confined to their Ashraf camp near the border with Iran. Its
weaponry is in storage, guarded by U.S. and now Bulgarian military personnel.
Another 350 PMOI fighters have taken advantage of an arrangement between Iran
and the ICRC for them to return home if they disavow further PMOI activities.
Another 200 are in the process of leaving Ashraf if a host country could be found.
Press reports say that some Administration officials want the group removed
from the FTO list and want a U.S. alliance with it against the Tehran regime.7 In
November 2002, a letter signed by about 150 House Members was released, asking
the President to remove the PMOI from the FTO list.8 Those advocating that policy
take heart from the U.S. decision in July 2004 to grant the Ashraf detainees
“protected persons” status under the 4th Geneva Convention, meaning they will not
be extradited to Tehran or forcibly expelled as long as U.S. forces remain in Iraq. At
the same time, some Iraqi leaders from pro-Iranian factions, including Prime Minister
Nuri al-Maliki, have said that the group would be expelled.
The Son of the Former Shah. Some Iranian exiles, as well as some elites
still in Iran, want to replace the regime with a constitutional monarchy led by Reza
Pahlavi, the U.S.-based son of the late former Shah and a U.S.-trained combat pilot.
However, he does not appear to have large-scale support inside Iran. In January 2001,
the Shah’s son, who is about 50 years old, ended a long period of inactivity by giving
a speech in Washington, DC, calling for unity in the opposition and the institution
of a constitutional monarchy and democracy in Iran. He has since broadcast messages
Cloud, David. “U.S., Iran Hit Bumpy Terrain on Road to Rapprochement.” Wall Street
Journal, May 12, 2003.
“Removal of Iran Group From Terror List Sought.” Washington Post, November 23, 2002.
into Iran from Iranian exile-run stations in California.9 His political adviser is MITeducated Shariar Ahy.
Other Exiled Activists. Numerous other Iranians in exile want to see a
change of regime in Tehran. Many of them are based in California, where there is a
large Iranian-American community, and there are about 25 small-scale radio or
television stations that broadcast into Iran. Some organizations, such as The National
Iranian American Council (NIAC), are not necessarily seeking influence inside Iran
but generally try to promote discussion of U.S. policy toward Iran. Some wellknown U.S.-based activists include The Abdorrahman Boroumand Foundation; The
Iran Human Rights Documentation Center (IHDC). The center is run by persons
mostly of Iranian origin and affiliated with Yale University’s Griffin Center for
Health and Human Rights. It is documenting abuses in Iran, using contacts with
Iranians in Iran ; and Amir Abbas Fakravar, a leader of the student dissidents who
emerged in the July 1999 anti-regime student riots. A former medical student, he
served time in Iranian prisons.
No U.S. assistance has been provided to exile-run stations. The conference
report on the FY2006 regular foreign aid appropriations, P.L. 109-102, stated the
sense of Congress that the Administration consider such financial support.
Iran’s Strategic Capabilities and
Weapons of Mass Destruction Programs
The Administration’s “National Security Strategy” document released March
16, 2006 — which continues to represent a prevailing and perhaps even growing
Administration view — says the United States “may face no greater challenge from
a single country than from Iran.” The perception is based largely on Iran’s growing
weapons of mass destruction (WMD) programs and its ability to exert influence in
the region counter to U.S. objectives.10 Iran’s national security goals are to protect
itself from foreign, primarily U.S., interference or attack, and to be able to protect
and defend the Shiite Islamic world that Iran sees as oppressed by the more
numerous and dominant Sunnis. Iran’s advanced and other conventional weaponry
is deemed to pose a less significant threat than its WMD, but Iran’s forces could still,
in some cases, threaten U.S. forces and allies in the Gulf region, as discussed later.
Conventional Military/Revolutionary Guard/Qods Force
Iran’s armed forces are extensive but widely considered relatively combat
ineffective against a well-trained, sophisticated military such as that of the United
States. Iran’s forces are believed to be sufficiently effective to deter or fend off
conventional threats from Iran’s weaker neighbors such as post-war Iraq,
Turkmenistan, Azerbaijan, and Afghanistan but are largely lacking in logistical
Kampeas, Ron. “Iran’s Crown Prince Plots Nonviolent Insurrection from Suburban
Washington.” Associated Press, August 26, 2002.
ability to project power much beyond Iran’s borders or to confront militarily capable
neighbors such as Turkey and Pakistan. Iran’s armed forces have few formal
relationships with foreign militaries, but Iran and India have a “strategic dialogue”
and some Iranian naval officers reportedly are being trained in India. Iran and Turkey
say they will soon sign (April 2008) an agreement to jointly fight terrorism and
secure their joint border. Most other military relationships between Iran and other
countries, such as Russia, Ukraine, Belarus, North Korea, and a few others generally
center on Iranian arms purchases or upgrade contracts.
The Islamic Revolutionary Guard Corps (IRGC),11 which also controls the Basij
(mobilization) volunteer militia that enforces adherence to Islamic customs, is
generally loyal to the hardliners politically and is clearly more politically influential
than is Iran’s regular military, which is larger but was held over from the Shah’s era.
The two forces, the Guard and the regular military, technically report to a Joint
Headquarters. As further evidence of the Guard’s pre-eminence, Chairman of the
Joint Chiefs of Staff Admiral Mike Mullen said on November 29, 2007 that the
IRGC Navy now has responsibility to patrol the entire Persian Gulf, and that the
regular Navy is patrolling the Strait of Hormuz and Gulf of Oman.
In IRGC leadership developments, on September 2, 2007, Khamene’i replaced
Rahim Safavi with Mohammad Ali Jafari as Commander In Chief of the Guard;
Jafari is considered a hardliner against political dissent, but he is believed politically
aligned with Rafsanjani and former Guard chief Mohsen Reza’i, rather than with
Ahmadinejad. In December 2007, Jafari briefly took direct control of the Basij,
which operates from thousands of positions in Iran’s institutions, and indicated he
would increase its role in monitoring and suppressing dissent. Later, the Basij
command was given to senior Guard leader Mohammad Baqr Zolqadr, who had been
serving as deputy Interior Minister, but was dismissed by Ahmadinejad in December
2007. More information on Iran’s military and how it might perform in combat
against the United States is discussed under “military options” later in this paper.
The Guard also has a unit, the Qods (Jerusalem) Force, that operates outside Iran
to assist pro-Iranian movements with weapons, training, and finances. The Guard is
also increasingly involved in Iran’s economy, acting through a network of contracting
businesses it has set up, most notably Ghorb (also called Khatem ol-Anbiya, Persian
for “Seal of the Prophet”). Active duty IRGC senior commanders reportedly serve
on Ghorb’s board of directors. For the role of the Guard/Qods Force in external
activities, see below under “Foreign Policy and Terrorism.”
In the 110th Congress, a provision of H.R. 1400 (passed by the House on
September 25), S. 970, and the conference report on H.R. 4986 (FY2008 defense
authorization bill, P.L. 110-181; Guard-related Senate amendment adopted
September 6 by vote of 76-22) calls for the Revolutionary Guard to be designated a
foreign terrorist organization, or FTO. On October 25, 2007, the Administration
took a somewhat lesser step by naming the Guard, the Ministry of Defense, and
several of the Guard’s commanders and construction firms, as well as several Iranian
For a more extensive discussion of the IRGC, see Katzman, Kenneth. “The Warriors of
Islam: Iran’s Revolutionary Guard,” Westview Press, 1993.
banks, as proliferation entities under Executive Order 13382. The Qods Force of the
Guard, along with Bank Saderat, was named as a “specially designated global
terrorist entity” under Executive Order 13224. Both orders freeze the U.S.-based
assets and prevent U.S. transactions with the named entities, but these entities are
believed to have virtually no U.S.-based assets that could be frozen - the main
penalties of Executive Order 13382 and 13324. The U.S. action might have
substantial effect on the Guard and its business entities if U.S. partner countries and
others adopt similar sanctions.
Table 5. Iran’s Conventional Military Arsenal
(incl. 480 I-Hawk
is about onethird of total
(incl. 25 MiG29 and 30 Su24)
has 3 Kilo
“Qods Forces” of IRGC. Approximately 10,000 - 15,000 total in the Qods Force, which
promotes Iran’s regional and global objectives through advisory support to pro-Iranian
factions in Lebanon, Iraq, Persian Gulf states, Afghanistan, and Central Asia. Also
operates worldwide intelligence network to give Iran possible terrorist option and to assist
in procurement of WMD-related technology.
Ship-launched cruise missiles. Iran is able to arm its patrol boats with Chinese-made C802 cruise missiles. Iran also has Chinese-supplied HY-2 Seerseekers emplaced along
Midget Subs. Iran is said to possess several, possibly purchased assembled or in kit form
from North Korea. Iran claimed on Nov. 29, 2007 to have produced a new small sub
equipped with sonar-evading technology.
Anti-aircraft missile systems. Russia has sold and now delivered to Iran (January 2007)
30 anti-aircraft missile systems (Tor M1), worth over $1 billion. In September 2006,
Ukraine agreed to sell Iran the Kolchuga radar system that can improve Iran’s detection of
combat aircraft. In December 2007, Russia agreed to sell the even more capable SA-20
air defense system, purportedly modeled after the U.S. Patriot system, which U.S. officials
say would greatly enhance Iran’s air defense capability.
Nuclear Program and Related Sanctions
Throughout 2007, Iran and the international community appeared to be
approaching a crisis over Iran’s nuclear program as many governments asserted their
belief that Iran is attempting to achieve a nuclear weapons capability. U.S. policy,
as stated repeatedly by President Bush, Vice President Cheney, and other senior
officials is that a nuclear Iran is unacceptable and that U.S. policy is to prevent that
International scrutiny of Iran’s nuclear program intensified after 2002, when
Iran confirmed PMOI allegations that it was building two facilities that could be
used to produce fissile material useful for a nuclear weapon: a uranium enrichment
facility at Natanz and a heavy water production plant at Arak,12 considered ideal for
the production of plutonium. It was revealed in 2003 that the founder of Pakistan’s
nuclear weapons program, Abdul Qadeer (A.Q.) Khan, sold Iran nuclear technology
and designs.13 The International Atomic Energy Agency (IAEA), despite intensified
inspections of Iran’s facilities since late 2002, has said it cannot verify that Iran’s
current program is purely peaceful, and several of its reports (January 31, 2006, and
February 27, 2006) say it found documents that show a possible “military nuclear
dimension” to Iran’s program. IAEA reports, including the February 22, 2008
report, refer to a “Green Salt” project of testing of relevant high explosives and of
missile re-entry vehicles. A National Intelligence Estimate (unclassified key
judgments), released December 3, 2007,14 cast doubt on the most alarming
interpretations of Iran’s program (as well as on that of a previous NIE issued in May
2005), saying that Iran had — but in late 2003 halted — a covert nuclear weapons
program as a result of increased international scrutiny and pressure.
Iranian leaders said the NIE validates Iran’s position that its Iran’s nuclear
program is for electricity generation. Iran says its oil resources are finite and that
enriching uranium to make nuclear fuel is allowed under the 1968 Nuclear NonProliferation Treaty,15 to which Iran is a party. An analysis was published by the
National Academy of Sciences challenging the U.S. view that Iran is petroleum rich
and therefore has no need for a nuclear power program. According to the analysis,
the relative lack of investment is causing a rapid decline in Iranian oil exports to the
point where Iran might have negligible exports of oil by 2015.16 U.S. officials say that
Iran’s vast gas resources make a nuclear energy program unnecessary.
In November 2006, the IAEA, at U.S. urging, declined to provide technical assistance to
the Arak facility on the grounds that it was likely for proliferation purposes.
Lancaster, John and Kamran Khan. “Pakistanis Say Nuclear Scientists Aided Iran.”
Washington Post, January 24, 2004.
Text at [http://www.dni.gov/press_releases/20071203_release.pdf]
For Iran’s arguments about its program, see Iranian paid advertisement “An Unnecessary
Crisis — Setting the Record Straight About Iran’s Nuclear Program,” in the New York
Times, November 18, 2005. P. A11.
Stern, Roger. “The Iranian Petroleum Crisis and United States National Security,”
Proceedings of the National Academy of Sciences of the United States of America.
December 26, 2006.
Despite Iran’s professions that WMD is inconsistent with its ideology, the NIE
says it is likely that Iran will eventually try to develop a nuclear weapon. Iran’s
factions appear to agree on the utility of a nuclear weapons capability as a means of
ending its perceived historic vulnerability to U.S. domination and a symbol of Iran
as a major nation. Others believe Iran sees nuclear weapons as instruments to
dominate the Persian Gulf, and these experts believe an Iranian nuclear weapon
would dramatically shift the balance of power in the Gulf/Middle East in Iran’s favor.
There are also fears Iran might transfer WMD to extremist groups or countries.
Even before the release of the NIE, there had been disagreement over the
urgency of the issue. The Administration’s key concern is that Iran is expanding its
ability to produce enriched uranium. The NIE assessed that Iran will likely be
technically capable of producing enough highly enriched uranium for a nuclear
weapon some time during 2010-2015. IAEA Director El Baradei said on April 18,
2008 that Iran is now running about 3,300 centrifuges, considered a threshold number
that could allow Iran to enrich enough uranium for a nuclear weapon. However,
IAEA reports have said Iran had enriched uranium to only about 4% (90% is needed
for a weapon), and that Iran still faces significant bottlenecks in enrichment. El
Baradei’s comments came about one week after Ahmadinejad said that Iran had
begun installing an additional 6,000 centrifuges at its Natanz site. The February 22,
2008, IAEA report added, and press photos of an Ahmadinejad visit to Natanz in
April 2008 show, that Iran is also testing a new generation of centrifuge design (“ IR2”). The IAEA report added that Iran had not addressed U.S. allegations that it had,
prior to 2003, a nuclear weapons effort, but Iran reportedly agreed in April 2008 to
address IAEA concerns on this issue.
At the same time, concerns continue over Russia’s work, under a January 1995
contract, on an $800 million nuclear power plant at Bushehr. Russia insisted that
Iran sign an agreement under which Russia would provide reprocess the plant’s
spent nuclear material; that agreement was signed on February 28, 2005. The plant
was expected to become operational in 2007, but Russia had insisted (including
during President Putin’s visit to Iran in October 2007) that Iran first comply with
the U.N. resolutions discussed below. In November 2007, perhaps to signal
disagreement with further pressure on Iran, Russia began taking steps to fuel the
reactor and, on December 17, shortly after the release of the NIE, began shipping the
fuel. Iran has received at least seven fuel shipments, virtually all that is needed to
become operational by June 2008. Iran says the fuel it is producing will be used for
a second reactor planned for the Darkhovin area. As part of Russia’s work with
Iran, Russia has trained about 700 Iranian nuclear engineers.
Diplomatic Efforts in 2003 and 2004/Paris Agreement. In 2003,
France, Britain, and Germany (the “EU-3”) opened a separate diplomatic track to
curb Iran’s program. On October 21, 2003, Iran pledged, in return for peaceful
nuclear technology, to (1) fully disclose its past nuclear activities, (2) to sign and
ratify the “Additional Protocol” to the NPT (allowing for enhanced inspections), and
(3) to suspend uranium enrichment activities. Iran signed the Additional Protocol on
December 18, 2003, although the Majles has not ratified it. Iran abrogated the
agreement after the IAEA reports of November 10, 2003, and February 24, 2004,
stated that Iran had violated its NPT reporting obligations over an 18-year period.
(The NIE released on December 3, 2007 appears to indicate that it was in conjunction
with this October 2003 agreement with the EU-3 that Iran might have halted its
covert nuclear weapons work.)
In the face of the U.S. threat to push for Security Council action, the EU-3 and
Iran reached a more specific November 14, 2004, “Paris Agreement,” committing
Iran to suspend uranium enrichment (which it did as of November 22, 2004) in
exchange for renewed trade talks and other aid.17 EU-3 — Iran negotiations on a
permanent nuclear pact began on December 13, 2004, and related talks on a trade and
cooperation accord (TCA) began in January 2005. On March 11, 2005, the Bush
Administration announced it would support, but not join, the EU-3 talks by offering
to drop U.S. objections to Iran’s application to the World Trade Organization (which
it did in May 2005) and to consider sales of U.S. civilian aircraft parts to Iran.
Reference to the Security Council. The Paris Agreement broke down
just after Ahmadinejad’s election, when Iran rejected as insufficient an EU-3 offer
to assist Iran with peaceful uses of nuclear energy and provide limited security
guarantees in exchange for Iran’s (1) permanently ending uranium enrichment; (2)
dismantling the Arak heavy water reactor;18 (3) agreement to no-notice nuclear
inspections; and (4) a pledge not to leave the NPT (which has a legal exit clause).
On August 8, 2005, Iran broke the IAEA seals on its uranium “conversion” (one step
before enrichment) facility at Esfahan and began conversion. On September 24, 2005,
the IAEA Board voted to declare Iran in non-compliance with the NPT and to refer
the issue to the Security Council,19 but no time frame was set for the referral. Iran did
not cease uranium conversion. The Administration supported a November 2005
Russian proposal to Iran to establish a facility in Russia at which Iranian uranium
would be enriched, thereby enabling Iran to claim it had retained its right to enrich.
Iran did not accept the proposal.
In January 2006, Iran resumed enrichment activities, and on February 4, 2006,
the IAEA board voted 27-320 for a resolution to report Iran to the U.N. Security
Council. On March 29, 2006, the Council agreed on a Council presidency
“statement” setting a 30-day time limit (April 28, 2006) for Iran to cease
For text of the agreement, see [http://www.iaea.org/NewsCenter/Focus/IaeaIran/eu_iran
In November 2006, the IAEA, at U.S. urging, declined to provide technical assistance to
the Arak facility on the grounds that it was likely for proliferation purposes.
Voting in favor: United States, Australia, Britain, France, Germany, Canada, Argentina,
Belgium, Ghana, Ecuador, Hungary, Italy, Netherlands, Poland, Portugal, Sweden, Slovakia,
Japan, Peru, Singapore, South Korea, India. Against: Venezuela. Abstaining: Pakistan,
Algeria, Yemen, Brazil, China, Mexico, Nigeria, Russia, South Africa, Sri Lanka, Tunisia,
Voting no: Cuba, Syria, Venezuela. Abstaining: Algeria, Belarus, Indonesia, Libya, South
Establishment of “P5+1” Contact Group/June 2006 Incentive
Package. Because of opposition from Russia and China to immediately punishing
Iran, as well as to build support for possible international or multilateral sanctions,
the Administration offered on May 31, 2006, to join the nuclear talks with Iran if Iran
first suspends its uranium enrichment. Such talks would center on a package of
incentives and possible sanctions that were agreed to on June 1, 2006, by a newly
formed group of negotiating nations, the so-called “Permanent Five Plus 1” (P5+1:
United States, Russia, China, France, Britain, and Germany). EU representative
Javier Solana formally presented the offer to Iran on June 6, 2006. (The incentive
package is formally outlined in Annex I to U.N. Resolution 1747, see below.)
Negotiations on an EU-Iran trade agreements and acceptance of Iran
into the World Trade Organization.
Easing of U.S. sanctions to permit sales to Iran of commercial
aircraft or aircraft parts.
Sale to Iran of a light-water nuclear reactor and guarantees of nuclear
fuel (including a five year buffer stock of fuel), and possible sales of
light-water research reactors for medicine and agriculture
An “energy partnership” between Iran and the EU, including help for
Iran to modernize its oil and gas sector and to build export pipelines.
Support for a regional security forum for the Persian Gulf, and
support for the objective of a WMD free zone for the Middle East.
The possibility of eventually allowing Iran to resume uranium
enrichment if it complies with all outstanding IAEA requirements
and can prove that its nuclear program is purely for peaceful
Denial of visas for Iranians involved in Iran’s nuclear program and
for high-ranking Iranian officials.
A freeze of assets of Iranian officials and institutions; a freeze of
Iran’s assets abroad; and a ban on some financial transactions.
A ban on sales of advanced technology and of arms to Iran; and a
ban on sales to Iran of gasoline and other refined oil products.
An end to support for Iran’s application to the WTO.
One source purports to have obtained the contents of the package from ABC News:
Resolution 1696. Iran did not immediately give a formal response to the
incentive offer. On July 31, 2006, the Security Council voted 14-1 (Qatar voting no)
for U.N. Security Council Resolution 1696, giving Iran until August 31, 2006, to
fulfill the longstanding IAEA nuclear demands (enrichment suspension, etc).
Purportedly in deference to Russia and China, it was passed under Article 40 of the
U.N. Charter, which makes compliance mandatory, but not under Article 41, which
refers to economic sanctions, or Article 42, which would authorize military action.
It called on U.N. member states not to sell Iran WMD-useful technology.
On August 22, 2006, Iran submitted a formal response to the June 6 offer by the
six powers. The text of Iran’s response was not disclosed, but it reportedly did not
offer to suspend uranium enrichment, instead proposing negotiations on a broader
roadmap of engagement with the West — and sought provision of guarantees that the
United States would not seek regime change.
Resolution 1737. With the backing of the P5+1, chief EU negotiator Javier
Solana negotiated with Iran to try arrange a temporary enrichment suspension. A
round of talks, in Berlin, concluded on September 28, 2006, without agreement.
After almost four months of negotiations, the Security Council agreed to U.N.
Security Council Resolution 1737. It was passed unanimously on December 23,
2006, under Chapter 7, Article 41 of the U.N. Charter. It prohibits sale to Iran — or
financing of such sale — of technology that could contribute to Iran’s uranium
enrichment or heavy-water reprocessing activities. It also required U.N. member
states to freeze the financial assets of 10 named Iranian nuclear and missile firms and
12 persons related to those programs. See Table 8.
The Resolution did not mandate the banning of travel by these personalities, but
called on member states not to admit them. It also provided an exemption, sought by
Russia, for the Bushehr reactor. The EU foreign ministers agreed on February 12,
2007, to freeze the assets of the named entities and to impose broader restrictions on
entities that might later be identified as assisting Iran’s WMD program and to prevent
the training of Iranians in Europe that might contribute to Iran’s programs. U.S.
implementation of the existing Resolutions has reportedly run into some difficulty
because the United States lacks passport numbers and other data to track the assets
or movements of the named Iranian personages.23
Resolution 1747 and Results. Resolution 1737 demanded enrichment
suspension by February 21, 2007. An IAEA report sent to Board member countries
that day said Iran continued its enrichment activities. In London on March 8, 2007,
the P5+1 began formal discussions on a new Chapter 7 Security Council resolution
that would presumably impose additional sanctions on Iran, quickly reaching
agreement. On March 24, 2007, Resolution 1747 was adopted unanimously, which:
Weisman, Steven. Lack of ID Data Impedes U.N. Sanctions Against Iran. New York
Times, September 17, 2007.
added 10 military/WMD-related entities; 3 Revolutionary Guard
entities; 8 persons, and 7 Revolutionary Guard commanders listed
in Table 8. Bank Sepah is among the entities sanctioned.
banned arms transfers by Iran, a provision targeted at Iran’s alleged
arms supplies to Lebanese Hezbollah and to Shiite militias in Iraq.
required all countries to report to the United Nations when the
sanctioned Iranian persons travel to their territories.
called for (but did not require) countries to avoid selling arms or
dual use items to Iran and to avoid any new lending or grants to Iran.
Resolution 1747 demanded Iran suspend enrichment by May 24, 2007. The
IAEA report of May 23, 2007 stated that Iran did not comply, but the pressure of the
Resolutions appeared to be altering Iran’s nuclear decisionmaking. In August 2007,
Iran agreed to sign with the IAEA an agreement to clear up outstanding questions on
Iran’s past nuclear activities by the end of 2007, although the agreement was
criticized by the United States as not central to preventing Iran from achieving a
nuclear capability. On that basis, the P5+1 grouping — along with the EU itself —
agreed to a joint statement on September 28, 2007 (reiterated in November 2007), in
which all the undersigned, including Russia and China, said they would negotiate
another sanctions resolution if there is no progress reported by the IAEA in
implementing the August 2007 agreement or in separate continued negotiations with
EU representative Javier Solana. The IAEA report was circulated on November
15, 2007, saying that Iran had provided additional information on its past programs,
but the report indicated that Iran had become less transparent on its current
On his separate diplomatic track, Solana bluntly
characterized a November 30, 2007, meeting with new Iranian negotiator Sayid
Jallili as “disappointing,” suggesting no progress whatsoever.
Resolution 1803 and New Incentives. A further sanctions resolution
took many months to negotiate, possibly because the NIE stalled momentum to
further punish Iran, but Resolution 1803 was adopted by a vote of 14-0 (Indonesia
abstaining) on March 3, 2008. The Resolution: (1) bans sales of dual use items
to Iran; (2) authorizes, but does not require, inspections of cargo (carried by Iran Air
Cargo and Islamic Republic of Iran Shipping Line) suspected of shipping WMDrelated goods; (3) imposes a travel ban on five Iranians named in Annex II to the
Resolution and requires reports on international travel by 13 individuals named in
Annex I; (4) calls for, but does not require, countries to prohibit financial transactions
with Iran’s Bank Melli and Bank Saderat; and (5) adds 12 entities to those
sanctioned under Resolution 1737 (requiring asset freezes of these entities).
However, the provisions are less than the United States and Britain had sought
because they do not materially affect civilian trade or investment, but the
Administration nonetheless hailed the Resolution as demonstrating that the
international community remained unified in insisting Iran curb its nuclear program.
Iran reacted defiantly to the passage of 1803.
Resolution 1803 also nodded to those countries that want to resolve the Iran
nuclear issue through negotiations, and led to an Administration shift toward offering
Iran enhanced incentives to induce its cooperation. The Resolution states that
“China, France, Germany, the Russian Federation, the United Kingdom and the
United States are willing to take further concrete measures on exploring an overall
strategy of resolving the Iranian nuclear issue through negotiation on the basis of
their June 2006 proposals.” Suggesting that divisions in the international community
over further punishments is widening, Russia and China blocked a proposed IAEA
resolution, drafted by Britain, France, and Germany on March 5, 2008, to call on the
IAEA to continue its investigations into Iran’s alleged nuclear weapons-related
experiments. The potential for additional sanctions is further discussed in the section
on multilateral and international sanctions later.
Appearing to want to preserve a unified front, while still skeptical that new
incentives would cause Iran to curb its nuclear program, the Bush Administration
agreed to subsequent P5+1 negotiations on reviving and possibly expanding the June
2006 incentive package to induce Iranian cooperation, discussed above. The P5+1
met on April 16, 2008 in Shanghai, China but reportedly failed to agree on alterations
to the June 2006 package. However, at a meeting in London on May 2, 2008, the
powers did agree on a “refreshed” package of incentives to augment those in the June
2006 package. According to press reports (the exact offer was not made public), the
powers included new language, beyond that in the June 2006 proposal, offering
political cooperation with Iran, and enhanced incentives on energy cooperation. Iran
subsequently rejected the new offer as little beyond what was already rejected in
Table 6. Summary of Provisions of U.N. Resolutions on Iran
Nuclear Program (1737, 1747, and 1803)
Require Iran to suspend uranium enrichment
Prohibit transfer to Iran of nuclear, missile, and dual use items to Iran, except for use
in light water reactors
Prohibit Iran from exporting arms or WMD-useful technology
Freeze the assets of 40 named Iranian persons and entities, including Bank Sepah, and
several Iranian front companies
Require that countries exercise restraint with respect to travel of 35 named Iranians
and ban the travel of 5 others
Calls on states not to export arms to Iran or support new business with Iran
Calls for vigilance with respect to the foreign activities of all Iranian banks, particularly
Bank Melli and Bank Saderat
Calls on countries to inspect cargoes carried by Iran Air Cargo and Islamic Republic of
Iran Shipping Lines if there are indications they carry cargo banned for carriage to Iran.
Chemical Weapons, Biological Weapons, and Missiles
Official U.S. reports and testimony continue to state that Iran is seeking a
self-sufficient chemical weapons (CW) infrastructure, and that it “may have
already” stockpiled blister, blood, choking, and nerve agents — and the bombs
and shells to deliver them. This raises questions about Iran’s compliance with its
obligations under the Chemical Weapons Convention (CWC), which Iran signed
on January 13, 1993, and ratified on June 8, 1997. These officials and reports also
say that Iran “probably maintain[s] an offensive [biological weapons] BW
program ... and probably has the capability to produce at least small quantities of
Ballistic Missiles/Warheads. Largely with foreign help, Iran is
becoming self-sufficient in the production of ballistic missiles and, by U.S.
accounts, already has the largest inventory of ballistic missiles in the Middle
East. Tehran appears to view its ballistic missiles as an integral part of its
strategy to deter or retaliate against forces in the region, including U.S. forces.
However, Iran’s technical capabilities are a matter of some debate among experts.
The Bush Administration is seeking to establish sites in Europe, including Poland
and the Czech Republic, to counter Iranian ballistic missiles, although Russia has
opposed these locations as indications that the missile defense plans are a cover
for systems directed against Russia. At the G-8 summit in June 2007, Russian
President Vladimir Putin presented an alternative proposal to cooperate with the
missile defense against Iran by allowing use of a radar facility in Azerbaijan that
Russia leases. In October 2007, U.S. officials suggested the missile defense plan
might be slowed or ended if the nuclear threat from Iran were alleviated, and the
new Prime Minister of Poland, Donald Tusk, has tacitly insisted on conditions in
exchange for the deployments — for example U.S. funding of other Polish
Table 7. Iran’s Ballistic Missile Arsenal
Shahab - 3
800 mile range. Two of first three tests (July 1998, July 2000, and
September 2000) reportedly inconclusive or unsuccessful. Apparently
successful tests in June 2003; Iran subsequently called missile
operational (capable of hitting Israel). Despite claims, some U.S. experts
say the missile not completely reliable, and Iran tested a purportedly
more accurate version on August 12, 2004. Iran called the test
successful, although some observers said Iran detonated it in mid-flight.
On May 31, 2005, Iran announced it had tested a solid-fuel version.
“Shahab - 4”
1,200 mile range. In October 2004, Iran announced it had extended range
of the Shahab-3 to 1,200 miles, and it added in early November 2004
that it is capable of “mass producing” this “Shahab-4.” Agence France
Presse report (February 6, 2006) said test in January 2006 was
successful. Related missiles claimed produced by Iran - both of about
1,200 mile range, include the “Ashoura” (claimed in November 2007)
and the “Ghadr” (displayed at military parade in September 2007. If
Iran’s claims are accurate, large portions of the Near East and
Southeastern Europe would be in range, including U.S. bases in Turkey.
On March 31, 2006, Iran claimed to have tested a missile, possibly a
Shahab-4, with separately targeted warheads.
1,500 mile range. On April 27, 2006, Israel’s military intelligence
chief said that Iran had received a shipment of North Korean-supplied
BM-25 missiles. Missile said to be capable of carrying nuclear
warheads. The Washington Times appeared to corroborate this
reporting in a July 6, 2006, story, which asserted that the North
Korean-supplied missile is based on a Soviet-era “SS-N-6” missile.
U.S. officials believe Iran might be capable of developing an
intercontinental ballistic missile (3,000 mile range) by 2015.24 In
February 2008 Iran claimed to have launched a probe into space,
suggesting its missile technology might be improving to the point
where an Iranian ICBM is an increasingly realistic possibility.
On September 6, 2002, Iran said it successfully tested a 200 mile
range “Fateh 110” missile (solid propellent), and Iran said in late
September 2002 that it had begun production.25 Iran also possesses a
few hundred short-range ballistic missiles, including the Shahab-1
(Scud-b), the Shahab-2 (Scud-C), and the Tondar-69 (CSS-8).
Wall Street Journal report of September 14, 2005, said that U.S.
intelligence believes Iran is working to adapt the Shahab-3 to deliver a
nuclear warhead. Subsequent press reports say that U.S. intelligence
captured an Iranian computer in mid-2004 showing plans to construct a
nuclear warhead for the Shahab.26 Iran denied work on such a warhead,
but the IAEA is seeking additional information from Iran on the
“Greater U.S. Concern About Iran Missile Capability.” Reuters, March 11, 2002.
“Iran: New Missile on the Assembly Line.” New York Times, September 26, 2002.
Broad, William and David Sanger. “Relying On Computer, U.S. Seeks to Prove Iran’s
Nuclear Aims.” New York Times, November 13, 2005.
Foreign Policy and Support for Terrorist
Iran’s foreign policy is a product of the ideology of Iran’s Islamic revolution,
blended with long-standing national interests, and is intended largely to overturn the
“status quo” in the Middle East that Iran believes favors the United States, Israel, and
Sunni Muslim regimes. The State Department report on international terrorism for
2007, released April 30, 2008, again stated (as it has for more than a decade) that
Iran “remained the most active state sponsor of terrorism” in 2005, and it again
attributed the terrorist activity primarily to the Revolutionary Guard [presumably the
Qods Force]. The report focused particular attention on Iran’s lethal support to
Shiite militias in Iraq.27
Relations with the Persian Gulf States.28 The Persian Gulf states are
highly concerned about the growing strategic influence of Iran but they do not openly
support U.S. conflict with Iran that might cause Iran to retaliate against Gulf state
targets. During the 1980s and early 1990s, Iran, through the Qods Force and the
MOIS, sponsored Shiite Muslim extremist groups opposed to the Sunni Muslim-led
monarchy states of the 6-member Gulf Cooperation Council (GCC; Saudi Arabia,
Kuwait, Bahrain, Qatar, Oman, and the United Arab Emirates). However, Iran’s
efforts to “export” its Islamic revolution were unsuccessful and caused the Gulf states
to ally closely with the United States. During Khatemi’s presidency, Iran reduced
support for Gulf Shiite dissident movements there. In part to counter Iran’s
perceived growing influence in the Gulf, in December 2006 the summit of the GCC
leaders announced that the GCC states might jointly study their own development of
“peaceful nuclear technology.” On the other hand, seeking to avoid further tensions
with Iran, the GCC leaders invited Ahmadinejad to observe and speak at the
December 2-3, 2007 summit of the GCC leaders in Doha, Qatar - the first time an
Iranian president has been invited to the meeting since the GCC was formed in 1981.
His speech reiterated a consistent Iranian theme that the Gulf countries, including
Iran, should set up their own security structure without the help of “outside powers.”
Saudi Arabia. Many observers closely watch the relationship
between Iran and Saudi Arabia because of Saudi alarm over the
emergence of a pro-Iranian government in Iraq and Iran’s
ascendancy in Lebanon. Saudi Arabia sees itself as leader of the
Sunni Muslim world and views Shiite Muslims as heretical and
disloyal internally. Saudi leaders are concerned that Iran’s nuclear
program will further strengthen Iran strategically but the Saudis also
worry about the potential for Iranian reaction against the Kingdom
should the United States take military action to stop Iran’s program.
The Saudis, who do not want a repeat of Iran’s sponsorship of
disruptive and sometimes violent demonstrations at annual Hajj
U.S. Department of State. Country Reports on Terrorism 2007. Released April 30, 2008.
See CRS Report RL31533, The Persian Gulf States: Issues for U.S. Policy, 2006, by
pilgrimages in Mecca in the 1980s and 1990s — or an increase in
Iranian support for Saudi Shiite dissidents — are receptive to easing
tensions with Iran, particularly, and they hosted Ahmadinejad in the
Kingdom in March 2007 and again for the Hajj in December 2007.
The Saudis continue to blame a pro-Iranian movement in the
Kingdom, Saudi Hezbollah, for the June 25, 1996, Khobar Towers
housing complex bombing, which killed 19 U.S. airmen.29 After
restoring relations in December 1991 (after a four-year break),
Saudi-Iran ties progressed to high-level contacts during Khatemi’s
presidency, including Khatemi visits in 1999 and 2002.
United Arab Emirates (UAE) concerns about Iran’s intentions have
not completely recovered from the April 1992 Iranian expulsion of
UAE security forces from the Persian Gulf island of Abu Musa,
which it and the UAE shared under a 1971 bilateral agreement. (In
1971, Iran, then ruled by the U.S.-backed Shah, seized two other
islands, Greater and Lesser Tunb, from the emirate of Ras
al-Khaymah, as well as part of Abu Musa from the emirate of
Sharjah.) The UAE (particularly the federation capital, Abu Dhabi,
which takes a harder line than Dubai, which has a large Persianspeaking community and business ties to Iran) wants to refer the
dispute to the International Court of Justice (ICJ), but Iran insists on
resolving the issue bilaterally. The UAE has not pressed the issue
vigorously in recent years, although it insists the islands dispute be
kept on the agenda of the U.N. Security Council (which it has been
since December 1971). The United States, which is concerned about
Iran’s military control over the islands, supports UAE proposals but
takes no formal position on sovereignty. As an indicator of the
degree to which the issue is fading, the UAE received Ahmadinejad
in May 2007, the highest level Iranian visit to UAE since the 1979
revolution in Iran; during the visit, Ahmadinejad led an anti-U.S.
rally of a reported several hundred Iranian-origin residents of Dubai
at a soccer stadium there.
Qatar is wary that Iran might seek to encroach on its large North
Field (natural gas), which it shares with Iran (called South Pars on
Iran’s side) and through which Qatar earns large revenues for natural
gas exports. Qatar’s fears were heightened on April 26, 2004, when
Iran’s deputy Oil Minister said that Qatar is probably producing
more gas than “her right share” from the field and that Iran “will not
allow” its wealth to be used by others. These concerns might have
Walsh, Elsa. “Annals of Politics: Louis Freeh’s Last Case.” The New Yorker, May 14,
2001. The June 21, 2001, federal grand jury indictments of 14 suspects (13 Saudis and a
Lebanese citizen) in the Khobar bombing indicate that Iranian agents may have been
involved, but no indictments of any Iranians were announced. In June 2002, Saudi Arabia
reportedly sentenced some of the eleven Saudi suspects held there. The 9/11 Commission
final report asserts that Al Qaeda might have had some as yet undetermined involvement in
the Khobar Towers attacks.
prompted Qatar to invite Ahmadinejad to the December 2007 GCC
summit in Qatar.
In 1981 and again in 1996, Bahrain publicly accused Iran of
supporting Bahraini Shiite dissidents (the Islamic Front for the
Liberation of Bahrain, Bahrain-Hezbollah, and other Bahraini
dissident groups) in efforts to overthrow the ruling Al Khalifa
family. Bahrain is about 60% Shiite, but its government is
dominated by the Sunni Muslim Al Khalifa family. Bahraini fears
that Iran would try to interfere in Bahrain’s November 25, 2006,
parliamentary elections by providing support to Shiite candidates did
not materialize, although the main Shiite opposition coalition won
18 out of the 40 seats of the elected body. Tensions flared in July
2007 when an Iranian newspaper claimed Bahrain is part of Iran —
that question was the subject of the 1970 U.N.-run referendum in
which Bahrainis opted for independence. Still, Bahrain has sought
not to antagonize Iran and has apparently allowed Iran’s banks to
establish a presence in Bahrain’s vibrant banking sector. On March
12, 2008, the Treasury Department sanctioned the Bahrain-based
Future Bank under Executive order 13382 that sanctions
proliferation entities. Future Bank purportedly is controlled by
Iranian Policy in Iraq. The U.S. military ousting of Saddam Hussein
benefitted Iran strategically,30 and U.S.-Iran differences in Iraq have widened to the
point where Chairman of the Joint Chiefs of Staff Admiral Michael Mullen warned
in late April 2008 that there is Defense Department planning for possible military
action against Iran’s “increasingly lethal and malign influence in Iran” – referring to
its assistance to Shiite militias in Iraq. The State Department terrorism report for
2007, released April 30, 2008, reinforced the consistent statements of U.S. officials
(including the September 10-11, 2007 and April 8-9, 2008 testimony of U.S.
commander in Iraq General David Petraeus) that Iran is providing arms (including
highly lethal “explosively forced projectiles,” EFPs, that have killed about nearly 200
U.S. soldiers in Iraq), training guidance, and financing to “special groups” of Shiite
militias involved in sectarian violence and anti-U.S. activities. The New York
Times reported on May 5, 2008 that Lebanese Hizballah militants, who are Arabs,
are providing some of the training to the Iraq militants at training camps near Tehran.
Some U.S. officials now indicate that the United States and Iran are now engaged
in a “proxy war” inside Iraq.
General Petraeus’ April 2008 testimony was delivered amidst an upsurge of
intra-Shiite factional fighting and rocketing of U.S. installations in Baghdad by proSadr militiamen ; the fighting wound down with a tense March 30, 2008 ceasefire, but
skirmishing continues in Sadr City between U.S. forces and pro-Sadr gunmen .
Rocket attacks continue on the heavily fortified International Zone where the U.S.
Embassy is located. Gen. Petraeus testified that Iran’s Qods Force directed, trained,
This issue is covered in greater depth in CRS Report RS22323, Iran’s Influence in Iraq,
by Kenneth Katzman.
and armed the militiamen responsible for the fighting. In October 2007, Gen.
Petraeus told journalists that Iran’s Ambassador to Iraq, Hassan Kazemi-Qomi, is
himself a member of the Qods Force. Iran also has signed a number of agreements
with Iraq on transportation, energy cooperation, free flow of Shiite pilgrims, border
security, intelligence sharing, and other cooperation; several more agreements,
including a $1 billion credit line for Iranian exports to Iraq, were signed during
Ahmadinejad’s March 2-3, 2008 visit to Baghdad; and sets of implementing
agreements were signed in mid-April 2008.
A provision of the FY2008 defense authorization bill ( H.R. 4986, P.L. 110181) requires a report to Congress on Iran’s interference in Iraq, but it does not
authorize or recommend use of U.S. force to stop these actions. On January 9,
2008, the Treasury Department took action against suspected Iranian and pro-Iranian
operatives in Iraq by designating four individuals and one organization as a threat to
stability in Iraq under the July 17, 2007 Executive Order 13438, which freezes the
assets and bans transactions with named individuals. The named entities, which
includes a senior Qods Forces leader, are in the tables on sanctioned entities.
The “Iraq Study Group” (Recommendations 9, 10, and 11) in its December
2006 report, recommended U.S. dialogue with Iran but President Bush initially
appeared to reject that idea. The Administration might have later judged that its
2007 “troop surge” and other military moves in the Gulf (extra aircraft carrier
deployments) strengthened the U.S. position, and the Administration supported a
March 10, 2007, regional conference in Iraq attended by Iran and Syria. Both Iranian
and U.S. officials called the conference constructive, but both denied that substantive
bilateral talks took place at the margins of the conference. Further regional talks on
Iraq (“Expanded Neighbors of Iraq” process) were held in Egypt during May 3-4,
2007, but Secretary of State Rice did not hold substantive bilateral discussions with
her counterpart, Iranian Foreign Minister Manuchehr Mottaki. Nor did they directly
talk at the November 2, 2007 ministerial on Iraq held in Istanbul . Secretary Rice did
not hold substantive talks with Mottaki at the April 22, 2008 Expanded Neighbors
meeting in Kuwait.
The Administration has held potentially more significant bilateral talks with
Iran on the Iraq issue. The first such meeting, in Baghdad, was on May 28, 2007; the
two sides met at the home of Prime Minister Nuri al-Maliki, who opened the
meeting. According to Ambassador Crocker (the Iranian side was represented by the
Iranian Ambassador to Iraq), the two sides agreed on broad principles for Iraq’s
political evolution and stability, but the United States would judge the dialogue by
the indications, discussed above, of Iranian cooperation in stopping military supply
of Shiite militias. Another round of talks was held on July 24; it reportedly included
mutual accusations but resulted in an agreement to establish a working group to
discuss ways to stabilize Iraq. This working group met for the first time on August
6, 2007. Because of signs that Iran had slowed weapons flows into Iraq, another
round of talks was tentatively scheduled for December 18, but Iran repeatedly
postponed more talks because of differences over the agenda and the level of talks
(Iran wants them to be at the ambassador level). Because of the continued U.S.
combat against the Mahdi forces in Sadr City that Iran said is causing the deaths of
innocent civilians, on May 5, 2008 Iran indefinitely suspended this dialogue. The
suspension came several days after an Iraqi parliamentary delegation visited Iran to
challenge Iran’s aid to the Shiite militants.
Supporting Palestinian Militant Groups.
Iran’s support for
Palestinian militant groups has long concerned U.S. Administrations, particularly
since doing so gives Tehran an opportunity to try to obstruct Israeli-Palestinian peace
prospects. Ahmadinejad’s various statements on Israel were discussed above,
although other Iranian leaders have made similar statements in the past. In the 1990s,
Khamene’i called Israel a “cancerous tumor” and made other statements suggesting
that he seeks Israel’s destruction. On April 16, 2008, the deputy commander of
Iran’s regular army, Mohammad Reza Ashtiani, said that Iran would respond to any
military attack from Israel by “eliminating” Israel.
In December 2001, Rafsanjani said that it would take only one Iranian nuclear
bomb to destroy Israel, whereas a similar strike against Iran by Israel would have far
less impact because Iran’s population is large. Iran has sometimes openly incited antiIsrael violence, including hosting conferences of anti-peace process organizations
(April 24, 2001, and June 2-3, 2002). During his presidency, Khatemi generally
refrained from inflammatory statements against Israel, and he conversed with Israel’s
president at the 2005 funeral of Pope John Paul II. The Iranian Foreign Ministry,
considered a bastion of moderates, has repeatedly stated that Iran’s official position
is that it would not seek to block any final Israeli-Palestinian settlement but that the
peace process is too weighted toward Israel to result in a fair settlement for
Palestinians. Ahmadinejad again articulated a hardline position when he openly
criticized the participation of Iran’s ally, Syria, at the major U.S.-sponsored Middle
East peace meeting in Annapolis, Maryland on November 27, 2007. The meeting, in
part, represented a U.S. attempt to isolate Iran and other hardline opponents of an
Israeli-Palestinian peace agreement.
The State Department report on terrorism for 2006 (mentioned above) again
accuses Iran of providing “extensive” funding, weapons, and training to Hamas,
Palestinian Islamic Jihad (PIJ), the Al Aqsa Martyr’s Brigades, and the Popular Front
for the Liberation of Palestine-General Command (PFLP-GC). All are named as
foreign terrorist organizations (FTO) by the State Department for their use of
violence to undermine the Arab-Israeli peace process. Some saw Iran’s regional
policy further strengthened by Hamas’s victory in the January 25, 2006, Palestinian
legislative elections, and even more so by Hamas’s June 2007 armed takeover of the
Gaza Strip, from which it continues to periodically launch rockets on some Israeli
towns. The Hamas gains potentially position it to block moves toward peace, and
Hamas continues to oppose a two-state solution with Israel and to occasionally fire
rockets from Gaza into Israel. However, Hamas activists downplay Iranian influence,
asserting that Iran is mostly Shiite, while Hamas members are Sunni Muslims.31
Hamas was reputed to receive about 10% of its budget in the early 1990s from Iran,
although since then Hamas has cultivated funding from wealthy Persian Gulf donors
and supporters in Europe and elsewhere.
CNN “Late Edition” interview with Hamas co-founder Mahmoud Zahar, January 29,
Lebanese Hezbollah. Iran has maintained a close relationship with
Hezbollah since the group was formed in 1982 by Lebanese Shiite clerics who were
sympathetic to Iran’s Islamic revolution and belonged to the Lebanese Da’wa Party.
Hezbollah was responsible for several acts of anti-U.S. and anti-Israel terrorism in
the 1980s and 1990s.32 Hezbollah’s attacks on Israeli forces in southern Lebanon
contributed to an Israeli withdrawal in May 2000, but, despite United Nations
certification of Israel’s withdrawal, Hezbollah maintained military forces along the
border. Hezbollah continued to remain armed and outside Lebanese government
control, despite U.N. Security Council Resolution 1559 (September 2, 2004) that
required its dismantlement. In refusing to disarm, Hezbollah says it was resisting
Israeli occupation of small tracts of Lebanese territory (Shib’a Farms).
Neither Israel nor the United States opposed Hezbollah’s progressively
increased participation in peaceful Lebanese politics. In March 2005, President Bush
indicated that the United States might accept Hezbollah as a legitimate political force
in Lebanon if it disarms. In the Lebanese parliamentary elections of May — June
2005, Hezbollah expanded its presence in the parliament to 14 out of the 128-seat
body, and it gained two cabinet seats. As a matter of policy, the United States does
not meet with any Hezbollah members, even those in the parliament or cabinet.
Hezbollah is a designated FTO, but that designation bars financial transactions by the
group and does not specifically ban meeting with members of the group.
Whether or not Iran instigated Lebanese Hezbollah to provoke the JulyAugust 2006 crisis, Iran has long been its major arms supplier. Hezbollah fired
Iranian-supplied rockets on Israel’s northern towns during the fighting. As part of a
package of aid to Hezbollah said to exceed $100 million per year, reported Iranian
shipments to Hezbollah over the past five years have included the “Fajr” (dawn) and
Khaybar series of rockets that were fired at the Israeli city of Haifa (30 miles from
the border), and over 10,000 Katyusha rockets that were fired at cities within 20
miles of the Lebanese border.33 Iran also supplied Hezbollah with an unmanned aerial
vehicle (UAV), the Mirsad, that Hezbollah briefly flew over the Israel-Lebanon
border on November 7, 2004, and April 11, 2005; at least three were shot down by
Israel during the conflict. On July 14, 2006, Hezbollah apparently hit an Israeli
warship with a C-802 sea-skimming missile probably provided by Iran. (See above
for information on Iran’s acquisition of that weapon from China.) Iran also
purportedly provided advice during the conflict; about 50 Revolutionary Guards
Qods Force personnel were in Lebanon (down from about 2,000 when Hezbollah was
formed, according to a Washington Post report of April 13, 2005) when the conflict
Hezbollah is believed responsible for the October 1983 bombing of the U.S. Marine
barracks in Beirut, as well as attacks on U.S. Embassy Beirut facilities in April 1983 and
September 1984, and for the hijacking of TWA Flight 847 in June 1985 in which Navy diver
Robert Stetham was killed. Hezbollah is also believed to have committed the March 17,
1992, bombing of Israel’s embassy in that city, which killed 29 people. Its last known
terrorist attack outside Lebanon was the July 18, 1994, bombing of a Jewish community
center in Buenos Aires, which killed 85. On October 31, 2006, Argentine prosecutors asked
a federal judge to seek the arrest of Rafsanjani, former Intelligence Minister Ali Fallahian,
former Foreign Minister Ali Akbar Velayati, and four other Iranian officials for this attack.
“Israel’s Peres Says Iran Arming Hizbollah.” Reuters, February 4, 2002.
began; that number might have increased during the conflict to help Hezbollah
operate the Iranian-supplied weaponry.
Iran has supported Hezbollah after the conflict as Hezbollah has increasingly
(but thus far peacefully, including a withdrawal from the cabinet) challenged the proU.S. government in Beirut. Other Lebanese factions have sought Hezbollah’s
concurrence on a consensus candidate as new president of Lebanon, but Hezbollah
insists it be allowed to remain armed. To bolster its protege’s challenge, one press
report said Iran made $150 million available for Hezbollah to distribute to Lebanese
citizens (mostly Shiite supporters of Hezbollah) whose homes were damaged in the
Israeli military campaign.34 Other reports say Iran is replacing the 4,000 rockets
Hezbollah fired during that war. A State Department counter-terrorism official
testified before the House International Relations Committee on September 28, 2006,
that Iranian military support to Hezbollah continued after the August 14 ceasefire,
which took place in accordance with U.N. Security Council Resolution 1701 (July
Prior to the conflict, in the 109th Congress, two resolutions (H.Res. 101 and
S.Res. 82) passed their respective chambers. They urged the EU to classify
Hezbollah as a terrorist organization; S.Res. 82 called on Hezbollah to disband its
militia as called for in U.N. Security Council Resolution 1559 (September 2, 2004).
Central Asia and the Caspian. Iran’s policy in Central Asia has thus
far emphasized Iran’s rights to Caspian Sea resources, particularly against
Azerbaijan. That country’s population, like Iran’s, is mostly Shiite Muslim, but its
leadership is secular. In addition, Azerbaijan is ethnically Turkic, and Iran fears that
Azerbaijan nationalists might stoke separatism among Iran’s large Azeri Turkic
population, which demonstrated some unrest in 2006. These factors could explain
why Iran has generally tilted toward Armenia, which is Christian, even though it has
been at odds with Azerbaijan over territory and control of ethnic Armenians. In July
2001, Iranian warships and combat aircraft threatened a British Petroleum (BP) ship
on contract to Azerbaijan out of an area of the Caspian that Iran considers its own.
The United States called that action provocative, and it is engaged in border security
and defense cooperation with Azerbaijan directed against Iran (and Russia). The
United States successfully backed construction of the Baku-Tblisi-Ceyhan oil
pipeline, intended in part to provide alternatives to Iranian oil. Along with India and
Pakistan, Iran has been given observer status at the Central Asian security grouping
called the Shanghai Cooperation Organization (SCO), which contains Russia, China,
Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan. In April 2008, Iran applied for
full membership in the organization, which opposes a long-term U.S. presence in
Shadid, Anthony. “Armed With Iran’s Millions, Fighters Turn to Rebuilding.”
Washington Post, August 16, 2006.
See CRS Report RL33566, Lebanon: The Israel-Hamas-Hezbollah Conflict, coordinated
by Jeremy Sharp.
Afghanistan.36 Iran is trying to restore some of its Iran’s traditional sway
in eastern, central, and northern Afghanistan where Persian-speaking Afghans
predominate. At first following the Taliban’s fall, Iran aided minority factions still
referred to as the “Northern Alliance” that were prominent in the post-Taliban
governing coalition. After 2004, Iran’s influence waned somewhat as Northern
Alliance figures have been marginalized in Afghan politics. To compensate, Iran
has funded projects in Afghanistan that total at least $200 million since 2001 (out of
a pledged $500 million), mostly in neighboring Herat. Iranian-funded Shiite
theological seminaries are being built in Kabul and elsewhere, perhaps an indication
of Iran’s continuing efforts to support Afghanistan’s Shiite minority, and Iran has
funded several media outlets in Afghanistan catering to Shiites.
The United States is concerned about Iran’s role in Afghanistan. Responding
to a statement on CNN by Afghan President Karzai that Afghanistan views Iran as
helpful in stabilizing Afghanistan, Secretary Gates said that same day (August 5,
2007) on that network that Iran is “playing both sides”in Afghanistan — an apparent
reference to possible Iranian attempts to gain leverage against the United States in
Afghanistan (and on other issues) by causing U.S. combat deaths. Iran is said to fear
the continuing presence of the about 30,000 U.S. troops in Afghanistan, and Iran has
objected to the U.S. use of Shindand air base in western Afghanistan, asserting that
it is being used to conduct surveillance on Iran. U.S. aircraft began using the base in
September 2004 after the downfall of the pro-Iranian governor of Herat Province,
The State Department terrorism report for 2007 accuses the Qods Force of
supplying various munitions, including 107mm rockets, to Taliban and other
militants in Afghanistan. On April 17, 2007, U.S. military personnel in Afghanistan
captured a shipment of Iranian weapons that purportedly was bound for Taliban
fighters. Because such a shipment would appear to conflict with Iran’s policy in
Afghanistan, Secretary of Defense Gates, in a statement on the matter on June 4,
2007, said it was unclear whether or not the shipments resulted from a deliberate
Iranian government decision to arm the Taliban. On June 6, 2007 and again on
September 6, 2007, NATO officers said they directly intercepted Iranian shipments
of heavy arms, C4 explosives, and advanced roadside bombs (explosively forced
projectiles, or EFPs, such as those found in Iraq) to Taliban fighters in Afghanistan.
U.S. commander of international forces in Afghanistan Gen. Dan McNeil says the
intercepted shipments are large enough that the Iranian government would have to
have known about them.
Iran long opposed the regime of the Taliban in Afghanistan on the grounds
that it oppressed Shiite Muslim and other Persian-speaking minorities. Iran nearly
launched a military attack against the Taliban in September 1998 after Taliban
fighters captured and killed nine Iranian diplomats based in northern Afghanistan,
and Iran provided military aid to the Northern Alliance factions. Iran, along with the
United States, Russia, and the countries bordering Afghanistan, attended U.N.sponsored meetings in New York (the Six Plus Two group) to try to end the conflict
See CRS Report RL30588, Afghanistan: Post-War Governance, Security, and U.S. Policy,
by Kenneth Katzman.
in Afghanistan. During the major combat phase of the post-September 11 U.S.-led
war in Afghanistan, Iran offered search and rescue of any downed service-persons
and the trans-shipment to Afghanistan of humanitarian assistance. In March 2002,
Iran expelled Gulbuddin Hikmatyar, a pro-Taliban Afghan faction leader. Iran froze
Hikmatyar’s assets in Iran (January 2005).
Al Qaeda. Iran is not a natural ally of Al Qaeda, largely because Al Qaeda
is an orthodox Sunni Muslim organization. However, Iran might see possibilities for
tactical alliance with Al Qaeda, and U.S. officials have said since January 2002 that
Iran has not brought to justice senior Al Qaeda operatives (spokesman Sulayman Abu
Ghaith, top operative Sayf Al Adl, and Osama bin Laden’s son, Saad37) who are
believed to be in Iran,38 meaning they might be at relative liberty within Iran. U.S.
officials blamed these figures for the May 12, 2003, bombings in Riyadh, Saudi
Arabia against four expatriate housing complexes on these operatives, saying they
have been able to contact associates outside Iran.39 In testimony before the Senate
Foreign Relations Committee on March 29, 2007, then Undersecretary of State
Nicholas Burns accused Iran of violating U.N. Security Council Resolutions 1267
and 1373, which require sharing information on Al Qaeda, as part of the emerging
broader U.S. strategy of pressuring Iran militarily, politically, and economically.
Iran asserted on July 23, 2003, that it had “in custody” senior Al Qaeda
figures. However, if that is not their status, the explanation could be that hardliners
in Iran might want to use Al Qaeda activists as leverage against the United States and
its allies. Some say Iran might want to exchange them for a U.S. hand-over of
People’s Mojahedin activists under U.S. control in Iraq. Possibly attempting to show
that it is an adversary and not an ally of Al Qaeda, on July 16, 2005, Iran’s
Intelligence Minister said that 200 Al Qaeda members are in Iranian jails and that
Iran had broken up an Al Qaeda cell planning attacks on Iranian students.40
The 9/11 Commission report said several of the September 11 hijackers and
other plotters, possibly with official help, might have transited Iran, but the report
does not assert that the Iranian government cooperated with or knew about the plot.
Another bin Laden ally, Abu Musab al-Zarqawi, killed by U.S. forces in Iraq on June
7, 2006, reportedly transited Iran after the September 11 attacks and took root in Iraq,
becoming a major insurgent leader there.
Latin America. A growing concern has been Iran’s developing relations
with countries and leaders in Latin America considered adversaries of the United
States, particularly Cuba and Venezuela’s Hugo Chavez. Chavez has visited Iran on
several occasions, offering Iran additional gasoline during Iran’s fuel shortages in
2007 as well as joint oil and gas projects. The two countries have established direct
Gertz, Bill. “Al Qaeda Terrorists Being Held by Iran.” Washington Times, July 24, 2003.
Keto, Alex. “White House Reiterates Iran Is Harboring Al Qaeda.” Dow Jones Newswires,
May 19, 2003.
Gertz, Bill. “CIA Points to Continuing Iran Tie to Al Qaeda.” Washington Times, July 23,
“Tehran Pledges to Crack Down on Militants.” Associated Press, July 18, 2005.
air links. In February 2006, Secretary Rice referred to Venezuela and Cuba as
“sidekicks” of Iran because of their votes in the IAEA against referring Iran to the
Security Council. On October 30, 2007, Secretary of Homeland Security Michael
Chertoff said that Iran’s relationship with Venezuela is an emerging threat because
it represents a “marriage” of Iran’s extremist ideology with “those who have antiAmerican views.” The State Department terrorism report for 2006 said that Cuba
maintains “close relationships with other state sponsors of terrorism such as Iran.”
In October 2007, Uruguayan parliamentary investigators said they blocked an attempt
by the government to buy arms from Iran, using a diversion through Venezuela.41
U.S. Policy Responses, Options, and Legislation
The February 11, 1979 fall of the Shah of Iran, a key U.S. ally, opened a long
rift in U.S.-Iranian relations. On November 4, 1979, radical “students” seized the
U.S. Embassy in Tehran and held its diplomats hostage until minutes after President
Reagan’s inauguration on January 20, 1981. The United States broke relations with
Iran on April 7, 1980 and the two countries have had only limited official contact
since.42 The United States tilted toward Iraq in the 1980-1988 Iran-Iraq war,
including U.S. diplomatic attempts to block conventional arms sales to Iran,
providing battlefield intelligence to Iraq43 and, during 1987-1988, direct skirmishes
with Iranian naval elements in the course of U.S. efforts to protect international oil
shipments in the Gulf from Iranian attacks. In one battle on April 18, 1988, Iran lost
about a quarter of its larger naval ships in a one-day engagement with the U.S. Navy,
including one frigate sunk and another badly damaged. Iran strongly disputed the
U.S. assertion that the July 3, 1988, U.S. shoot-down of Iran Air Flight 655 by the
U.S.S. Vincennes over the Persian Gulf (bound for Dubai, UAE) was an accident.
In his January 1989 inaugural speech, President George H.W. Bush laid the
groundwork for a rapprochement, saying that, in relations with Iran, “goodwill
begets goodwill,” implying better relations if Iran helped obtain the release of U.S.
hostages held by Hezbollah in Lebanon. Iran reportedly did assist in obtaining their
releases, which was completed in December 1991, but no thaw followed, possibly
because Iran continued to back groups opposed to the U.S.-sponsored Middle East
peace process, a major U.S. priority.
Upon taking office in 1993, the Clinton Administration moved to further
isolate Iran as part of a strategy of “dual containment” of Iran and Iraq. In 1995 and
1996, the Clinton Administration and Congress added sanctions on Iran in response
to growing concerns about Iran’s weapons of mass destruction, its support for
Arostegui, Martin. “Uruguay Caught Buying Iran Arms.” Washington Times, October 12,
An exception was the abortive 1985-1986 clandestine arms supply relationship with Iran
in exchange for some American hostages held by Hezbollah in Lebanon (the so-called
Sciolino, Elaine. The Outlaw State: Saddam Hussein’s Quest for Power and the Gulf
Crisis. New York: John Wiley and Sons, 1991. p. 168.
terrorist groups, and its efforts to subvert the Arab-Israeli peace process. The
election of Khatemi in May 1997 precipitated a U.S. shift toward engagement; the
Clinton Administration offered Iran official dialogue, with no substantive
preconditions. In January 1998, Khatemi publicly agreed to “people-to-people” U.S.Iran exchanges as part of his push for “dialogue of civilizations, but he ruled out
direct talks. In a June 1998 speech, then Secretary of State Albright stepped up the
U.S. outreach effort by calling for mutual confidence building measures that could
lead to a “road map” for normalization of relations. Encouraged by the reformist
victory in Iran’s March 2000 parliamentary elections, Secretary Albright, in a March
17, 2000, speech, acknowledged past U.S. meddling in Iran, announcing some minor
easing of the U.S. trade ban with Iran, and promised to try to resolve outstanding
claims disputes. In September 2000 U.N. “Millennium Summit” meetings, Albright
and President Clinton sent a positive signal to Iran by attending Khatemi’s speeches.
Overview of Bush Administration Iran Policy
Although some U.S. commentators, including former CENTCOM
Commander John Abizaid, believe that the United States “can live with” a nuclear
Iran, it is U.S. policy to prevent Iran from obtaining a nuclear weapons capability.
The Bush Administration has continued multi-faceted efforts to try to implement
that policy, as well as to limit Iran’s strategic capabilities more generally, through
international diplomacy and sanctions — both international sanctions as well as
sanctions enforced by its allies, outside Security Council mandate. At the same
time, the Administration has engaged in bilateral diplomacy with Iran on specific
priority issues, such as stabilizing Afghanistan and Iraq. These efforts are mostly led
by Department of State officials, who believe that this policy course is the only U.S.
option that would garner broad international support and affect Iran’s behavior. The
policy framework is supported by maintenance of a large U.S. conventional military
capabilities in the Persian Gulf and through U.S. alliances with Iran’s neighbors.
At times, the Administration has considered or, to some extent, pursued
harder line options. Some Administration officials, reportedly led by Vice President
Cheney, believe that existing measures will not curb the threat posed by Iran and that
policy should focus on possible military confrontation with Iran or on U.S. efforts to
change Iran’s regime.44 Legislation pending in the 110th Congress, discussed below,
indicates congressional support for increasing U.S. sanctions and for steps to compel
other countries to adopt stricter sanctions against Iran or to curb their companies’
business dealings with Iran. The FY2007 defense authorization law (P.L. 109364) called for a report by the Administration on all aspects of U.S. policy and
objectives on Iran (and required the DNI to prepare a national intelligence estimate
on Iran, which was released on December 3, 2007 as discussed above).
Containment and Possible Military Action
A key question in Congress and among U.S. allies and other countries has
been whether President Bush might use military action to delay or halt Iran’s nuclear
Cooper, Helene and David Sanger. “Strategy on Iran Stirs New Debate at White House.”
New York Times, June 16, 2007.
program. Others believe that there is a growing chance of U.S. military action
against Iran’s efforts to arm and train Shiite militias in Iraq, with such action perhaps
expanding to include Iran’s nuclear or other sites. Although some Members publicly
oppose most forms of military action against Iran, others fear that diplomacy and
sanctions might not succeed and that Iran’s nuclear program should be stopped before
Iran possesses a working nuclear device, notwithstanding the consequences. In
discussing possible military options against Iran’s nuclear facilities, President Bush
has repeatedly maintained that “all options are on the table”45 — a position he
reiterated after the release of the NIE – even though most observers see the NIE as
lessening the chance of U.S. conflict with Iran. A U.S. ground invasion to remove
Iran’s regime has not, at any time, appeared to be under serious consideration; most
experts believe U.S. forces are spread too thin to undertake such action, including
about 150,000 deployed in Iraq, and that U.S. forces would be greeted with hostility.
The Commander of U.S. Central Command, Admiral William Fallon, was considered
an opponent of military action against Iran; his resignation in March 2008, which
followed the release of a prominent profile on him by Esquire magazine (“The Man
Between War and Peace”), was seen by some as an indication the Administration
might be seriously considering such action.
Proponents of U.S. air and missile strikes against suspected nuclear sites
argue that military action could set back Iran’s nuclear program because there are
only a limited number of key targets, and these targets are known to U.S. planners
and could be struck, even those that are hardened or buried.46 On former Air Force
planner estimates that up to 400 targets would need to be struck, including at least 75
that would require penetrating munitions . It could also be argued that the United
States could reduce Iran’s potential for military or unconventional retaliation by
striking not only nuclear facilities but also Iran’s conventional military infrastructure,
particularly its small ships and coastal missiles . Some published estimates discuss
a few thousand sites, including conventional military targets, if such action were
expanded beyond WMD sites.
Still others argue that there are military options available that do not involve
air or missile strikes. Some say that a naval embargo is possible that could pressure
Iran into reconsidering its stand on the nuclear issue. Others say that the imposition
of a “no-fly zone” over Iran might also serve that purpose. Either action could still
be considered acts of war that Iran might challenge, and which could escalate into
Most U.S. allies in Europe, not to mention Russia, China, and some U.S.
experts, have expressed opposition to any military action. Some question whether
the United States is aware of or militarily able to reach all relevant sites; other
opponents believe any benefits would be minor, or only temporary, and that the costs
of a strike are too high. Some believe that a U.S. strike would cause the Iranian
public to rally around Iran’s regime, setting back U.S. efforts to promote change
Fletcher, Michael and Keith Richburg. “Bush Tries to Allay E.U. Worry Over Iran.”
Washington Post, February 23, 2005.
For an extended discussion of U.S. air strike options on Iran, see Rogers, Paul. Iran:
Consequences Of a War. Oxford Research Group, February 2006.
within Iran. On the other hand, regarding international support, in August 2007
French President Nicolas Sarkozy indicated that such a strike might be undertaken
by the United States if Iran does not curb its nuclear program, although he said the
effects of such a strike would be a “disaster.” Other members of his government
made similar comments in September 2007, possibly in an effort to provoke
accelerated action on stricter international sanctions.
Expressing particular fear that Iran might achieve a nuclear weapons
capability, Israeli officials have repeatedly refused to rule out the possibility that
Israel might strike Iran’s nuclear infrastructure. Discussion of this possibility
increased after the NIE was released, because Israel fears it has greatly dampened the
international appetite to forcefully curb Iran’s nuclear abilities. However, several
experts doubt that Israel has the capability to make such action effective.
Iranian Retaliatory Scenarios. Some officials and experts warn that a
U.S. military strike on Iran could provoke unconventional retaliation, using the
equipment discussed in the section on “conventional military capabilities,” that could
be difficult to counter. At the very least, such conflict is likely to raise world oil
prices significantly out of fear of an extended supply disruption. Others say such
action would cause Iran to withdraw from the NPT and refuse any IAEA inspections.
Other possibilities include firing missiles at Israel, or directing Lebanese Hezbollah
or Hamas to fire rockets at Israel.
Iran has acquired a structure and doctrine for unconventional warfare that
partly compensates for its conventional weakness. Former CENTCOM commander
Gen. John Abizaid said in March 2006 that the Revolutionary Guard Navy, through
its basing and force structure, is designed to give Iran a capability to
“internationalize” a crisis in the Strait of Hormuz. In his confirmation hearings on
January 30, 2007, Abizaid’s replacement, Admiral William Fallon, said that “Based
on my read of their military hardware acquisitions and development of tactics ... [the
Iranians] are posturing themselves with the capability to attempt to deny us the ability
to operate in [the Strait of Hormuz].” During a visit to the Gulf, Vice President
Cheney warned Iran on May 11, 2007, not to try to restrict sea traffic, saying “[The
United States] will keep the sea lanes open.”
Although many experts believe that U.S. forces could quickly reopen the
Strait if Iran closed it, Iran has tried to demonstrate that it is a capable force in the
Gulf. It has conducted at least five major military exercises since August 2006,
including exercises simultaneous with U.S. exercises in the Gulf in March 2007. In
early 2007, Iranian ships were widening their patrols, coming ever closer to key
Iraqi oil platforms in the Gulf. Several weeks after that report, Iran seized 15 British
sailors that Iran said were patrolling in Iran’s waters, although Britain says they were
in Iraqi waters performing coalition-related searches. They were held until April 5,
2007. On January 6, 2008, the U.S. Navy reported a confrontation in which five
IRGC Navy small boats approached three U.S. Navy ships to the point where they
manned battle stations. The IRGC boats veered off before any shots were fired, but
the Bush Administration called it a “provocative act” and filed a formal protest with
Tehran, which claims the United States overblew the incident. The IRGC could
have been testing U.S. rules of engagement following months of U.S. criticism and
the proliferation designations of the IRGC and its subunits. Another incident
occurred in April 2008 when a ship under U.S. contract fired a shot to warn off
Iranian boats in the Gulf.
If there were a conflict in the Gulf, some fear that Iran might try to use suicide
boat attacks or to lay mines in the Strait. In April 2006, Iran conducted naval
maneuvers, including test firings of what Iran claims are underwater torpedos that
can avoid detection, presumably for use against U.S. ships in the Gulf, and a surfaceto-sea radar-evading missile launched from helicopters or combat aircraft. U.S.
military officials said the claims might be an exaggeration. The Gulf states fear that
Iran will fire coastal-based cruise missiles at their oil loading or other installations
across the Gulf, as happened during the later stages of the Iran-Iraq war.
Containment and the Gulf Security Dialogue. Whether or not a strike
on Iran is planned, the Administration believes that U.S. conventional military
capabilities and regional alliances strengthen overall efforts to contain Iran
strategically. An assertive military containment component of policy was signaled
in the January 10, 2007, Iraq “troop surge” statement by President Bush, in which he
confirmed in that speech that the United States was sending a second U.S. aircraft
carrier group into the Gulf,47 and he announced the extended deployment of Patriot
anti-missile batteries in the Gulf, reportedly in Kuwait and Qatar, as well as increased
intelligence sharing with the Gulf states. Secretary of Defense Gates said at the time
that he saw the U.S. buildup as a means of building leverage against Iran that could
be useful in bolstering U.S. diplomacy. He and other top U.S. military leaders have
repeatedly denied that the military moves are a prelude or part of planning for any
U.S. military attack on Iran. Nonetheless, some experts express concern about
potential U.S. action against Iran at times, such as in late April 2007, when the
United States announces new aircraft carrier task forces in the Gulf. The April 2008
deployment of a second carrier group to the Gulf was, according to Secretary Gates,
a “reminder” to Iran of U.S. capabilities in the Gulf.
The U.S. Gulf deployments build on a containment strategy inaugurated in
mid-2006 by the State Department, primarily the Bureau of Political-Military Affairs
(“Pol-Mil”). The State Department effort represented an effort to revive some of the
U.S.-Gulf state defense cooperation that had begun during the Clinton Administration
but had since languished as the United States focused on the post-September 11 wars
in Afghanistan and Iraq. In a December 8, 2007 speech in Bahrain, Secretary Gates
said the “Gulf Security Dialogue,” which is now in its third round of talks, has six
key pillars, some of which go beyond Iran containment:
Defense cooperation (with the Gulf states).
Developing a shared assessment and agenda on Iraq.
Regional stability, especially with respect to Iran.
Energy infrastructure security.
Shanker, Thom. “U.S. and Britain to Add Ships to Persian Gulf in Signal to Iran,” New
York Times, December 21, 2006.
One goal of the initiative is on boosting Gulf state capabilities fueled
speculation about major new weapons sales to the GCC states. The emphasis of the
sales is to improve Gulf state missile defense capabilities, for example by sales of the
upgraded Patriot Advanced Capability-3 (PAC-3),48 as well as to improve border and
maritime security equipment through sales of combat littoral ships, radar systems,
and communications gear. The initial sales, including PAC-3 related sales to UAE
and Kuwait, and Joint Direct Attack Munitions (JDAMs) to Saudi Arabia and UAE
were notified to Congress in December 2007 and January 2008.
Presidential Authorities and Legislation. A decision to take military
action might raise the question of presidential authorities and congressional
consultation, and some in Congress have begun to express concern that the
Administration might be preparing for military action against Iran, despite
Administration denials to that effect. In the 109th Congress, H.Con.Res. 391,
introduced on April 26, 2006, called on the President to not initiate military action
against Iran without first obtaining authorization from Congress. A similar bill,
H.Con.Res. 33, has been introduced in the 110th Congress. Other bills requiring
specific congressional authorization for use of force against Iran (or prohibiting U.S.
funds for that purpose) include S.Res. 356, H.J.Res. 14, H.R. 3119, S.Con.Res. 13,
S. 759, and H.R. 770. A provision that sought to bar the Administration from taking
military action against Iran without congressional authorization was taken out of an
early draft of an FY2007 supplemental appropriation (H.R. 1591) to fund additional
costs for Iraq and Afghanistan combat (which was vetoed on May 1, 2007).
A major feature of policy for part of 2006 — promotion of “regime change”
— has appeared to since recede. Senior U.S. officials now say that the democracy
promotion programs discussed below are intended to promote political evolution in
Iran and lead to changes in regime behavior, not outright replacement. Still, several
high-ranking U.S. officials, purportedly including Vice President Cheney, believe
that only an outright change of regime would permanently reduce the threat posed by
Iran. One account said that President Bush had authorized some covert operations
to destabilize the regime.49 There has been some support in the United States for
regime change since the 1979 Islamic revolution; the United States provided some
funding to anti-regime groups, mainly pro-monarchists, during the 1980s.50 The
Administration’s attraction to this option became apparent after the September 11,
“New Persian Gulf Security Effort Expected to Fuel Arms Sales in FY-07.” Inside the
Pentagon, November 9, 2006.
Ross, Brian and Richard Esposito. Bush Authorizes New Covert Action Against Iran.
CRS conversations with U.S. officials responsible for Iran policy. 1980-1990. After a
period of suspension of such assistance, in 1995, the Clinton Administration accepted a
House-Senate conference agreement to include $18-$20 million in funding authority for
covert operations against Iran in the FY1996 Intelligence Authorization Act (H.R. 1655, P.L.
104-93), according to a Washington Post report of December 22, 1995. The Clinton
Administration reportedly focused the covert aid on changing the regime’s behavior, rather
than its overthrow.
2001, attacks, when President Bush’s described Iran as part of an “axis of evil” in
his January 2002 State of the Union message. President Bush’s second inaugural
address (January 20, 2005) and his State of the Union messages of February 2, 2005,
and January 31, 2006, suggested a clear preference for a change of regime by stating,
in the latter speech, that “... our nation hopes one day to be the closest of friends with
a free and democratic Iran.” Indications of affinity for this option include increased
public criticism of the regime’s human rights record — for example supporting
General Assembly resolutions condemning Iran’s human rights record — as well as
the funding of Iranian pro-democracy activists.
The State Department is the implementer of these programs. In 2006, the
Administration began increasing the presence of Persian-speaking U.S. diplomats in
U.S. diplomatic missions around Iran, in part to help identify and facilitate Iranian
participate in U.S. democracy-promotion programs. The Iran unit at the U.S.
consulate in Dubai has been enlarged significantly, and new “Iran-watcher” positions
have been added to U.S. diplomatic facilities in Baku, Azerbaijan; Istanbul, Turkey;
Frankfurt, Germany; London; and Ashkabad, Turkmenistan, all of which have large
expatriate Iranian populations and/or proximity to Iran.51 An enlarged (six-person)
“Office of Iran Affairs” has been formed at State Department, and it is reportedly
engaging in contacts with U.S.-based exile groups such as those discussed earlier.52
The State Department has used funds provided in recent appropriations to support
pro-democracy programs run by 26 organizations based in the United States in
Europe. The Department refuses to name grantees for security reasons. Part of the
program is to promote people-to-people exchanges which might help alter the image
of the United States in Iran; to date the State Department has sponsored exchanges
with about 150 Iranian academics, professionals, athletes, artists, and medical
professionals. The Department has also formed a Persian-language website. Iran
asserts that funding democracy promotion represents a violation of the 1981 “Algiers
Accords” that settled the Iran hostage crisis and provide for non-interference in each
others’ internal affairs.
Funding. As shown below, prior to FY2008, a total of $42.2 million has
been appropriated for Iran democracy promotion ($15.2 million through DRL and
$27 million through the Bureau of Near Eastern Affairs). Of that, as of October 2007,
$35.65 million has been obligated, and $9.109 million disbursed.
Stockman, Farah. “‘Long Struggle’ With Iran Seen Ahead.” Boston Globe, March 9, 2006.
Weisman, Steven. “U.S. Program Is Directed At Altering Iran’s Politics.” New York
Times, April 15, 2006.
Table 8. Iran Democracy Promotion Funding
Foreign operations appropriation (P.L. 108-199) earmarked $1.5 million for
“educational, humanitarian and non-governmental organizations and
individuals inside Iran to support the advancement of democracy and human
rights in Iran.” The State Department Bureau of Democracy and Labor
(DRL)53 gave $1 million to the IHDC organization, mentioned earlier;
$500,000 to National Endowment for Democracy (NED).
$3 million from FY2005 foreign aid appropriation (P.L. 108-447) for
democracy promotion. Priority areas were political party development, media
development, labor rights, civil society promotion, and human rights.
$11.15 for democracy promotion from regular FY2006 foreign aid
appropriation (P.L. 109-102). $4.15 million administered by DRL and $7
million for the Bureau of Near Eastern Affairs.
Total of $66.1 million (of $75 million requested) from FY2006 supplemental
(P.L. 109-234): $20 million for democracy programs ($5 million above
request); $5 million for public diplomacy directed at the Iranian population
(amount requested); $5 million for cultural exchanges (amount requested);
and $36.1 million for Voice of America-TV and “Radio Farda” broadcasting
($13.9 million less than request). Of all FY2006 funds, the State Department
said on June 4, 2007 that $16.05 million was obligated for democracy
promotion programs, as was $1.77 million for public diplomacy and $2.22
million for cultural exchanges (bringing Iranian professionals and language
teachers to the United States). Broadcasting funds provided through the
Broadcasting Board of Governors; began under Radio Free Europe/Radio
Liberty (RFE/RL), in partnership with the VOA, in October 1998.54 Farda
(“Tomorrow” in Farsi) received $14.7 million of FY2006 funds; now
broadcasts 24 hours/day. VOA Persian services (radio and TV) combined cost
about $10 million per year. VOA-TV began on July 3, 2003, and now is
broadcasting to Iran 12 hours a day.
FY2007 continuing resolution provided $6.55 million for Iran (and Syria)
to be administered through DRL. No funds were requested.
$60 million (of $75 million requested) is contained in Consolidated
Appropriation (H.R. 2764, P.L. 110-161), of which $21.8 million is ESF for
pro-democracy programs, including non-violent efforts to oppose Iran’s
meddling in other countries. Appropriation also fully funds additional $33.6
million requested for Iran broadcasting: $20 million for VOA Persian service;
and $8.1 million for Radio Farda; and $5.5 million for exchanges with Iran.
Request is for $65 million in ESF “to support the aspirations of the Iranian
people for a democratic and open society by promoting civil society, civic
participation, media freedom, and freedom of information.”
The State Department has determined that, because Iran is ineligible for U.S. aid, Iran
democracy promotion funds cannot be channeled through the Middle East Partnership
Initiative, because those are Economic Support Funds, ESF, and cannot be used in Iran.
The service began when Congress funded it at $4 million in the FY1998
Commerce/State/Justice appropriation (P.L. 105-119). It was to be called Radio Free Iran
but was never formally given that name by RFE/RL.
Many question the prospects of U.S.-led Iran regime change through
democracy promotion or other means, short of all-out-U.S. military invasion, because
of the weakness of opposition groups. Providing overt or covert support to antiregime organizations, in the view of many experts, would not make them materially
more viable or attractive to Iranians. The regime purportedly also conducts
extensive regime surveillance of democracy activists or other internal dissidents.
Iran has been arresting civil society activists by alleging they are accepting the U.S.
democracy promotion funds, while others have refused to participate in U.S.-funded
programs, fearing arrest. The highest profile such arrest came in May 2007, when
Iranian-American scholar Haleh Esfandiari, of the Woodrow Wilson Center in
Washington, DC, who had been under house arrest and unable to leave Iran since late
December 2006, was sent to Evin prison. Three other Iranian Americans were
arrested and accused by the Intelligence Ministry of actions contrary to national
security in May 2007: U.S. funded broadcast (Radio Farda) journalist Parnaz Azima
(who was not in jail but was not allowed to leave Iran); Kian Tajbacksh of the Open
Society Institute funded by George Soros; and businessman and peace activist Ali
Shakeri. All were released as of September 2007. Others argue that reformist
groups such as students, women, labor leaders, intellectuals, and others might be able
to galvanize regime change unexpectedly despite the repression; all of these groups
have conducted various small protests during the past few years. Several
congressional resolutions called on Iran to release Esfandiari (S.Res.214, agreed to
by the Senate on May 24; H.Res. 430, passed by the House on June 5; and S.Res.
Iran Freedom Support Act (P.L. 109-293). Legislation in the 109th
Congress exemplified the preference of some Members for regime change in Iran by
authorizing funding for democracy promotion, among other provisions. In the 109th
Congress, H.R. 282 passed the House on April 26, 2006, by a vote of 397-21. A
companion, S. 333, was introduced in the Senate. The Administration supported the
democracy-promotion sections of these bills, while opposing provisions on economic
sanctions, as discussed below in the section on the Iran Sanctions Act. Major
provisions of the bills were included in H.R. 6198, which was introduced on
September 27, 2006, passed by both chambers, and signed September 30, 2006 (P.L.
109-293). Entitled the Iran Freedom Support Act, it authorizes funds (no specific
dollar amount) for Iran democracy promotion and modifies the Iran Sanctions Act.
Many believe that the NIE findings largely preclude hard line options against
Iran, and that the United States should instead seek a comprehensive direct dialogue
with Iran. The Bush Administration has directly engaged Iran on specific issues
(Afghanistan and Iraq), viewing such dialogue as helpful to the stabilization missions
in those countries, but has refused an unconditional dialogue on all issues. The
United States had a dialogue with Iran on Iraq and Afghanistan from late 2001 until
May 2003, when the United States broke off the talks following the May 12, 2003,
terrorist bombing in Riyadh. At that time, the United States and Iran publicly
acknowledged that they were conducting direct talks in Geneva on those two issues,55
the first confirmed direct dialogue between the two countries since the 1979
revolution. The United States briefly resumed some contacts with Iran in December
2003 to coordinate U.S. aid to victims of the December 2003 earthquake in Bam,
Iran, including a reported offer to send a high-level delegation to Iran. However, Iran
rebuffed that offer. The recent meetings on Iraq were discussed above.
Regarding a broader dialogue with Iran on nuclear and other issues, since
2006 the Administration has maintained it would join multilateral nuclear talks, or
even potentially engage in direct bilateral talks, if Iran first suspends uranium
enrichment. Some believe the Administration position was based on a view that
offering to participate in a nuclear dialogue with Iran would later increase
international support for sanctions and other pressure mechanisms by demonstrating
the willingness of the Administration to resolve the issue diplomatically. An
amendment by Senator Biden (adopted June 2006) to the FY2007 defense
authorization bill (P.L. 109-364) supported the Administration’s offer to join nuclear
talks with Iran. As part of the U.S. declared openness to talk with Iran if it complies
on nuclear issues, the Administration indicated that it considers Iran a great nation
and respects its history; such themes have been prominent in speeches by President
Bush such as at the Merchant Marine Academy on June 19, 2006, and his September
18, 2006, speech to the U.N. General Assembly. Former senior U.S. diplomat
Thomas Pickering said in April 2008 that U.S. and Iranian former officials and
academics have been meeting to discuss formulas under which Iran might continue
to enriched uranium to non bomb-grade levels under monitoring to be determined.
U.S. officials have not, to date, offered an unconditional, direct U.S.-Iran
bilateral dialogue on all issues of U.S. concern: nuclear issues, Iranian support of
militant movements, involvement in Iraq, and related issues. Some view this as a
“missed opportunity,” saying that U.S. officials rebuffed a reported overture from
Iran just before the May 12, 2003, Riyadh bombing to negotiate all outstanding U.S.Iran issues as part of a so-called “grand bargain” that has been discussed by outside
experts and reported in various press articles. The Washington Post reported on
February 14, 2007 (“2003 Memo Says Iranian Leaders Backed Talks”), that the
Swiss Ambassador to Iran in 2003, Tim Guldimann, had informed U.S. officials of
a comprehensive Iranian proposal for talks with the United States. However, State
Department officials and some European diplomats based in Tehran at that time
question whether that proposal represented an authoritative communication from the
Iranian government. Some believe that the NIE gives the United States another
opportunity to explore the grand bargain possibility, in part because alternatives to
pressure Iran have become more difficult. Others might argue that the reported
offer was unrealistic because an agreement would have required Iran to abandon key
tenets of its Islamic revolution, including support for Hezbollah and acceptance of
Israel’s right to exist. On January 3, 2008, Supreme Leader Khamene’i said he
would support resumed relations with the United States at the right time and under
the right circumstances, but not at the present because the United States would use
relations to insert spies into Iran. Secretary of State Rice said in late January 2008
that the United States does not consider Iran a “permanent enemy.”
Wright, Robin. “U.S. In ‘Useful’ Talks With Iran.” Los Angeles Times, May 13, 2003.
Further International and Multilateral Sanctions
If Iran does not accept new offers of incentives, the Administration is likely
to return, later in 2008, to consideration of new international and multilateral
sanctions. The following represent sanctions that the Security Council might impose
in future U.N. resolutions, along with some discussion of key positions expressed by
some Security Council or other nations on those ideas. Administration officials say
these or other additional sanctions might also be considered by a “coalition” of
countries, outside Security Council authorization — a possibility that reportedly was
discussed at a meeting of Security Council permanent members at the U.S. State
Department on September 21, 2007.56 On the other hand, even among U.S. allies,
Germany opposed sanctions outside Council action on the grounds that doing so
would undermine the Security Council process. 57 Among the further U.N. or
multilateral sanctions widely discussed are the following:
Mandating Reductions in Diplomatic Exchanges with Iran or
Prohibiting Travel by Iranian Officials.
As noted above,
Resolution 1803 imposes, rather than calls for, a ban on travel by
some named Iranian officials. A further option is to limit sports or
cultural exchanges with Iran, such as Iran’s participation in the
World Cup soccer tournament or the Olympics. However, many
experts oppose using sporting events to accomplish political goals.
Banning or Inspecting International Flights to and from Iran. Bans
on flights to and from Libya were imposed on that country in
response to the finding that its agents were responsible for the
December 21, 1988, bombing of Pan Am 103 (now lifted). There are
no indications that a passenger aircraft flight ban is under
consideration at the U.N. Security Council, although, as noted
above, inspections of Iranian international cargo flights and
shipping is authorized in Resolution 1803.
A Ban on Exports to Iran of Refined Oil Products or of Other
Products. Even before the NIE was released, members of the U.N.
Security Council did not appear ready to include this sanction in a
new Security Council resolution. Some countries that supply
gasoline to Iran, such as those listed in the economic table above
(see Table 3), might oppose this sanction. A gas exports ban would
almost certainly hurt Iran’s economy because Iran does not refine
enough gasoline to meet demand and must import gasoline,
although some experts believe Iran would be able to circumvent this
sanction by offering premium prices to suppliers. A bill, H.R. 2880,
would apply the Iran Sanctions Act (see below) to entities that sell
gasoline to Iran.
Wright, Robin. U.S., Europeans Planning Own Iran Sanctions. Washington Post,
September 22, 2007.
Berlin Says U.S. and France Guilty of Hypocrisy. Spiegel Online, September 24, 2007.
Financial and Trade Sanctions, Such as a Freeze on Iran’s
Financial Assets Abroad or Limiting Lending to Iran by Banks or
International Financial Institutions. Resolution 1737 and 1747
freeze the assets only of specific Iranian entities and individuals
named in those resolutions. A future resolution could mandate
reduction of official credit guarantees, and British Prime Minister
Brown indicated British support for this idea on November 12, 2007.
In response to U.S. urging, U.S. allies and their banks are already
reducing export credit guarantees and financing for Iran, as
discussed below. In his November 12, 2007 comments, Brown also
expressed support for a worldwide financing of energy projects in
Iran as a means of cutting off energy development in Iran, although
others believe that taking this step could cause worldwide energy
prices to rise further. As noted, Resolution 1803 authorizes — but
does not require — countries to curtail banking relationships with
Iran’s Bank Melli and Bank Saderat.
Imposing a Worldwide Ban on Sales of Arms to Iran. Resolution
1747 called for — but did not require — U.N. member states to
exercise restraint in selling arms to Iran. A future resolution might
mandate such an arms sales ban. Another option under discussion
is to eliminate the Resolution 1737 exemption from sanctions for the
Bushehr nuclear reactor project, although Russian support for such
a move is in doubt.
Imposing an International Ban on Purchases of Iranian Oil or Other
Trade /Ban on International Investment in Iran’s Energy Sector.
These are widely considered the most sweeping of sanctions that
might be imposed, and would be unlikely to be considered in the
Security Council unless the findings of the NIE somehow proved
completely incorrect. Virtually all U.S. allies conduct extensive
trade with Iran, and would oppose sanctions on trade in civilian
goods with Iran. A ban on oil purchases from Iran is unlikely to be
imposed because world oil prices remain over $ 100 per barrel and
could go far higher if such sanctions were imposed on Iran.
European/Japanese/Other Foreign Country Policy on Sanctions
and Trade Agreements. Although the United States and its allies are now
mostly aligned on Iran policy, some philosophical differences remain. Most U.S.
allies still favor engagement and incentives — not just economic or political
punishments — as tools to change Iran’s behavior. During 1992-1997, when the
United States was tightening its own sanctions against Iran, the European Union (EU)
countries maintained a policy of “critical dialogue” with Iran, and the EU and Japan
refused to join the 1995 U.S. trade and investment ban on Iran. The European
dialogue with Iran was suspended in April 1997 in response to the German terrorism
trial (“Mykonos trial”) that found high-level Iranian involvement in assassinating
Iranian dissidents in Germany, but resumed in May 1998 after Khatemi became
With Iran still defiant on nuclear issues, the European countries and Japan are
no longer negotiating new trade agreements and other economic interaction with Iran.
In December 2002, as part of its engagement strategy, the EU (European
Commission) first began negotiations with Iran on a “Trade and Cooperation
Agreement” (TCA) that would lower the tariffs or increase quotas for Iranian exports
to the EU countries. However, revelations about Iran’s undeclared nuclear activity
caused a suspension of the talks in July 2003. The TCA talks resumed in January
2005 in concert with the “Paris Agreement,” but were suspended after the
breakdown of the Paris Agreement. During the active period of such talks, there
were working group discussions focused not only on the TCA terms and proliferation
issues but also on Iran’s human rights record, Iran’s efforts to derail the Middle East
peace process, Iranian-sponsored terrorism, counter-narcotics, refugees, migration
issues, and the Iranian opposition PMOI. In addition, several EU countries report
that civilian trade with Iran is down because Iran’s defiance on the nuclear issue is
introducing more perceived risk to trading with Iran.
Similarly, there is insufficient international support to grant Iran membership
in the World Trade Organization (WTO) until there is progress on the nuclear issue.
Iran first attempted to apply to join the WTO in July 1996. On 22 occasions after
that, representatives of the Clinton and then the Bush Administration blocked Iran
from applying (applications must be by consensus of the 148 members). As discussed
above, as part of an effort to assist the EU-3 nuclear talks with Iran, the
Administration announced on March 11, 2005, that it would drop opposition to Iran’s
applying for WTO membership. At a WTO meeting in May 2005, no opposition to
Iran’s application was registered, and Iran formally began accession talks.
Foreign Banking and Financing Limitations.
including Undersecretary of State Burns and Undersecretary of the Treasury Stuart
Levey, say that they are having substantial success in separate unilateral effort to
persuade European governments and companies to stop financing commerce with
Iran. Then Under Secretary of State Burns and Under Secretary of the Treasury
Levey testified on March 21, 2007, that “many leading foreign banks ... [have
concluded] that they simply did not wish to be a banker for a regime that deliberately
conceals the nature of its illicit business.” Treasury and State Departments officials,
as recently as April 17, 2008 testimony before the House Foreign Affairs Committee,
say they have persuaded at least 40 banks not to provide financing for exports to Iran
or to process dollar transactions for Iranian banks. Among those pulling out of Iran
are UBS and Credit Suisse (Switzerland), HSBC (Britain), Germany’s Commerzbank
A.G and Deutsche Bank AG.
In an attempt to prevent Iran’s use of non-European banks to circumvent these
pullouts, U.S. pressure has reportedly convinced Kuwaiti banks to stop transactions
with Iranian accounts,58 and South Korean banks are considering doing the same.
The restrictions on financing are, according to Iranian and outside observers, making
it more difficult to fund energy industry and other projects in Iran, and particularly
hurting small Iranian businesses who have to pay new fees and premiums in order to
Mufson, Steven and Robin Wright. “Iran Adapts to Economic Pressure.” Washington
Post, October 29, 2007.
collect on accounts earned by outside trade. The results are due also to U.S.
presentations of the financial risk posed by providing credit to Iran. The Organization
for Economic Cooperation and Development (OECD) in 2006 raised the financial
risk rating for Iran.
Some of these moves by European banks have come about by U.S. pressure.
In 2004, the Treasury Department fined UBS $100 million for the unauthorized
movement of U.S. dollars to Iran and other sanctioned countries, and on December
20, 2005, the Treasury Department fined Dutch bank ABN Amro $80 million for
failing to fully report the processing of financial transactions involving Iran’s Bank
Melli (and another bank partially owned by Libya). On September 8, 2006, the
Treasury Department said it would bar U.S. banks from handling any indirect
transactions (“U-turn transactions, meaning transactions with non-Iranian foreign
banks that are handling transactions on behalf of an Iranian bank) with Iran’s Bank
Saderat (see above), which the Administration accuses of providing funds to
Hezbollah.59 Bank Sepah is subject to asset freezes and transactions limitations as
a result of their naming as sanctionable entities under Resolution 1737 and 1747.
The Treasury Department reportedly is considering similar sanctions against Bank
Markazi (Central Bank) which, according to a February 25, 2008 Wall Street Journal
story, is helping other Iranian banks circumvent the U.S. and U.N. banking pressure.
As another sign of success for the U.S. campaign, some EU countries say
they have reduced credit guarantee exposure to Iran since Resolution 1737 was
passed in December 2006. The table at the beginning of this paper lists some
countries that have dramatically cut back credit guarantees for Iran. Previously, the
EU countries and their banks have maintained that financing for purely civilian goods
is not banned by any U.N. resolution and that exporters of such goods should not be
penalized. In the 1990s, European and Japanese creditors — over U.S. objections —
rescheduled about $16 billion in Iranian debt. These countries (governments and
private creditors) rescheduled the debt bilaterally, in spite of Paris Club rules that call
for multilateral rescheduling. Iran’s improved external debt led most European export
credit agencies to restore insurance cover for exports to Iran. In July 2002, Iran
tapped international capital markets for the first time since the Islamic revolution,
selling $500 million in bonds to European banks.
World Bank Loans. The EU and Japan appear to have made new
international lending to Iran contingent on Iran’s response to international nuclear
demands. This represents a narrowing of past differences between the United States
and its allies on this issue. Acting under provisions of successive foreign aid laws,
in 1993 the United States voted its 16.5% share of the World Bank against loans to
Iran of $460 million for electricity, health, and irrigation projects, but the loans were
approved. To block that lending, the FY1994-FY1996 foreign aid appropriations
(P.L. 103-87, P.L. 103-306, and P.L. 104-107) cut the amount appropriated for the
U.S. contribution to the Bank by the amount of those loans. The legislation
contributed to a temporary halt in new Bank lending to Iran. During 1999-2005,
Iran’s moderating image had led the World Bank to consider new loans over U.S.
Kessler, Glenn. “U.S. Moves to Isolate Iranian Banks.” Washington Post, September 9,
opposition. In May 2000, the United States’ allies outvoted the United States to
approve $232 million in loans for health and sewage projects. During April 2003May 2005, a total of $725 million in loans were approved for environmental
management, housing reform, water and sanitation projects, and land management
projects, in addition to $400 million in loans for earthquake relief. (A provision of
H.R. 1400 and S. 970, introduced in the 110th Congress, would impose a new
restriction on U.S. contributions to the World Bank in proportion to the Bank’s
lending to Iran.)
Any international or multilateral sanctions would add to the wide range of
U.S. sanctions in place since the November 4, 1979, seizure of the U.S. hostages in
Tehran.60 Some experts believe that, even before U.S. allies have begun to impose
some sanctions on Iran, U.S. sanctions alone were slowing Iran’s economy, forcing
it to curb spending on weapons purchases.61 However, a report on U.S. sanctions by
the Government Accountability Office (GAO), published December 2007 (GAO-0858: Iran Sanctions: Impact in Furthering U.S. Objectives Is Unclear and Should Be
Reviewed ) found that the extent of the impact on Iran is “difficult to determine.”
The GAO studied said that, despite the U.S. sanctions, Iran’s global trade has
continued to expand from 1987 (when sanctions first began to be imposed) to 2006,
and that Iran had signed $20 billion in energy investment deals with foreign firms,
although these agreements might not ultimately be carried out, as discussed below.
Terrorism/Foreign Aid Sanctions. In January 1984, following the
October 1983 bombing of the U.S. Marine barracks in Lebanon (believed perpetrated
by Hezbollah) Iran was added to the “terrorism list.” The list was established by
Section 6(j) of the Export Administration Act of 1979, sanctioning countries
determined to have provided repeated support for acts of international terrorism.
The terrorism list designation restricts sales of U.S. dual use items
(Export Administration Act, as continued by executive order), and,
under other laws, bans direct U.S. financial assistance (Foreign
Assistance Act, FAA) and arms sales (Arms Export Control Act),
and requires the United States to vote to oppose multilateral lending
to the designated countries (Anti-Terrorism and Effective Death
Penalty Act of 1996, P.L. 104-132). Waivers are provided under
these laws, but successive foreign aid appropriations laws since the
late 1980s ban direct assistance to Iran (loans, credits, insurance,
Eximbank credits) without providing for a waiver.
Section 307 of the FAA (added in 1985) names Iran as unable to
benefit from U.S. contributions to international organizations, and
require proportionate cuts if these institutions work in Iran. No
waiver is provided for.
On November 14, 1979, President Carter declared a national emergency with respect to
Iran, renewed every year since 1979.
“The Fight Over Letting Foreigners Into Iran’s Oilfields.” The Economist, July 14, 2001.
Under the Anti-Terrorism and Effective Death Penalty Act, the
President is required to withhold U.S. foreign assistance to any
country that provides to a terrorism list country foreign assistance or
arms. Waivers are provided.
U.S. sanctions laws do not bar disaster aid and the United States
donated $125,000, through relief agencies, to help victims of two
earthquakes in Iran (February and May 1997), and another $350,000
worth of aid to the victims of a June 22, 2002 earthquake. (The
World Bank provided some earthquake related lending as well.) The
United States provided $5.7 million in assistance (out of total
governmental pledges of about $32 million, of which $17 million
have been remitted) to the victims of the December 2003 earthquake
in Bam, Iran, which killed as many as 40,000 people and destroyed
90% of Bam’s buildings. The United States flew in 68,000
kilograms of supplies to Bam with U.S. military aircraft.
Proliferation Sanctions. Iran is prevented from receiving advanced
technology from the United States under relevant and Iran-specific anti-proliferation
laws.62 The Iran-Iraq Arms Nonproliferation Act (P.L. 102-484) requires denial of
license applications for exports to Iran of dual use items, and imposes sanctions on
foreign countries that transfer to Iran “destabilizing numbers and types of
conventional weapons,” as well as WMD technology. The Iran Nonproliferation Act
(P.L. 106-178, now called the Iran-Syria Non-Proliferation Act, or ISNA) authorizes
sanctions on foreign entities that assist Iran’s WMD programs. It bans U.S.
extraordinary payments to the Russian Aviation and Space Agency in connection
with the international space station unless the President can certify that the agency
or entities under its control had not transferred any WMD or missile technology to
Iran within the year prior. 63
Reflecting a Bush Administration decision to impose sanctions for violations,
the Bush Administration has sanctioned numerous entities as discussed below. These
entities were sanctioned under the INA, the Iran-Iraq Arms Non-Proliferation Act of
1992 (P.L. 102-484), and another law, the Chemical and Biological Warfare
Elimination Act of 1991, for sales to Iran. Those entities are listed in Table 8.
As with previous years’ appropriations, the FY2007 foreign aid appropriation
(H.R. 5522, P.L. 110-5) punishes the Russian Federation for assisting Iran by
withholding 60% of any U.S. assistance to the Russian Federation unless it
terminates technical assistance to Iran’s nuclear and ballistic missiles programs. A
Such laws include the Atomic Energy Act of 1954 and the Energy Policy Act of 2005
The provision contains certain exceptions to ensure the safety of astronauts, but it
nonetheless threatened to limit U.S. access to the international space station after April
2006, when Russia started charging the United States for transportation on its Soyuz
spacecraft. Legislation in the 109th Congress (S. 1713, P.L. 109-112) amended the provision
in order to facilitate continued U.S. access and extended INA sanctions provisions to Syria.
similar provision is contained in the FY2008 foreign aid bill (H.R. 2764, included in
the omnibus appropriation). A provision of H.R. 1400 and of S. 970 would restrict
nuclear cooperation with Russia, under the Atomic Energy Act of 1954, if it
continues to assist Iran’s nuclear or advanced conventional weapons capabilities.
(The two bills refer to different sections of the Atomic Energy Act, however.)
Executive Order 13382, allows the President to block the assets of
proliferators of weapons of mass destruction (WMD) and their supporters under the
authority granted by the International Emergency Economic Powers Act (IEEPA, 50
U.S.C. 1701 et seq.), the National Emergencies Act (50 U.S.C. 1601 et seq.), and
Section 301 of Title 3, United States Code. Iranian entities designated under E.O.
13382 are listed in Table 9 at the end of this paper. As noted above, the
Revolutionary Guard, several Guard officers, several Iranian banks, and other entities
were designated under this Order on October 21, 2007.
Counter-Narcotics. In February 1987, Iran was first designated as a state
that failed to cooperate with U.S. anti-drug efforts or take adequate steps to control
narcotics production or trafficking. U.S. and U.N. Drug Control Program (UNDCP)
assessments of drug production in Iran prompted the Clinton Administration, on
December 7, 1998, to remove Iran from the U.S. list of major drug producing
countries. This exempts Iran from the annual certification process that kept drugrelated U.S. sanctions in place on Iran. According to several governments, over the
past few years Iran has augmented security on its border with Afghanistan in part to
prevent the flow of narcotics from that country into Iran. Britain has sold Iran some
night vision equipment and body armor for the counter-narcotics fight. Iran also
reportedly is supporting the international counter-narcotics effort in Afghanistan by
providing aid to Afghan farmers to grow crops other than poppy.
U.S. Trade Ban/Subsidiaries. On May 6, 1995, President Clinton issued
Executive Order 12959 banning U.S. trade and investment in Iran.64 This followed
an earlier March 1995 executive order barring U.S. investment in Iran’s energy
sector. The trade ban was partly intended to blunt criticism that U.S. trade with Iran
made U.S. appeals for multilateral containment of Iran less credible. Each March
since 1995, the U.S. Administration has renewed a declaration of a state of
emergency that triggered the investment ban. Some modifications to the trade ban
since 1999 account for the trade that does exist between the United States and Iran.
(H.R. 1400 and S. 970, see below, would reimpose many of the restrictions).
The following conditions and modifications, as administered by the Office
of Foreign Assets Control (OFAC) of the Treasury Department, apply:
Some goods related to the safe operation of civilian aircraft may be
licensed for export to Iran, and as recently as September 2006, the
Bush Administration, in the interests of safe operations of civilian
aircraft, permitted a sale by General Electric of Airbus engine spare
An August 1997 amendment to the trade ban (Executive Order 13059) prevented U.S.
companies from knowingly exporting goods to a third country for incorporation into
products destined for Iran.
parts to be installed on several Iran Air passenger aircraft (by
European airline contractors). H.R. 1400 would ban such sales of
OFAC regulations do not permit U.S. firms to negotiate investment
deals with Iran or to trade Iranian oil overseas.
Since April 1999, commercial sales of food and medical products to
Iran have been allowed, on a case-by-case basis and subject to
OFAC licensing. According to OFAC in April 2007, licenses for
exports of medicines to treat HIV and leukemia are routinely
expedited for sale to Iran, and license applications are viewed
favorably for business school exchanges, earthquake safety seminars,
plant and animal conservation, and medical training in Iran. Private
letters of credit can be used to finance approved transactions, but no
U.S. government credit guarantees are available, and U.S. exporters
are not permitted to deal directly with Iranian banks. The FY2001
agriculture appropriations law (P.L. 106-387) contained a provision
banning the use of official credit guarantees for food and medical
sales to Iran and other countries on the U.S. terrorism list, except
Cuba, although allowing for a presidential waiver to permit such
credit guarantees. Neither the Clinton Administration nor the Bush
Administration provided the credit guarantees. H.R. 1400 and S. 970
do not contain provisions limiting such exports to Iran.
In April 2000, the trade ban was further eased to allow U.S.
importation of Iranian nuts, dried fruits, carpets, and caviar. The
United States was the largest market for Iranian carpets before the
1979 revolution, but U.S. anti-dumping tariffs imposed on Iranian
products in 1986 dampened of many Iranian products. The tariff on
Iranian carpets is now about 3% - 6%, and the duty on Iranian caviar
is about 15%. In December 2004, U.S. sanctions were further
modified to allow Americans to freely engage in ordinary publishing
activities with entities in Iran (and Cuba and Sudan). As of mid2007, the product most imported from Iran by U.S. importers is
pomegranate juice concentrate. H.R. 1400 and S. 970 would reimpose the ban on importation of such goods.
The trade ban permits U.S. companies to apply for licenses to
conduct “swaps” of Caspian Sea oil with Iran, but, as part of a U.S.
policy to route Central Asian energy around Iran (and Russia), a
Mobil Corporation application to do so was denied in April 1999.
In May 2002 Moody’s stopped its credit ratings service for Iran’s
government bonds on the grounds that performing this service might
violate the U.S. trade ban.
Subsidiaries. The trade ban does not bar subsidiaries of U.S. firms from
dealing with Iran, as long as the subsidiary has no operational relationship to the
parent company. Some U.S. companies have come under scrutiny for dealings by
their subsidiaries with Iran. H.R. 1400 and S. 970 — as well as the House-passed
H.R. 957 — would apply sanctions to the parent companies of U.S. subsidiaries if
those subsidiaries are directed or formed to trade with Iran. Among subsidiaries of
U.S. firms that trade with Iran are:
On January 11, 2005, Iran said it had let a contract to the U.S.
company Halliburton, and an Iranian company, Oriental Kish, to
drill for gas in Phases 9 and 10 of South Pars. Halliburton reportedly
provided $30 million to $35 million worth of services per year
through Oriental Kish, leaving unclear whether Halliburton would
be considered in violation of the U.S. trade and investment ban or
the Iran Sanctions Act (ISA),65 because the dealings apparently
involved a subsidiary of Halliburton (Cayman Islands-registered
Halliburton Products and Service, Ltd, based in Dubai). On April
10, 2007, Halliburton announced that its subsidiaries had, as
promised in January 2005, completed all contractual commitments
with Iran and that it is no longer operating there, but Halliburton has
said it is setting up a headquarters in Dubai to pursue additional
business in the region.
General Electric (GE) announced in February 2005 that it would
seek no new business in Iran, and it reportedly is expected to wind
down the already agreed contracts by July 2008. According to press
reports, GE had been selling Iran equipment and services for
hydroelectric, oil and gas services, and medical diagnostic projects
through Italian, Canadian, and French subsidiaries. The trade ban
appears to bar any Iranian company from buying a foreign company
that has U.S. units.
A subsidiary of Foster Wheeler company is said to be providing Iran
energy related technology.
An Irish subsidiary of the Coca Cola company provides syrup for the
U.S.-brand soft drink to an Iranian distributor, Khoshgovar. Local
versions of both Coke and of Pepsi (with Iranian-made syrups) are
also marketed in Iran by distributors who licensed the recipes for
those soft drinks before the Islamic revolution and before the trade
ban was imposed on Iran.
The Iran Sanctions Act (ISA). The Iran Sanctions Act penalizes foreign
(or U.S.) investment of more than $20 million in one year in Iran’s energy sector. 66
In the 109th Congress, broad ISA-amendment bills were H.R. 282, which was passed
by the House on April 26, 2006; a Senate companion measure, S. 333; and H.R.
6198, the latter of which was passed and then signed on September 30, 2006 (P.L.
“Iran Says Halliburton Won Drilling Contract.” Washington Times, January 11, 2005.
Originally called the Iran-Libya Sanctions Act, or ILSA; P.L. 104-172, August 5, 1996.
It was renewed by P.L. 107-24, August 3, 2001; renewed again for two months by P.L. 109267; and renewed and amended by P.L. 109-293.
109-293). This “Iran Freedom Support Act,” discussed above, extends ISA until
December 31, 2011, and drops Libya from the law, and is now called the Iran
Sanctions Act. It codified existing Iran sanctions, makes exports to Iran of WMD or
advanced conventional weapons technology sanctionable, and recommends (but does
not mandate) a 180-day time limit for the Administration to determine whether a
project violates ISA. It did not change the menu of available sanctions. As noted
above, it also authorized additional funding for promoting democracy in Iran. (See
CRS Report RS20871, The Iran Sanctions Act, by Kenneth Katzman.)
No projects have actually been sanctioned under ISA, and numerous
investment agreements with Iran since its enactment have helped Iran slow
deterioration of its energy export sector. However, some European companies are
reportedly hesitating on potential new energy investments in Iran, and there is
uncertainty about whether large agreements of investments by Asian companies will
be implemented. In 2007, in part to express displeasure on the nuclear issue, Japan’s
Inpex to cut its $2 billion investment to develop Iran’s large (26 billion barrels)
onshore Azadegan oil field to a stake of only about 10% in that project. An
agreement on that project was signed in April 2007. On the other hand, the NIE
might have unfrozen some deals; on December 9, 2007 China’s Sinopec finalized a
2004 deal to develop Yadavaran oil field and on December 26, Malaysia’s SKS
Ventures finalized a $16 billion, 25-year deal to develop on shore and off shore gas
One major project that Iran believes would help its gas export sector
considerably is a proposed gas pipeline from Iran through Pakistan, to India, on
which Iran and Pakistan said in November 2007 that they had reached final
agreement. A long delayed formal signing reportedly was to happen in late
February 2008, but has not taken place to date, although Ahmadinejad’s visit to India
in late April 2008 has reportedly revived Indian discussions on the deal and could
pave the way for a final agreement among the three countries. Another major deal
was considered a blow to European solidarity – the agreement in March 2008 by
Switzerland’s EGL utility to buy 194 trillion cubic feet per year of Iranian gas for 25
years, through a Trans-Adriatic Pipeline (TAP) to be built by 2010, a deal valued at
least $15 billion. The United States said it was launching a “legal review” of the
deal and criticized it as sending the “wrong message” to Iran, but the deal appears to
involve only purchase of Iranian gas, not development, and so many would consider
it unlikely to constitute a violation of ISA. It is also not clear whether or not Iran’s
reported investment to build five refineries in various Asian countries would
constituted sanctionable investment under ISA. H.R. 2880, as noted above, would
apply ISA to sales of gasoline to Iran.
Other recently announced preliminary agreements might test Administration
application of ISA. Many of these deals are included in a chart in the December
2007 GAO study referenced above. One is a deal reported in July 2007 for the
export of Iranian gas to Europe through the Iran-Turkey gas pipeline (a project not
sanctioned under ISA), which includes Turkish development of phases 22, 23, and
24 of the large South Pars gas field. In early October 2007, government-owned
GAIL (India) agreed to set up a $2.3 billion petrochemicals plant in Iran, which
would presumably use natural gas and oil products to manufacture rubber, plastics,
or related chemicals. Another such project is an investment by India’s Essar Steel
to build an oil refinery in Iran, although Essar said in November 2007 it is rethinking
that project since it could potentially, because of ISA, complicate its planned
investment in a steel plant in Minnesota. Syria has agreed to buy $1 billion worth of
Iranian natural gas per year from Iran (via Turkey), although this does not appear to
constitute an investment as defined in ISA. Iran says it will not extend a June 2008
deadline for Royal Dutch Shell and partner Repsol (Spain) to finalize a deal to
develop phases 13 and 14 of the large South Pars gas field; Royal Dutch Shell has
reportedly hesitated on the deal because of U.S. pressure on foreign firms not to do
business with Iran, and the implicit threat to impose ISA sanctions.
H.R. 1400, passed by the House on September 25, 2007, would remove the
Administration’s ability to waive application of sanctions under ISA. A companion
Senate measure, S. 970, does not contain a similar provision. The Administration
opposes that provision on the grounds that requiring sanctions on allied companies
would divide the United States and its allies on Iran policy. However, H.R. 1400 does
not impose on the Administration a time limit to determine whether a project is
sanctionable. H.R. 1400, S. 970, and another bill, H.R. 957 (the latter passed the
House on July 31, 2007) would clarify the definitions of sanctionable entities to
include official credit guarantee agencies, such as France’s COFACE and Germany’s
Hermes, and both bills would also clearly apply ISA sanctions to pipeline and
liquified natural gas (LNG) projects. H.R. 1400 would require the president to select
a ban procurement from a sanctioned entity as one of the two sanctions to impose.
Divestment. A growing trend not only in Congress but in at least nine U.S.
states is to require or call for or require divestment of shares of firms that have
invested in Iran’s energy sector (at the same levels considered sanctionable under the
Iran Sanctions Act). Thus far, state legislatures in California, Florida, Louisiana, and
Missouri have passed divestment legislation on Iran. Pending legislation, H.R. 1400
(see below), does not require divestment, but requires a presidential report on firms
that have invested in Iran’s energy sector. Another bill, H.R. 1357, would require
government pension funds to divest of shares in firms that have made ISAsanctionable investments in Iran’s energy sector and bar government and private
pension funds from future investments in such firms. Two other bills, H.R. 2347
(passed by the House on July 31, 2007) and S. 1430, would protect mutual fund and
other investment companies from shareholder action for any losses that would occur
from divesting in firms that have investing in Iran’s energy sector.
Pending Sanctions Legislation: H.R. 1400 and S. 970. Legislation
pending in the 110th Congress — primarily the Iran Counter-Proliferation Act of
2007, H.R. 1400 and S. 970 — would attempt to compel foreign adoption of tighter
sanctions against Iran. Their provisions on the Iran Sanctions Act were noted above.
In addition, both bills would broaden the types of foreign entities (to include official
credit guarantee agencies, for example) that could be sanctioned by the United States
for dealings with Iran. H.R. 1400, passed by the House on September 25, 2007 by a
vote of 397-16, would remove presidential waiver authority to avoid sanctioning such
companies. The bills would mandate cuts in U.S. contributions to the World Bank
for lending to Iran and preventing Russia from obtaining a nuclear agreement with
the United States if it continues supplying nuclear technology to Iran. Other
provisions of both would rescind the easing of the U.S. trade ban with Iran.
Travel-Related Guidance. Use of U.S. passports for travel to Iran is
permitted. Iranians entering the United States are required to be fingerprinted, and
Iran has imposed reciprocal requirements. In May 2007 the State Department
increased its warnings about U.S. travel to Iran, based largely on the arrests of the
dual Iranian-American nationals discussed earlier.
Status of Some U.S.-Iran Assets Disputes. A U.S.-Iran Claims
Tribunal at the Hague continues to arbitrate cases resulting from the 1980 break in
relations and freezing of some of Iran’s assets. Major cases yet to be decided center
on hundreds of Foreign Military Sales (FMS) cases between the United States and
the Shah’s regime, which Iran claims it paid for but were unfulfilled. About $400
million in proceeds from the resale of that equipment was placed in a DOD FMS
account, and about $22 million in Iranian diplomatic property remains blocked,
although U.S. funds have been disbursed — credited against the DOD FMS account
— to pay judgments against Iran for past acts of terrorism against Americans. Other
disputes include the mistaken U.S. shoot-down on July 3, 1988, of an Iranian Airbus
passenger jet (Iran Air flight 655), for which the United States, in accordance with
an ICJ judgment, paid Iran $61.8 million in compensation ($300,000 per wage
earning victim, $150,000 per non-wage earner) for the 248 Iranians killed. The
United States has not compensated Iran for the airplane itself. As it has in past similar
cases, the Administration has opposed a terrorism lawsuit against Iran by victims of
the U.S. Embassy Tehran seizure on the grounds of diplomatic obligation. 67
Mistrust between the United States and Iran’s Islamic regime has run deep for
over two decades. Many experts say that all factions in Iran are united on major
national security issues and that U.S.-Iran relations might not improve unless or until
the Islamic regime is removed or moderates substantially, even if a nuclear deal is
reached and implemented. The Administration and many experts believe that Iran has
become emboldened by the installation of pro-Iranian regimes in Iraq and
Afghanistan, and the new strength of Hezbollah in Lebanon, and that Iran now seeks
to press its advantage to strengthen regional Shiite movements and possibly drive the
United States out of the Gulf. Others reach an opposite conclusion, stating that Iran
now feels more encircled than ever by pro-U.S. regimes and U.S. forces guided by
a policy of pre-emption, and Iran is redoubling its efforts to develop WMD and other
capabilities to deter the United States. Some say that, despite Ahmadinejad’s
presidency, the United States and Iran have a common interest in stability in the
Persian Gulf and South Asia regions in the aftermath of the defeat of the Taliban and
the regime of Saddam Hussein and that major diplomatic overtures to Iran should be
See CRS Report RL31258, Suits Against Terrorism States by Victims of Terrorism, by
Jennifer K. Elsea.
Figure 1. Structure of the Iranian Government
Figure 2. Map of Iran
Table 9. Entities Sanctioned by U.N. Resolutions and
Executive Order 13382
Entities Named for Sanctions Under Resolution 1737
Atomic Energy Organization
of Iran (AEIO)
Mesbah Energy Company (Arak
Pars Trash Company
7th of Tir
Shahid Hemmat Industrial Group
(SHIG) — missile program
Fajr Industrial Group
Mohammad Qanadi, AEIO Vice
Dawood Agha Jani
(Natanz construction manager)
(adviser to AEIO)
Ali Hajinia Leilabadi
(director of Mesbah Energy)
Lt. Gen. Mohammad Mehdi Nejad
(Malak Ashtar University of
Defence Technology rector)
Gen Hosein Salimi
Ahmad Vahid Dastjerdi
(head of Aerospace
Industries Org., AIO)
Reza Gholi Esmaeli
Maj. Gen. Yahya Rahim
(Commander in Chief,
Entities Added by Resolution 1747
Ammunition and Metallurgy
(controls 7th of Tir)
Esfahan Nuclear Fuel Research and
Production Center and Esfahan
Nuclear Technology Center
(subsidiary of AEIO)
Parchin Chemical Industries
(branch of DIO)
Karaj Nuclear Research Center
Cruise Missile Industry
(funds AIO and subordinate
Sanam Industrial Group
(subordinate to AIO)
Ya Mahdi Industries Group
Qods Aeronautics Industries
(produces UAV’s, para-gliders for
IRGC asymmetric warfare)
Pars Aviation Services
(maintains IRGC Air
(produces IRGC light aircraft
for asymmetric warfare)
(senior defense scientist)
Seyed Jaber Safdari
(head of Esfahan nuclear facilities)
(head of Fajr Industrial
Ketabachi (head of SBIG)
(head of SHIG)
(head of Bank Sepah)
Brig. Gen. Morteza Reza’i
Vice Admiral Ali Akbar Ahmadiyan
(chief of IRGC Joint Staff)
Brig. Gen. Mohammad
(IRGC ground forces
Rear Admiral Morteza Safari
(commander, IRGC Navy)
Brig. Gen. Mohammad Hejazi
Brig. Gen. Qasem
Gen. Mohammad Baqr
(IRGC officer serving as
deputy Interior Minister
Entities Added by Resolution 1803
Thirteen Iranians named in
Annex 1 to Resolution 1803;
all reputedly involved in
various aspects of nuclear
Abzar Boresh Kaveh Co.
Electro Sanam Co.
Ettehad Technical Group
(AIO front co.)
Industrial Factories of
Jabber Ibn Hayan
Joza Industrial Co.
Niru Battery Manufacturing
(Makes batteries for Iranian
military and missile systems)
Pshgam (Pioneer) Energy Industries
(AIO front, involved in
(involved in uranium
Entities Designated Under U.S. Executive Order 13382
Shahid Hemmat Industrial Group (Iran)
June 2005, Sept. 07
Shahid Bakeri Industrial Group (Iran)
Atomic Energy Organization of Iran
Novin Energy Company (Iran)
Mesbah Energy Company (Iran)
Four Chinese entities: Beijing Alite Technologies, LIMMT
Economic and Trading Company, China Great Wall Industry Corp,
and China National Precision Machinery Import/Export Corp.
Sanam Industrial Group (Iran)
Ya Mahdi Industries Group (Iran)
Bank Sepah (Iran)
Defense Industries Organization (Iran)
Pars Trash (Iran, nuclear program)
Farayand Technique (Iran, nuclear program)
Fajr Industries Group (Iran, missile program)
Mizan Machine Manufacturing Group (Iran, missile prog.)
Aerospace Industries Organization (AIO) (Iran)
Korea Mining and Development Corp. (N. Korea)
Islamic Revolutionary Guard Corps (IRGC)
October 21, 2007
Ministry of Defense and Armed Forces Logistics
October 21, 2007
Bank Melli (Iran’s largest bank, widely used by the Guard); Bank
Melli Iran Zao (Moscow); Melli Bank PC (U.K.)
October 21, 2007
October 21, 2007
Arian Bank (joint venture between Melli and Bank Saderat). Based
October 21, 2007
Bank Mellat (provides banking services to Iran’s nuclear sector);
Mellat Bank SB CJSC (Armenia). Reportedly has $1.4 billion in
assets in UAE
October 21, 2007
Persia International Bank PLC (U.K.)
October 21, 2007
Khatam ol Anbiya Gharargah Sazendegi Nooh (Revolutionary Guard
construction, contracting arm, with $7 billion in oil, gas deals
October 21, 2007
Oriental Oil Kish (Iranian oil exploration firm)
October 21, 2007
Ghorb Karbala; Ghorb Nooh (synonymous with Khatam ol Anbiya)
October 21, 2007
Sepasad Engineering Company (Guard construction affiliate)
October 21, 2007
Omran Sahel (Guard construction affiliate)
October 21, 2007
Sahel Consultant Engineering (Guard construction affiliate)
October 21, 2007
October 21, 2007
Gharargahe Sazandegi Ghaem
October 21, 2007
Bahmanyar Morteza Bahmanyar (AIO, Iran missile official, see
above under Resolution 1737)
October 21, 2007
Ahmad Vahid Dastjerdi (AIO head, Iran missile program)
October 21, 2007
Reza Gholi Esmaeli (AIO, see under Resolution 1737)
October 21, 2007
Morteza Reza’i (deputy commander, IRGC) See also Resolution
October 21, 2007
Mohammad Hejazi (Basij commander). Also, Resolution 1747
October 21, 2007
Ali Akbar Ahmadian (Chief of IRGC Joint Staff). Resolution 1747
October 21, 2007
Hosein Salimi (IRGC Air Force commander). Resolution 1737
October 21, 2007
Qasem Soleimani (Qods Force commander). Resolution 1747
October 21, 2007
Future Bank (Bahrain-based but allegedly controlled by Bank Melli)
March 12, 2008
Entities Sanctioned Under Executive Order 13224 (Terrorism Entities)
October 21, 2007
Bank Saderat (allegedly used to funnel Iranian money to Hezbollah,
Hamas, PIJ, and other Iranian supported terrorist groups)
October 21, 2007
Entities Sanctioned Under the Iran Non-Proliferation Act and other U.S. Proliferation
Norinco (China). For alleged missile technology sale to Iran.
Taiwan Foreign Trade General Corporation (Taiwan)
July 4, 2003
Tula Instrument Design Bureau (Russia). For alleged sales of laserguided artillery shells to Iran.
September 17, 2003
13 entities sanctioned including companies from Russia, China,
Belarus, Macedonia, North Korea, UAE, and Taiwan.
April 7, 2004
14 entities from China, North Korea, Belarus, India (two nuclear
scientists, Dr. Surendar and Dr. Y.S.R. Prasad), Russia, Spain, and
September 29, 2004
14 entities, mostly from China, for alleged supplying of Iran’s missile
program. Many, such as North Korea’s Changgwang Sinyong and
China’s Norinco and Great Wall Industry Corp, have been sanctioned
several times previously. Newly sanctioned entities included North
Korea’s Paeksan Associated Corporation, and Taiwan’s Ecoma
December 2004 and
9 entities, including those from China (Norinco yet again), India (two
chemical companies), and Austria. Sanctions against Dr. Surendar of
India (see September 29, 2004) were ended, presumably because of
information exonerating him.
December 26, 2005
7 entities. Two Indian chemical companies (Balaji Amines and
Prachi Poly Products); two Russian firms (Rosobornexport and
aircraft manufacturer Sukhoi); two North Korean entities (Korean
Mining and Industrial Development, and Korea Pugang Trading);
and one Cuban entity (Center for Genetic Engineering and
August 4, 2006
9 entities. Rosobornesksport, Tula Design, and Komna Design
Office of Machine Building, and Alexei Safonov (Russia); Zibo
Chemical, China National Aerotechnology, and China National
Electrical (China). Korean Mining and Industrial Development
(North Korea) for WMD or advanced weapons sales to Iran (and
14 entities, including Lebanese Hezbollah. Some were penalized for
transactions with Syria. Among the new entities sanctioned for
assisting Iran were Shanghai Non-Ferrous Metals Pudong
Development Trade Company (China); Iran’s Defense Industries
Organization; Sokkia Company (Singapore); Challenger Corporation
(Malaysia); Target Airfreight (Malaysia); Aerospace Logistics
Services (Mexico); and Arif Durrani (Pakistani national).
April 23, 2007
Entities Designated as Threats to Iraqi Stability under Executive Order 13438
Ahmad Forouzandeh. Commander of the Qods Force Ramazan
Headquarters, accused of fomenting sectarian violence in Iraq and of
organizing training in Iran for Iraqi Shiite militia fighters
January 9, 2008
Abu Mustafa al-Sheibani. Iran based leader of network that funnels
Iranian arms to Shiite militias in Iraq.
January 9, 2008
Isma’il al-Lami (Abu Dura). Shiite militia leader, breakaway from
Sadr Mahdi Army, alleged to have committed mass kidnappings and
planned assassination attempts against Iraqi Sunni politicians
January 9, 2008
Mishan al-Jabburi. Financier of Sunni insurgents, owner of proinsurgent Al-Zawra television, now banned
January 9, 2008
Al Zawra Television Station
January 9, 2008