Iran Sanctions
Kenneth Katzman
Specialist in Middle Eastern Affairs
June 23July 12, 2010
Congressional Research Service
7-5700
www.crs.gov
RS20871
CRS Report for Congress
Prepared for Members and Committees of Congress
Iran Sanctions
Summary
Numerous U.S. laws and regulations have been adopted to try to slow Iran’s weapons of mass
destruction (WMD) programs and curb its support for militant groups. The U.S. beliefview is that
sanctions, particularly those targeting Iran’s energy sector, which that provides about 80% of
government government
revenues, canmight reduce Iran’s ability to support its WMD programs and generate
domestic pressure within Iran to adopt policies more acceptable to the international community.
Some United and terrorism support activities. United
Nations sanctions have been imposed since 2006, with many of those same
objectives, although
more narrowly targeted to avoid harming the civilian population of Iran. The
wide range of U.S. sanctions restrictU.S. sanctions are
broader than those imposed by the United Nations - restricting U.S. trade with and investment in
Iran, prohibitprohibiting U.S. foreign
aid to Iran, and requirerequiring the United States to vote against
international lending to Iran. Several
laws and executive orders authorize the imposition of U.S.
penalties against foreign companies
that do business with Iran, as part of an effort to persuade
foreign firms to choose between the
Iranian market and the much larger U.S. market. U.S. efforts
to curb international energy
investment in Iran’s energy sector began in 1996 with the Iran Sanctions Act (ISA), but no firms
have been sanctioned under it. Still, ISA, when coupled with broader factors, may have
influenced some international firms’ decisions to refrain from investing in energy projects in Iran
Sanctions Act (ISA).
In an effort to exploit Iran’s dependence on imports of gasoline, in the 111th Congress, H.R. 2194
(which awaits action on a conference report submitted June 23, 2010), would add as ISA
signed into law on July 1 – P.L. 111-195) adds as ISA violations selling refined gasoline to Iran;
providing shipping insurance or other services to
deliver gasoline to Iran; or supplying equipment
to or performing the construction of oil refineries
in Iran. The conference reportnew law also adds a broad range of
other measures further restricting the already
limited amount of U.S. trade with Iran. The June 22, 2010, conference agreement on H.R. 2194
and
restricting some trade with countries that allow WMD-useful technology to reach Iran. The
enactment of this law follows the June 9, 2010, adoption of U.N. Security Council Resolution
1929, which imposes a
ban on sales of heavy weapons to Iran and sanctions many additional
Iranian entities affiliated
with its Revolutionary Guard, but does not mandate the stronger measures sought by the United
States such as sanctions on Iran’s
energy or broad financial sector.
The effectiveness of U.S. and international sanctions on Iran, by most accounts, is unclear. Iran’s
oil production has fallen to about 3.8 million barrels per day, from over 4 million barrels per day
several years ago, although Iran now has a gas export sector that it did not have before Iran
opened its fields to foreign investment in 1996. Some Iranian economic sectors have clearly been
harmed by sanctions, but any such effects have not, to date, caused a demonstrable shift in Iran’s
commitment to its nuclear program. The sanctions have, to some extent, fostered a growing
perception that Iran is an international outcast, demonstrated by the announcement over the past
two years by several major international firms that they are ending their business pursuits in Iran.
To try to further Iran’s isolation and strengthen the domestic opposition, the Obama
Administration and Congress appear to be increasingly emphasizing further measures that would
sanction Iranian officials who are human rights abusers, facilitate the democracy movement’s
access to information, and express outright U.S. support for the opposition. For a broader analysis
of policy on Iran, see CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by
Kenneth Nor is
there certainty about the degree to which the new U.N. and U.S. sanctions enacted in 2010 will
affect Iran’s economy and decisionmaking process. Even though no firms have been sanctioned
under ISA, that law, when coupled with broader factors, appears to have caused some
international firms to refrain from investing in energy projects in Iran. Partly as a consequence,
Iran’s oil production has fallen slightly to about 3.9 million barrels per day, from over 4.1 million
barrels per day several years ago, although Iran now has small natural gas exports that it did not
have before Iran opened its fields to foreign investment in 1996. And, U.S. and international
sanctions have contributed to recent decisions by numerous major international firms to end their
business pursuits in Iran. However, when measured against the overall strategic objectives of the
sanctions, there is a consensus that U.S. and U.N. sanctions have not, to date, caused a
demonstrable shift in Iran’s commitment to its nuclear program. Possibly in an effort to
accomplish the separate objective of promoting the cause of the domestic opposition in Iran, the
Obama Administration and Congress are increasingly emphasizing measures that would sanction
Iranian officials who are human rights abusers, facilitate the democracy movement’s access to
information, and express outright U.S. support for the opposition. For a broader analysis of policy
on Iran, see CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth
Katzman.
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Iran Sanctions
Contents
Overview ....................................................................................................................................1
The Iran Sanctions Act (ISA) ......................................................................................................1
Legislative History and Provisions ........................................................................................2
Key Provisions/”Triggers” and Available Sanctions ”Triggers”.........................................................2
Available Sanctions Under ISA .......................................................2
Requirement and Time Frame to Investigate Violations .............................................3
Waiver and Termination Authority......3
Available Sanctions Under ISA .......................................................................................3
ISA Sunset 4
Waiver and Termination Authority...................................................................................4
ISA Sunset ................................................4
Implementation, Effectiveness, and Ongoing Challenges......................................................................4
Application to Energy Routes5
Implementation, Effectiveness, and Ongoing Challenges.......................................................5
Application to Energy Routes...................................4
Application to Energy Purchases From or Sales to Iran.......................................................6
Application to Iranian Firms or the Revolutionary Guard ................................................67
Effectiveness of ISA .......................................................................................................6
Efforts in the 111th Congress to Expand ISA Application to Gasoline Production and
Sales—H.R. 2194 ........8
The Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010,
H.R. 2194/P.L. 111-195......................................................................................................79
Legislation in the 111th Congress ........................................./CISADA and Other Bills............................................9 10
Administration Review of Potential ISA Violations ....................................................... 1720
Ban on U.S. Trade and Investment With Iran............................................................................. 2325
Application to Foreign Subsidiaries of U.S. Firms ............................................................... 2426
Treasury Department “Targeted Financial Measures” ................................................................ 2628
Terrorism List Designation-Related Sanctions ........................................................................... 2729
Executive Order 13224 ....................................................................................................... 2830
Proliferation-Related Sanctions ................................................................................................. 2931
Iran-Iraq Arms Nonproliferation Act ................................................................................... 2931
Iran-Syria-North Korea Nonproliferation Act ...................................................................... 2931
Executive Order 13382 ....................................................................................................... 2931
Foreign Aid Restrictions for Suppliers of Iran...................................................................... 2931
Implementation ................................................................................................................... 3032
Relations to International Sanctions........................................................................................... 3032
European/Japanese/Other Foreign Country Policy on Sanctions
and Trade Agreements................................................................................................ 3234
World Bank Loans ........................................................................................................ 3335
Efforts to Promote Divestment .................................................................................................. 3336
Sanctions and Other Proposals to Support Iran’s Opposition...................................................... 3436
Expanding Internet and Communications Freedoms ............................................................ 3436
Measures to Sanction Human Rights Abuses and Promote the Opposition ........................... 3537
Blocked Iranian Property and Assets ......................................................................................... 3537
Tables
Table 1. Comparison of Major Versions of H.R. 2194..................../P.L. 111-195............................................ 1012
Table 2. Post-1999 Major Investments/Major Development Projects in
Iran’s Energy Sector............................................................................................................... 1921
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Table 3. Summary of Provisions of U.N. Resolutions on Iran Nuclear Program (1737,
1747, 1803, and 1929)............................................................................................................ 3234
Table 4. Entities Sanctioned Under U.N. Resolutions and
U.S. Laws and Executive Orders ............................................................................................ 3638
Contacts
Author Contact Information ...................................................................................................... 4346
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Iran Sanctions
Overview
The Obama Administration’s overall policy approach toward Iran has contrasted with the Bush
Administration’s by actively engaging Iran in negotiations on the nuclear issue, rather than
focusing only on increasing sanctions on Iranattempting to couple the imposition of sanctions to an active and sustained
effort to engage Iran in negotiations on the nuclear issue. That approach was not initially altered
because of
the Iranian dispute over its June 12, 2009, elections. However, with subsequent negotiations
negotiations yielding no firm Iranian agreement to compromise, the Administration and Congress
turned their focus to achieving the imposition of additional U.N. and U.S. sanctions whose
cumulative effect would be to diplomatically and economically isolate Iran to the maximum
extent possibleturned its focus to
imposing “biting” or “crippling” U.N. sanctions against Iran.
International sanctions on Iran (the latest of which are imposed by Resolution 1929, adopted June
9, 2010) are a relatively recent (post-2006) development. However, since its 1979 Islamic
revolution, Iran has been subjected to progressively more comprehensive and stringent U.S.
sanctions. Many of these U.S. sanctions overlap each other as well as the several U.N. sanctions
now in place. The Obama Administration and Congress have also begun to also alter some U.S.
laws and regulations to help Iran’s domestic opposition that has seethed since the June 12, 2009
presidential election in Iran. In February and June 2010, the Administration sanctioned additional
firms linked to Iran’s Revolutionary Guard, which was a target of Resolution 1929 and which is
viewed as the backbone of Iran’s apparatus of repression. President Obama renewed for another
year the U.S. trade and investment ban on Iran (Executive Order 12959) in March 2010.
A focus of Iran-related legislation in the 111th Congress has been to expand the provisions of the
Iran Sanctions Act (ISA) to apply to sales to Iran of gasoline and related equipment and services.
ISA, in its current form, has caused differences of opinion between the United States and its
European allies ever since its adoption in 1996 because it mandates U.S. imposition of sanctions
on foreign firms. The Administration has sought to ensure that the congressional sanctions
initiative does not hamper cooperation with key international partners whose support is needed to
adopt stricter international sanctions. This concern was incorporated, to a large extent, in P.L.
111-195. The growing international sentiment to sanction Iran has caused some major
international firms - some foreign subsidiaries of U.S. firms and some completely international
firms - to pull out of the Iranian market in order not to jeopardize business inIran has long been subject to
one of the most stringent U.S. sanctions regime of any country in the world. Many of these
sanctions overlap each other as well as the several U.N. sanctions imposed since 2006 because of
Iran’s nuclear program development. While seeking to increase international sanctions against
Iran, the Administration has begun to also alter some U.S. regulations to help Iran’s domestic
opposition and undermine the pillars of Iran’s regime. In February 2010, the Administration
sanctioned additional firms linked to Iran’s Revolutionary Guard, which were a particular target
of Resolution 1929. The Administration also has modified U.S. regulations to allow U.S. Internet
software to reach Iran—a move that appears to support a congressional trend to try to help the
domestic opposition in Iran. President Obama renewed for another year the U.S. trade and
investment ban on Iran (Executive Order 12959) in March 2010.
A particular focus of Iran-related legislation in the 111th Congress has been to expand the
provisions of the Iran Sanctions Act (ISA) to apply to sales to Iran of gasoline and related
equipment and services. ISA, in its current form, has caused differences of opinion between the
United States and its European allies ever since its adoption in 1996 because it mandates U.S.
imposition of sanctions on foreign firms. The Administration has sought to ensure that the
congressional sanctions initiative does not hamper cooperation with key international partners
whose support is needed to adopt stricter international sanctions. Still, the growing sentiment in
the United States and Europe for additional international and national sanctions against Iran has
caused some major international firms—some foreign subsidiaries of U.S. firms and some
completely international firms—to pull out of the Iranian market in order not to jeopardize their
businesses in these larger markets.
The Iran Sanctions Act (ISA)
The Iran Sanctions Act (ISA) is one among many U.S. sanctions in place against Iran. It has
attracted substantial attention because it authorizes penalties against foreign firms, many of which
are incorporated in countries that are allies of the United StatesU.S. allies. In the past, U.S. allies have
objected to banning
trade with Iran and to the U.S. imposition of sanctions, such as ISA, that
apply to non-U.S.
companies. This opposition has been despite the fact that most European
countries share the U.S.
goal of ensuring that Iran does not become a nuclear power. Congress
and the Clinton
Administration saw ISA as a potential mechanism to compel U.S. allies to join the
United States
in enacting trade sanctions against Iran. American firms are restricted from trading
with or
investing in Iran under separate U.S. executive measures, as discussed below. A bill now
in conference in the 111th Congress proposes amending the actAs noted, a bill
enacted in the 111th Congress (Comprehensive Iran Sanctions, Accountability, and Divestment
Act of 2010, P.L. 111-195) amended ISA to try to curtail additional types of
activity, such as
selling gasoline and gasoline shippingproduction-related equipment and services to Iran.
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Legislative History and Provisions
Originally called the Iran and Libya Sanctions Act (ILSA), ISA was enacted to try to deny Iran
the resources to further its nuclear program and to support terrorist organizations such as
Hizbollah, Hamas, and Palestine Islamic Jihad. Iran’s petroleum sector generates about 20% of
Iran’s GDP, but itsand 80% of its government revenue. Iran’s oil sector is as old as the petroleum
industry itself, and Iran’s onshore oil fields and oil industry infrastructure are aging and need substantial
far past peak
production and in need of substantial investment. Its large natural gas resources (940 trillion
cubic feet, exceeded only by Russia) were
virtually undeveloped when ISA was first enacted. Iran
has 136.3 billion barrels of proven oil reserves, the
third-largest after Saudi Arabia and Canada.
The opportunity for the United States to try to harm Iran’s energy sector came in November 1995,
when Iran opened
its energy the sector to foreign investment. To accommodate its ideology to retain insistence on retaining
control of its
national resources, Iran used a “buy-back” investment program in which foreign
firms recoup
their investments from the proceeds of oil and gas discoveries but do not receive equity. With
. With input from the
Administration, on September 8, 1995, Senator Alfonse D’Amato introduced the
“Iran Foreign
Oil Sanctions Act” to sanction foreign firms’ exports to Iran of energy technology.
A revised
version instead sanctioning investment in Iran’s energy sector passed the Senate on
December 18,
1995 (voice vote). On December 20, 1995, the Senate passed a version applying
the provisions to
Libya, which was refusing to yield for trial the two intelligence agents suspected
in the December
21, 1988, bombing of Pan Am 103. The House passed H.R. 3107, on June 19,
1996 (415-0), and
then concurred on a Senate version adopted on July 16, 1996 (unanimous
consent). The Iran and
Libya Sanctions Act was signed on August 5, 1996 (P.L. 104-172).
Key Provisions/”Triggers” and Available Sanctions”Triggers”
ISA consists of a number of “triggers”—transactions with Iran that would be considered
violations of ISA and could cause a firm or entity to be sanctioned under ISA’s provisions. ISA
When
triggered, ISA provides a number of different sanctions that the President could impose that
would harm a
foreign firm’s business opportunities in the United States. ISA does not, and
probably could not
practically, compel any foreign government to take action against one of its firms.
ISA requires the President to sanction companies (entities, persons) that make an “investment” of
more than $20 million in one year in Iran’s energy sector,1 or that sell to Iran weapons of mass
destruction (WMD) technology or “destabilizing numbers and types” of advanced conventional
weapons.2 ISA is primarily targeting foreign firms, because American firms are already prohibited
from investing in Iran under the 1995 trade and investment ban discussed earlier.
There is no time frame for the Administration to determine that a firm has violated ISA’s
provisions. P.L. 109-293, the “Iran Freedom Support Act” (signed September 30, 2006) amended
firms. Amendments added by P.L. 111-195, the Comprehensive Iran Sanctions, Accountability,
and Divestment Act of 2010 (CISADA), provide several means for governments and their firms
to avoid any possibility of U.S. sanctions by unilaterally ending their involvement with Iran.
The pre-2010 version of ISA requires the President to sanction companies (entities, persons) that
make an “investment”1 of more than $20 million in one year in Iran’s energy sector,2 or that sell
1
The definition of “investment” in ISA (Section 14 (9)) includes not only equity and royalty arrangements (including
additions to existing investment, as added by P.L. 107-24) but any contract that includes “responsibility for the
development of petroleum resources” of Iran. These definitions are interpreted by the State Department to include
pipelines to or through Iran, as well as contracts to lead the construction, upgrading, or expansions of such energy
related projects as refineries. However, the definition does not include sales of technology, goods, or services for such
projects, or financing of such purchases. For Libya, the threshold was $40 million, and sanctionable activity included
export to Libya of technology banned by Pan Am 103-related Security Council Resolutions 748 (March 31, 1992) and
883 (November 11, 1993). Under Section 4(d) of the act, for Iran, the threshold dropped to $20 million, from $40
million, one year after enactment, when U.S. allies did not join a multilateral sanctions regime against Iran.
2
This latter “trigger” was added by P.L. 109-293.
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ISA by calling for, but not requiring, a 180-day time limit for a violation determination (there is
no time limit in the original law). Other ISA amendments under that law included recommending
against U.S. nuclear agreements with countries that supply nuclear technology to Iran and
expanding provisions of the USA Patriot Act (P.L. 107-56) to curb money-laundering for use to
further WMD programs.
Earlier versions of legislation (H.R. 282, S. 333) that ultimately became P.L. 109-293 contained
ISA amendment proposals that were viewed by the Bush Administration as too inflexible and
The definition of energy sector had included oil and natural gas, but now, as a consequence of the enactment of P.L.
111-195, also includes liquefied natural gas (LNG), oil or LNG tankers, and products to make or transport pipelines
that transport oil or LNG.
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to Iran weapons of mass destruction (WMD) technology or “destabilizing numbers and types” of
advanced conventional weapons.3 ISA is primarily targeting foreign firms, because American
firms are already prohibited from investing in Iran under the 1995 trade and investment ban
discussed earlier. As shown in the table below, P.L. 111-195 added new triggers: selling to Iran
(over specified threshold amounts) refined petroleum (gasoline, aviation fuel, and other fuels
included in the definitions); and equipment or services for Iran to expand its own ability to
produce refined petroleum.
Activities That Do Not Constitute ISA Violations
Purchases of oil or natural gas from Iran do not appear to constitute violations of ISA, because
ISA sanctions investment in Iran’s energy sector and (following enactment of P.L. 111-195) sales
to Iran of gasoline or gasoline-related services or equipment. Some of the deals listed in the chart
later in this report involve combinations of investment and purchase. In addition, ISA does not
sanction sales to Iran of equipment that Iran could use to explore or extract its own oil or gas
resources. For example, selling Iran an oil or gas drill rig or motors or other gear that Iran will use
to drill for oil or gas would not appear to be sanctionable. However, as noted, with the
amendments of P.L. 111-195, sales of equipment to Iran to enhance or expand its oil refineries, of
equipment with which Iran could import gasoline, and of equipment that Iran could use to
construct an energy pipeline, are now sanctionable.
In March 2008, Switzerland’s EGL utility agreed 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
over $15 billion. The United States criticized the deal as sending the “wrong message” to Iran.
However, as testified by Under Secretary of State Burns on July 9, 2008, the deal appears to
involve only purchase of Iranian gas, not exploration, and would likely not be considered an ISA
violation. In August 2008, Germany’s Steiner-Prematechnik-Gastec Co. agreed to apply its
method of turning gas into liquid fuel at three Iranian plants.
Requirement and Time Frame to Investigate Violations
There has been no time frame for the Administration to determine that a firm has violated ISA’s
provisions. P.L. 109-293, the “Iran Freedom Support Act” (signed September 30, 2006) amended
ISA by calling for, but not requiring, a 180-day time limit for a violation determination (there is
no time limit in the original law). Other ISA amendments under that law included recommending
against U.S. nuclear agreements with countries that supply nuclear technology to Iran and
expanding provisions of the USA Patriot Act (P.L. 107-56) to curb money-laundering for use to
further WMD programs. P.L. 111-195 makes mandatory that the Administration investigate
potential ISA (as amended) violations, and makes mandatory the 180 day time limit for a
determination (with the exception that the mandatory investigations and time limit go into effect
one year after enactment, with respect to gasoline related sales to Iran. ) There is also a “special
rule” provided for by P.L. 111-195 which allows the Administration to avoid investigating any
company that ends or pledges to end the sanctionable activity with Iran.
Earlier versions of legislation (H.R. 282, S. 333) that ultimately became P.L. 109-293 contained
ISA amendment proposals that were viewed by the Bush Administration as too inflexible and
3
This latter “trigger” was added by P.L. 109-293.
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restrictive, and potentially harmful to U.S. relations with its allies. These provisions included
setting a mandatory 90-day time limit for the Administration to determine whether an investment
is a violation; cutting U.S. foreign assistance to countries whose companies violate ISA; and
applying the U.S.-Iran trade ban to foreign subsidiaries of U.S. firms.
Available Sanctions Under ISA
Once a firm is determined to be a violator, the original version of ISA requiredISA requires the imposition of
two of a menu of six
sanctions on that firm. The available sanctionsP.L. 111-195 added three new possible sanctions and
requires the imposition of at least three out of the nine against violators. The available sanctions
against the sanctioned entity that the President can select from (Section 6) include:
1. denial of Export-Import Bank loans, credits, or credit guarantees for U.S. exports
to the sanctioned entity;
2. denial of licenses for the U.S. export of military or militarily useful technology to
the entity;
3. denial of U.S. bank loans exceeding $10 million in one year to the entity;
4. if the entity is a financial institution, a prohibition on its service as a primary
dealer in U.S. government bonds; and/or a prohibition on its serving as a
repository for U.S. government funds (each counts as one sanction);
5. prohibition on U.S. government procurement from the entity; and
6. restriction on imports from the violating entity, in accordance with the
International Emergency Economic Powers Act (IEEPA, 50 U.S.C. 1701);
7. prohibitions in transactions in foreign exchange by the entity;
8. prohibition on any credit or payments between the entity and any U.S. financial
institution;
9. prohibition of the sanctioned entity from acquiring, holding, or trading any U.S.based property.
New Mandatory Sanction
P.L. 111-195 adds a provision to incent companies not to violate ISA. It requires companies, as a
condition of obtaining a U.S. government contract, to certify to the relevant U.S. government
agency, that the firm is not violating ISA, as amended. A contract may be terminated—and further
penalties imposed—if it is determined that the company’s certification of compliance was false.
Waiver and Termination Authority
The President has had .
Waiver and Termination Authority
The President has the authority under ISA to waive sanctions if he certifies that doing so is
important to the U.S. national interest (Section 9(c)). There was also waiver authority (Section
4c) if the parent
country of the violating firm joined a sanctions regime against Iran, but this
waiver provision was
changed by P.L. 109-293 to allow for a waiver determination based on U.S. vital national security
interests. ISA application to Iran would terminate if Iran is determined by the Administration to
have ceased its efforts to acquire WMD and is removed from the U.S. list of state sponsors of
terrorism, and no longer “poses a significant threat” to U.S. national security and U.S. allies.3
The existing version of ISA (Section5(f)) also contains several exceptions such that the President
is not required to impose sanctions that prevent procurement of defense articles and services
under existing contracts, in cases where a firm is the sole source supplier of a particular defense
3
This latter termination requirement added by P.L. 109-293. This law also removed Libya from the act, although
application to Libya effectively terminated when the President determined on April 23, 2004, that Libya had fulfilled
the requirements of all U.N. resolutions on Pan Am 103.
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article or service. The President also is not required to prevent procurement or importation of
essential
vital national security interests. P.L. 111-195 changes the 9(c) waiver standard to “necessary” to
the national interest. The Section 4(c) waiver was altered by P.L. 111-195 to provide for a six
month (extendable) waiver if doing so is vital to the national interest and if the parent country of
the violating entity is “closely cooperating” with U.S. efforts against Iran’s WWMD and
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advanced conventional weapons program. The criteria of “closely cooperating” is defined in the
conference report, with primary focus on implementing all U.N. sanctions against Iran. However,
it is not clear why a Section 4 waiver would be used as opposed to a Section 9 waiver, although it
could be argued that using a Section 4 waiver would support U.S. diplomacy with the parent
country of the offending entity.
ISA application to Iran would terminate if Iran is determined by the Administration to have
ceased its efforts to acquire WMD; is removed from the U.S. list of state sponsors of terrorism;
and no longer “poses a significant threat” to U.S. national security and U.S. allies. 4
ISA (Section5(f)) also contains several exceptions such that the President is not required to
impose sanctions that prevent procurement of defense articles and services under existing
contracts, in cases where a firm is the sole source supplier of a particular defense article or
service. The President also is not required to prevent procurement or importation of essential
spare parts or component parts.
In the 110th Congress, several bills contained provisions that would have further amended ISA,
but they were not adopted. H.R. 1400, which passed the House on September 25, 2007 (397-16),
would have removed the Administration’s ability to waive ISA sanctions under Section 9(c),
national interest grounds, but it would not have imposed on the Administration a time limit to
determine whether a project is sanctionable.
ISA Sunset
ISA was to sunset on August 5, 2001, in a climate of lessening tensions with Iran (and Libya).
During 1999 and 2000, the Clinton Administration had eased the trade ban on Iran somewhat to
try to engage the relatively moderate Iranian President Mohammad Khatemi. However, some
maintained that Iran would view its expiration as a concession, and renewal legislation was
enacted (P.L. 107-24, August 3, 2001). This law required an Administration report on ISA’s
effectiveness within 24 to 30 months of enactment; that report was submitted to Congress in
January 2004 and did not recommend that ISA be repealed. Currently, as discussed below, ISA is
ISA was scheduled to sunset on
December 31, 2011 (as provided by P.L. 109-293). The sunset is now December 31, 2016, as
provided for in the CISADA, P.L. 111-195).
Implementation, Effectiveness, and Ongoing Challenges
Traditionally reticent to impose economic sanctions, the European Union opposed ISA as an
extraterritorial application of U.S. law and filed a formal complaint before the World Trade
Organization (WTO). In April 1997, the United States and the EU agreed to avoid a trade
confrontation over ISA and a separate Cuba sanctions law (P.L. 104-114). The agreement
involved the dropping of the WTO complaint and the May 18, 1998, decision by the Clinton
Administration to waive ISA sanctions (“national interest”—Section 9(c) waiver) on the first
4
This latter termination requirement added by P.L. 109-293. This law also removed Libya from
the act, although application to Libya effectively terminated when the President determined on
April 23, 2004, that Libya had fulfilled the requirements of all U.N. resolutions on Pan Am 103.
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project determined to be in violation. That project was a $2 billion4billion5 contract, signed in September
1997, for Total SA of France and its partners, Gazprom of Russia and Petronas of Malaysia to
develop phases 2 and 3 of the 25-phase South Pars gas field. The EU pledged to increase
cooperation with the United States on non-proliferation and counter-terrorism, and the
Administration indicated future investments by EU firms in Iran would not be sanctioned.56
Since the Total/Petronas/Gazprom project in 1998, no projects have been determined as violations
of ISA. As shown in Table 2 below, several foreign investment agreements have been agreed with
Iran since the 1998 Total consortium waiver, although some have been stalled, not reached final
agreement, or may not have resulted in actual production.
Application to Energy Routes
As noted in the footnote earlier, ISA’s definition of sanctionable “investment”—which specifies
investment in Iran’s petroleum resources, defined as petroleum and natural gas—has been
4
Dollar figures for investments in Iran represent public estimates of the amounts investing firms are expected to spend
over the life of a project, which might in some cases be several decades.
5
Text of announcement of waiver decision by then Secretary of State Madeleine Albright, containing expectation of
similar waivers in the future. http://www.parstimes.com/law/albright_southpars.html.
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interpreted by successive administrations to include construction of energy routes to or through
Iran. The Clinton and Bush interpreted by successive administrations to include construction of energy routes to or through
Iran. That has been reinforced by the amendments to ISA in P.L. 111-195. The Clinton and Bush
Administrations used the threat of ISA sanctions to deter oil routes
involving Iran and thereby
successfully promoted an alternate route from Azerbaijan (Baku) to
Turkey (Ceyhan). The route
became operational in 2005.
No determination of sanctionability was issued on a 1997 project viewed as necessary to U.S. ally
Turkey—an Iran-Turkey natural gas pipeline in which each constructed the pipeline on its side of
their border. State Department testimony stated that Turkey would be importing gas originating in
Turkmenistan, not Iran, under a swap arrangement. However, direct Iranian gas exports to Turkey
began in 2001, and, as shown in Table 2, in July 2007, a preliminary agreement was reached to
build a second Iran-Turkey pipeline, through which Iranian gas would also flow to Europe. That
agreement was not finalized during Iranian President Mahmoud Ahmadinejad’s visit to Turkey in
August 2008 because of Turkish commercial concerns but the deal remains under active
discussion. On February 23, 2009, Iranian newspapers said Iran had formed a joint venture with a
Turkish firm to export 35 billion cubic meters of gas per year to Europe; 50% of the venture
would be owned by the National Iranian Gas Export Company (NIGEC).
Iran and Kuwait reportedly are holding talks on the construction of a 350 mile pipeline that would
bring Iranian gas to Kuwait. The two sides have apparently reached agreement on volumes (8.5
million cubic meters of gas would go to Kuwait each day) but not on price.67 In May 2009, Iran
and Armenia inaugurated a natural gas pipeline between the two, built by Gazprom of Russia.
Iran-India Pipeline and Undersea Routes
Another pending pipeline project would carry Iranian gas, by pipeline, to Pakistan. India had been
a part of the $7 billion project, which would take about three years to complete, but India was
5
Dollar figures for investments in Iran represent public estimates of the amounts investing firms are expected to spend
over the life of a project, which might in some cases be several decades.
6
Text of announcement of waiver decision by then Secretary of State Madeleine Albright, containing expectation of
similar waivers in the future. http://www.parstimes.com/law/albright_southpars.html.
7
http://www.kuwaittimes.net/read_news.php?newsid=NDQ0OTY1NTU4; http://english.farsnews.com/newstext.php?
nn=8901181055.
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Iran Sanctions
reported in June 2010 to be largely out of the project, not signing a memorandum finalizing the
deal on June 12, 2010. Still, India might eventually reenter the project and Indian firms have won
bids to take some equity stakes in various Iranian energy projects, as shown in the table below.
India reportedly has been concerned about the security of the pipeline, the location at which the
gas would be officially transferred to India, pricing of the gas, tariffs, and the source in Iran of the
gas to be sold. During the Bush Administration, Secretary of State Rice on several occasions
“expressed U.S. concern” about the pipeline deal or called it “unacceptable,” but no U.S. official
in either the Bush or the Obama Administration has stated outright that it would be sanctioned.
India may envision an alternative to the pipeline project, as a means of tapping into Iran’s vast gas
resources. During high level economic talks in early July 2010, Iranian and Indian officials
reportedly raised the issue of constructing an underwater natural gas pipeline, which would avoid
going through Pakistani territory. However, such a route would presumably be much more
expensive to construct than would be an overland route.
European Gas Pipeline Routes
Iran also is attempting to position itself as a gas exporter to Europe. A potential project involving
Iran is the Nabucco pipeline project, which would transport Iranian gas to western Europe. Iran,
Turkey, and Austria reportedly have negotiated on that project. The Bush Administration did not
support Iran’s participation in the project, and the Obama Administration apparently takes the
same view, even though the project might make Europe less dependent on Russian gas supplies.
Iran’s Energy Minister Gholam-Hossein Nozari said on April 2, 2009, that Iran is considering
negotiating a gas export route—the “Persian Pipeline”—that would send gas to Europe via Iraq,
Syria, and the Mediterranean Sea.
6
http://www.kuwaittimes.net/read_news.php?newsid=NDQ0OTY1NTU4; http://english.farsnews.com/newstext.php?
nn=8901181055.
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Iran Sanctions
Application to Energy Purchases From or Sales to Iran
Major purchases of oil or natural gas from Iran would not appear to constitute violations of ISA,
as it exists currently, because ISA sanctions investment in Iran, not trade with Iran (even in energy
products). Nor do sales to Iran of equipment or services for Iran to build its own energy projects
appear to meet the definition of investment under the act. Some of the deals listed in the chart
later in this report involve combinations of investment and purchase.
In March 2008, Switzerland’s EGL utility agreed 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
over $15 billion. The United States criticized the deal as sending the “wrong message” to Iran.
However, as testified by Under Secretary of State Burns on July 9, 2008, the deal appears to
involve only purchase of Iranian gas, not exploration, and would likely not be considered an ISA
violation. In August 2008, Germany’s Steiner-Prematechnik-Gastec Co. agreed to apply its
method of turning gas into liquid fuel at three Iranian plants.
Application to Iranian Firms or the Revolutionary Guard
As noted above, any firm that meets the definition of investing in Iran’s energy sector under ISA
could be determined to violate ISA.
Application to Iranian Firms or the Revolutionary Guard
Although ISA is widely understood to apply to firms around
the world that reach an investment
agreement with Iran, the provisions could also be applied to
Iranian firms and entities subordinate
to the National Iranian Oil Company (NIOC), which is
supervised by the Oil Ministry. However,
such entities do not do business in the United States and
would not likely be harmed by any of the
penalties that wouldcould be imposed under ISA, if a
violation were determined. Some of the major components of NIOC are:
•
The Iranian Offshore Oil Company;
•
The National Iranian Gas Export Co.;
•
National Iranian Tanker Company; and
•
Petroleum Engineering and Development Co.
The actual construction and work is done through a series of contractors. Some of them, such as
Khatam ol-Anbia and Oriental Kish, have been identified by the U.S. government as controlled
by Iran’s Revolutionary Guard. The relationship of other Iranian contractors to the Guard, if any,
is unclear. Some of the Iranian contractor firms include Pasargad Oil Co, Zagros Petrochem. Co,
Sazeh Consultants, Qeshm Energy, Sadid Industrial Group, and others.
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Iran Sanctions
Effectiveness of ISA
U.S. administrations have maintained that, even without actually imposing ISA sanctions, the
threat of imposing sanctions—coupled with Iran’s reputedly difficult negotiating behavior, and
compounded by Iran’s growing isolation because of its nuclear program—have combined to slow
the development of Iran’s energy sector. As a result of sanctions and the overall climate of
international isolation of Iran, its oil production has fallen somewhatslightly to about 3.8 million barrels
per per
day (mbd) from about 4.1 million barrels per day (mbd) in the mid-2000s. Some Members of
Congress believe that ISA would have been even more effective if successive administrations had
imposed sanctions, and have expressed frustration that the executive branch has not imposed ISA
sanctions.
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Iran Sanctions
Some observers maintain that, over and above the threat of ISA sanctions and the international
pressure on Iran, it is Iran’s negotiating behavior that has slowed international investment in
Iran’s energy sector. Some international executives that have negotiated with Iran say Iran insists
on deals that leave little profit, and that Iran frequently seeks to renegotiate provisions of a
contract after it is ratified.
Some key energy investors in Iran, such as major European firms Repsol, Royal Dutch Shell, and
Total, and ENI have announced pullouts from some of their Iran projects, declined to make further
further investments, or resold their investments to other companies. On July 12, 2008, Total and
Petronas, the original South Pars investors, pulled out of a deal to develop a liquified natural gas
(LNG) export capability at Phase 11 of South Pars, saying that investing in Iran at a time of
growing international pressure over its nuclear program is “too risky.” Also in 2008, Japan
significantly reduced its participation in the development of Iran’s large Azadegan field. Some of
the void has been filled, at least partly, by Asian firms such as those of China and Malaysia.
, Malaysia, and
Vietnam. However, these companies are perceived as not being as technically capable as those
that have
withdrawn from Iran. These trends have constrained Iran’s energy sector significantly;
Iran’s
deputy Oil Minister said in November 2008 that Iran needs about $145 billion in new investment
investment over the next 10 years in order to build a thriving energy sector.
With Iran’s oil production appearing to slip gradually, some analyses, including by the National
Academy of Sciences, say that Iran might have negligible exports of oil by 2015.78 Others
maintain that Iran’s gas sector can more than compensate for declining oil exports, although it
needs gas to reinject into its oil fields and remains a relatively minor gas exporter. It exports about
3.6 trillion cubic feet of gas, primarily to Turkey. A GAO study of December 2007, (GAO-08-58),
contains a chart of post-2003 investments in Iran’s energy sector, totaling over $20 billion in
investment, although the chart includes petrochemical and refinery projects, as well as projects
that do not exceed the $20 million in one year threshold for ISA sanctionability.
In the 110th Congress, several bills—including S. 970, S. 3227, S. 3445, H.R. 957 (passed the
House on July 31, 2007), and H.R. 7112 (which passed the House on September 26, 2008)—
would have (1) expanded the definition of sanctionable entities to official credit guarantee
agencies, such as France’s COFACE and Germany’s Hermes, and to financial institutions and
insurers generally; and (2) made investment to develop a liquified natural gas (LNG) sector in
Iran a sanctionable violation. Iran has no LNG export terminals, in part because the technology
for such terminals is patented by U.S. firms and unavailable for sale to Iran.
Efforts in the 111th Congress to Expand ISA Application to Gasoline
Production and Sales—H.R. 2194
ISA, as currently constituted, has limited evident applications to Iran’s gasoline dependency. Iran
8
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.
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Iran Sanctions
for such terminals is patented by U.S. firms and unavailable for sale to Iran. The LNG provision
was included in P.L. 111-195 (CISADA), but not the credit guarantee proposals.
The Comprehensive Iran Sanctions, Accountability, and
Divestment Act of 2010, H.R. 2194/P.L. 111-195
ISA, as previously constituted, had limited evident applications to Iran’s gasoline dependency.
Iran is dependent on gasoline imports to supply about 25%-35% of its gasoline needs. To try to reduce
reduce that dependence, Iran has plans to build or expand, possibly with foreign investment, at
least eight
refineries. Selling Iran equipment with which it can build or expand its refineries using
its own
construction capabilities woulddid not appear to constitute “investment” under the current definition
previous
definition of ISA. However, taking responsibility for constructing oil refineries or petrochemical plants in
7
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.
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Iran Sanctions
Iran could constitute
plants in Iran has always constituted sanctionable projects under ISA because ISA’s definition of investment
investment includes “responsibility for the development of petroleum resources located in Iran.”
(Table 2
provides some information on openly announced contracts to upgrade or refurbish
Iranian oil
refineries.)
It is not clear whether or not Iranian investments in energy projects in other countries, such as
Iranian investment to help build five oil refineries in Asia (China, Indonesia, Malaysia, and
Singapore) and in Syria, reported in June 2007, would constitute “investment” under ISA.
Gasoline Sales
As noted, selling or shipping gasoline to Iran does not appear to meet the definition of
Many in the 111th Congress took exception to the fact that selling or shipping gasoline to Iran did
not previously constitute sanctionable activity under ISA. There appears to behave been a relatively limited
group of major gasoline
suppliers to Iran. In March 2010, several of them announced that they have stopped or would stop
supplying gasoline to Iran.8 As noted in a New York Times report of March 7, 2010,9 some firms
that have supplied Iran have received U.S. credit guarantees or contracts. The main suppliers to
, and many in Congress believed that trying to stop such
sells could put economic pressure on Iran’s leaders. In March 2010, well before the passage of
CSIDA on June 24, 2010, several gas suppliers to Iran, anticipating this legislation, announced
that they had stopped or would stop supplying gasoline to Iran.9 As noted in a New York Times
report of March 7, 2010,10 some firms that have supplied Iran have received U.S. credit
guarantees or contracts. The main suppliers to Iran and the status of their sales to Iran are
•
Vitol of Switzerland (which said in March 2010 it has stopped sales of gasoline
to Iran);1011
•
Trafigura of Switzerland (which also sayssaid in March 2010 it has stopped sales);
•
Glencore of Switzerland;
•
Total of France;
•
Reliance Industries of India (reportedly has promised to end sales to Iran);11 (said in March 2010 it has stopped selling gasoline to
Iran;
•
Total of France (announced a halt to sales in early July 2010);
•
Reliance Industries of India (reportedly has ended sales to Iran as of the end of
2009);12
9
Information in this section derived from, Blas, Javier. “Traders Cut Iran Petrol Line.” Financial Times, March 8,
2010.
10
Becker, Jo and Ron Nixon. “U.S. Enriches Companies Defying Its Policy on Iran.” New York Times, March 7, 2010.
11
http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
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Iran Sanctions
•
Petronas of Malaysia (said in mid-April 2010 it had stopped sales to Iran;12);13
•
Lukoil of Russia (reportedly said in April 2010 that it will end sales to Iran);1314
•
Royal Dutch Shell of the Netherlands (which says it stopped sales to Iran in
2009);1415
•
British Petroleum of United Kingdom (told CRS in e-mail conversation in late
2009 that it is not selling gasoline to Iran);
•
ZhenHua Oil of China (China’s firms reportedly supply one-third of Iran’s
gasoline imports);15
8
Information in this section derived from, Blas, Javier. “Traders Cut Iran Petrol Line.” Financial Times, March 8,
2010.
9
Becker, Jo and Ron Nixon. “U.S. Enriches Companies Defying Its Policy on Iran.” New York Times, March 7, 2010.
10
http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
11
http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
12
http://www.ft.com/cms/s/0/009370f0-486e-11df-9a5d-00144feab49a.html.
13
http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
14
http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
15
Blas, Javier, Carola Hoyas, and Daniel Dombey. “Chinese Companies Supply Iran With Petrol.” Financial Times,
September 23, 2009.
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Iran Sanctions16
•
Petroleos de Venezuela (reportedly reached a September 2009 deal to supply Iran
with gasoline);
•
Kuwait’s Independent Petroleum Group supplies Iran;1617 and
•
Munich Re, Allianz, and Hannover Re reportedly have exited the market for
insuring gasoline shipments for Iran.1718
•
Various aviation gasoline suppliers at various airports in Europe reportedly
suspended some refueling of Iran Air passenger aircraft after enactment of P.L.
111-195 because that law’s definition of refined petroleum includes aviation fuel.
The cessation of supplies to Iran by the large suppliers listed above, particularly Vitol, Glencore,
and Trafigura, could affect Iran because they jointly supplied half of Iran’s imports of about
130,000 barrels per day worth of gasoline. Some accounts say refineries in Bahrain and UAE may
have picked up some of the shortfall, in addition to the other suppliers listed above.
Legislation in the 111th Congress
A Other press
reports in July 2010 said that oil and oil products are being shipped into Iran via the Kurdish
autonomous region of Iraq.19
Legislation in the 111th Congress/CISADA and Other Bills
Aside from CSIDA, a number of ideas to expand ISA’s application to gasoline sales to Iran have been were
advanced,
although some believe that a sanction such as this would only be effective if it applied
to all
countries under a U.N. Security Council resolution rather than a unilateral U.S. sanction. In the
the 110th Congress, H.R. 2880 would have made sales to Iran of refined petroleum resources a
violation of ISA.
In the 111th Congress, a few initiatives have been adopted. Using U.S. funds to fill the Strategic
Petroleum Reserve with products from firms that sell over $1 million worth of gasoline to Iran is
prevented by the FY2010 Energy and Water Appropriation (H.R. 3183, P.L. 111-85, signed
October 28, 2009). A provision of the FY2010 consolidated appropriation (P.L. 111-117) would
deny Eximbank credits to any firm that sells gasoline to Iran, provides equipment to Iran that it
can use to expand its oil refinery capabilities, or performs gasoline production projects in Iran.
(...continued)
12
http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
13
http://www.ft.com/cms/s/0/009370f0-486e-11df-9a5d-00144feab49a.html.
14
http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
15
http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
16
Blas, Javier, Carola Hoyas, and Daniel Dombey. “Chinese Companies Supply Iran With Petrol.” Financial Times,
September 23, 2009.
17
http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
18
http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
19
Dagher, Sam. “Smugglers in Iraq Blunt Sanctions Against Iran.” New York Times, July 9, 2010.
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Iran Sanctions
In the 111th Congress, a few initiatives were adopted prior to CSIDA. Using U.S. funds to fill the
Strategic Petroleum Reserve with products from firms that sell over $1 million worth of gasoline
to Iran is prevented by the FY2010 Energy and Water Appropriation (H.R. 3183, P.L. 111-85,
signed October 28, 2009). A provision of the FY2010 consolidated appropriation (P.L. 111-117)
would deny Eximbank credits to any firm that sells gasoline to Iran, provides equipment to Iran
that it can use to expand its oil refinery capabilities, or performs gasoline production projects in
Iran. The Senate version of a FY2011 defense authorization bill (S. 3454) would prohibit Defense
Department contracts for companies that sell gasoline to Iran or otherwise violate ISA; this
provision would seem to be redundant with a provision of CSIDA, which is now law.
In the past, some threats to sanction foreign gasoline sellers to Iran have deterred sales to Iran.
The Reliance Industries Ltd. of India decision to cease new sales of refined gasoline to Iran (as of
December 31, 2008), mentioned above, came after several Members of Congress urged the Exim
Bank of the United States to suspend assistance to Reliance, on the grounds that it was assisting
Iran’s economy with the gas sales. The Exim Bank, in August 2008, had extended a total of $900
million in financing guarantees to Reliance to help it expand.
Legislative Action: Iran Refined Petroleum Sanctions Act (IRPSA) and
Comprehensive Iran
Sanctions, Accountability, and Divestment Act (H.R. 2194,
P.L. 111-195)
In April 2009, several bills were introduced—H.R. 2194, S. 908, H.R. 1208, and H.R. 1985—that
would amend ISA to make sanctionable efforts by foreign firms to supply refined gasoline to Iran
or to supply equipment to Iran that could be used by Iran to expand or construct oil refineries.
H.R. 2194 and S. 908 were both titled the Iran Refined Petroleum Sanctions Act of 2009
(IRPSA). H.R. 2194 passed the House on December 15, 2009, by a vote of 412-12, with four
others voting “present” and six others not voting. The opposing and “present” votes included
16
17
http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
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several Members who have opposed several post-September 11 U.S. military operations in the
Middle East/South Asia region.
A bill in the Senate, the “Dodd-Shelby Comprehensive Iran Sanctions, Accountability, and
Divestment Act,” (S. 2799), was reported to the full Senate by the Senate Banking Committee on
November 19, 2009, and passed the Senate, by voice vote, on January 28, 2010. It was adopted
by the Senate under unanimous consent as a substitute amendment to H.R. 2194 on March 11,
2010, setting up conference action on the two versions of H.R. 2194. The Senate bill contains
very similar provisions of the Iran Refined Petroleum Sanctions Act, but, as discussed in Table 1
below, adds provisions affecting U.S.-Iran trade and other issues.
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Table 1. Comparison of Major Versions of H.R. 2194/P.L. 111-195
House Version
Senate Version
Conference Report
General Goals: Seeks to expand the
/Final Law
General Goals and Overview: Seeks
to expand the authorities of the Iran
Sanctions Act
(ISA, P.L. 104-172) to
deter sales by
foreign companies of
gasoline to
Iran.
Sanctions Broader goals than House: sanctions
sales of gasoline to Iran
similar to
House version of H.R.
2194, but also
would affect several
other U.S.
sanctions against Iran
already in
place, including revoking
some some
exemptions to the U.S. ban on
imports from Iran.
Generally closer to the Senate
version, but adds new provisions
sanctioning Iranians determined to
be involved in human rights abuses
and requires Treasury Department
to prohibit transactions with foreign
banks that conduct business with
Revolutionary Guard and U.N.sanctioned Iranian entities.
Statement of U.S. Policy on
Sanctioning Iran’s Central Bank
(Bank Markazi):
Section 108 urges the President to
use existing U.S. authorities to
impose U.S. sanctions against the
Iranian Central Bank or other Iranian
banks engaged in proliferation or
support of terrorist groups.
Section 104 (see below) contains
sense of Congress urging U.S.
sanctions against Iranian Central
Bank and would prohibit U.S. bank
dealings with any financial institution
that helps the Central Bank facilitate
circumvention of U.N. resolutions
on Iran.
Section2(c) and 3(a) state that it
shall be U.S. policy to fully enforce
ISA to encourage foreign
governments:
- to cease investing in Iran’s energy
sector.
- to sanction Iran’s Central Bank and
other financial institutions that do
business with the Iranian Central
Bank (or any Iranian bank involved in
proliferation or support of terrorist
activities).
Congressional Research Service
Such authorities could include
Section 311 of the USA Patriot Act
(31 U.S.C. 5318A), which authorizes
designation of foreign banks as “of
primary money laundering concern”
and thereby cut off their relations
with U.S. banks.
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Iran Sanctions
House Version
Extension of ISA to Sales of
Gasoline:
Section 3(a) would amend ISA to
make sanctionable:
- the sale to Iran of equipment or
services (of over $200,000 in value,
or $500,000 combined sales in one
year) that would enable Iran to
maintain or expand its domestic
production of refined petroleum.
Senate Version
Conference Report
—or, the sale to Iran of refined
petroleum products or ships,
vehicles, or insurance or reinsurance
to provide such gasoline to Iran
(same dollar values as sale of
equipment).
Such authorities could include
Section 311 of the USA Patriot Act
(31 U.S.C. 5318A), which authorizes
designation of foreign banks as “of
primary money laundering concern”
and thereby cut off their relations
with U.S. banks.
Section 102(a) contains similar
provisions regarding both gasoline
sales and sales of equipment and
services for Iran to expand its own
refinery capacity. However, sets the
aggregate one-year sale value at $1
million—double the level of the
House bill.
Section 102(a) contains provisions
sanctioning sales of amending ISA to include sales of
gasoline and
refining services and equipment
similar to
equipment as sanctionable (similar to
both versions). Sets dollar
value value
“trigger” at $1million transaction, or
$5 million 5 million
aggregate value
(equipment or
gasoline sales) in a one year period.
Similar to House bill (Section
102(a)).
Section 102(b) would add the three
sanctions contained in the House
and Senate versions, but: it would
add these three to the existing menu of
six sanctions in ISA. The President
would be required to impose 3 out of
the 9 specified sanctions on entities
determined to be violators. (As it
now exists, ISA requires the
imposition of two out of six
one year period.
Specifies that what is sanctionable
includes helping Iran develop not
only oil and natural gas resources,
but also liquefied natural gas (LNG).
Products whose sales is sanctionable
includes LNG tankers and products
to build pipelines used to transport
oil or LNG. Includes aviation fuel in
definition of refined petroleum.
Formally reduces investment
threshold to $20 million to trigger
sanctionability.
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House Version
Expansion of ISA Sanctions:
Section 3(b) would mandate certain
sanctions (not currently authorized
by ISA) on sellers of the equipment,
gasoline, or services described in
Section 3(a) to include:
Senate Version
Conference Report/Final Law
Similar to House bill (Section
102(a)).
Section 102(b) amends ISA to add
the three sanctions contained in the
House and Senate versions, but: it
would add these three to the existing
menu of six sanctions in ISA. The
President would be required to
impose 3 out of the 9 specified
sanctions on entities determined to
be violators. (As previously existed,
ISA required the imposition of two
out of six sanctions of the menu.)
Section 103(b)(4) contains a similar
provision, but mandates that the
head of a U.S. agency may not
contract with a person that meets
criteria of sanctionability in the act.
Would not require the
bidding/contracting firm to certify its
own compliance, thereby placing the
burden of verifying such compliance
on the U.S. executive agency.
Section 102(b) contains amends ISA by adding
a provision
similar to the House version
version: requiring new Treasury
Dept.
regulations that mandate that firms
firms to certify that they are not in
violating of ISA as a condition of
receiving a U.S. government
contract, and providing for penalties
for any falsification.
—or, the sale to Iran of refined
petroleum products or ships,
vehicles, or insurance or reinsurance
to provide such gasoline to Iran
(same dollar values as sale of
equipment).
Expansion of ISA Sanctions:
Section 3(b) would mandate certain
sanctions (not currently authorized
by ISA) on sellers of the equipment,
gasoline, or services described in
Section 3(a) to include:
- prohibition of any transactions in
foreign exchange with sanctioned
entity;
- prohibition of credit or payments
to the sanctioned entity;
Specifies that what is sanctionable
includes helping Iran develop not
only oil and natural gas resources,
but also liquefied natural gas (LNG).
Products whose sales is sanctionable
is specified to include LNG tankers
and pipelines used to transport oil or
LNG.
- prohibition of any transactions in
foreign exchange with sanctioned
entity;
- prohibition of credit or payments
to the sanctioned entity;
- and, prohibition on any
transactions involving U.S.-based
property of the sanctioned entity.
(These sanctions would be imposed
in addition to the required two out
of six sanctions currently specified in
ISA.)
U.S. Government Enforcement
Mechanism:
Section 3(b) also requires the heads
of U.S. Government agencies to
ensure that their agencies contract
with firms that certify to the U.S.
agency that they are not selling any
of the equipment, products, or
services to Iran (gasoline and related
equipment and services) specified in
Section 3(a).
The section contains certain
penalties, such as prohibition on
future bids for U.S. government
contracts, to be imposed on any firm
that makes a false certification about
such activity.
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House Version
Additional Sanctions Against
Suppliers of Nuclear, Missile, or
Advanced Conventional Weapons
Technology to Iran:
Senate Version
No equivalent, although, as noted
below, the Senate bill does contain
several proliferation-related
provisions.
Section 3(c) provides an additional
ISA sanction to be imposed on any
country whose entity(ies) violate ISA
by providing nuclear weaponsrelated technology or missile
technology to Iran.
Conference Report/Final Law
Section 102(a)(2) contains a
amends ISA by
adding a prohibition on licensing of nuclear
nuclear materials, facilities, or
technology to
any entity determined sanctioned
under ISA (as amended) any country which is
the parent country of an entity
determined to be sanctioned under
ISA for providing WMD technology
to Iran.
Waiver is provided on vital national
security interest grounds.
The sanction to be imposed on such
country is a ban on any nuclear
cooperation agreement with the
United States under the Atomic
Energy Act of 1954, and a
prohibition on U.S. sales to that
country of nuclear technology in
accordance with such an agreement.
The sanction can be waived if the
President certifies to Congress that
the country in question is taking
effective actions against its violating
entities.
Alterations to Waiver and
Implementation Provisions:
Section 3(d)(1) imposes a
requirement (rather than an nonbinding exhortation in the existing
law) that the Administration
“immediately” initiate an
investigation of any potentially
sanctionable activity under ISA.
Section 3(d)(2) would require the
President to certify that a waiver of
penalties on violating entities
described above is “vital to the
national security interest of the
United States.” rather than, as
currently stipulated in ISA, is
“important to the national interest
of the United States.”
Congressional Research Service
No similar provisions
Implementation and waiver
provisions closer to House version.
Section 102(g) amends ISA to make
mandatory the beginning of an
investigation of potentially
sanctionable activity, and makes
mandatory a decision on
sanctionability within 180 days of the
beginning of such an investigation.
(Currently, 180 day period is nonbinding.)
Section 102(c) sets waiver standard
9(c) waiver
standard as “necessary to the national
national interest”
Section 102(g) also alters existing
4(c) ISA waiver to delay sanctions
on on
firms of countries that are
“closely
cooperating” with U.S.
efforts against
Iran’s WMD
programs. (This is not
an automatic
“carve out” for cooperating
cooperating countries widely
discussed in the
press.
12 )
Section 102(g)(3) adds to ISA a
“special rule” that no investigation of
a potential violation need be started
if a firm has ended or pledged to end
its violating activity in/with Iran.
Congressional Research Service
14
Iran Sanctions
House Version
Required Reports:
Section 3(e) would amend ISA’s
current Administration reporting
requirements to also include an
assessment of Iran’s support for
militant movements and to acquire
weapons of mass destruction
technology.
A new reporting requirement would
be created (every six months) on
firms providing Iran gasoline and
related equipment and services
specified above, as well as the names
and dates of such activity, and any
contracts such entities have with
U.S. Government agencies.
The required report is to include
information on persons the
President determines is affiliated
with Iran’s Islamic Revolutionary
Guard Corp (IRGC), as well as
persons providing material support
to the IRGC or conducting financial
transactions with the IRGC or its
affiliates.
Senate Version
Section 107 contains a provision
similar to the new reporting
requirement of the House bill with
regard to firms that sold gasoline and
related equipment and services to
Iran, and invested in Iran’s energy
sector.
The Senate bill does not require
reporting on the IRGC that is
stipulated in the House bill, or the
report on Iran-G-20 trade.
However, the Senate bill (Section
109) expresses the sense of
Congress that the United States
“continue to target” the IRGC for
supporting terrorism, its role in
proliferation, and its oppressive
activities against the people of Iran.
Conference Report/Final Law
Various reporting requirements
throughout, including the report on
Iran-G-20 trade of the House
version.
Includes new reporting requirement,
not in either version, on the
potential for ethanol and related
products and services to benefit and
enhance Iran’s energy sector.
Requires report on investment in
Iran’s energy sector.
Requires report on the beneficiaries
of export credit agencies of foreign
countries (presumably the extent to
which these agencies are
guaranteeing financing for trade with
Iran).
Also required is an Administration
report, within one year of
enactment, on trade between Iran
and countries in the G-20.
Expansion of ISA Definitions:
Section 3(f) would expand the
definitions of investing entities, or
persons, contained in ISA, to include:
Similar provision contained in
Section 102(d).
Would not include export credit
agencies as a sanctionable entity
under ISA (as amended).
Title IV would terminate the act’s
provisions 30 days after the
President certifies that Iran has:
Terminates ISA if the President
certifies that Iran has ceased WMD
development, has been removed
from the U.S. terrorism list, and
poses no significant threat to U.S.
national security, interests, or alliesDoes include LNG as petroleum
resources.
- export credit agencies. (Such a
provision is widely considered
controversial because export credit
agencies are arms of their
governments, and therefore
sanctioning such agencies is
considered a sanction against a
government.)
Termination Provisions:
Section 3(g) would terminate
the
bill’s sanctions against persons who are
are sanctioned, under the act, for sales
sales of WMD-related technology, if the
the President certifies that Iran has
ceased activities to acquire a nuclear
device and has ceased enrichment of
uranium and other nuclear activities.
Congressional Research Service
- ceased support for international
terrorism and qualifies for removal
from the U.S. “terrorism list”
- and, has ceased the pursuit and
development of WMD and ballistic
missile technology.
13
Iran Sanctions
House Version
ISA Sunset:
Senate Version
No similar provision
Sunset provision same as House
version.
Section 103(b)(1) would ban all
imports of Iranian origin from the
United States, with the exception of
informational material. Currently,
modifications to the U.S. trade ban
with Iran (Executive Order 12959 of
May 6, 1995) that became effective in
2000 permit imports of Iranian
luxury goods, such as carpets, caviar,
nuts, and dried fruits.
Same as Senate version. However,
contains a new section that the ban
on most exports to Iran not include
the exportation of services for
Internet communications.
Section 3(h) would extend all
provisions of ISA until 2016. It is
currently scheduled to “sunset” on
December 31, 2011, as amended by
the Iran Freedom Support Act (P.L.
109-293).
Modification to U.S. Ban on Trade
With and Investment in Iran:
No provision
Would not include export credit
agencies as a sanctionable entity
under ISA (as amended).
Title IV would terminate the act’s
provisions 30 days after the
President certifies that Iran has:
- ceased support for international
terrorism and qualifies for removal
from the U.S. “terrorism list”
- and, has ceased the pursuit and
development of WMD and ballistic
missile technology.
Terminates ISA if the President
certifies that Iran has ceased WMD
development, has been removed
from the U.S. terrorism list, and
poses no significant threat to U.S.
national security, interests, or allies.
(No significant change from preexisting ISA.)
15
Iran Sanctions
House Version
ISA Sunset:
Senate Version
No similar provision
Section 3(h) would extend all
provisions of ISA until December 31,
2016. It is currently scheduled to
“sunset” on December 31, 2011, as
amended by the Iran Freedom
Support Act (P.L. 109-293).
Conference Report/Final Law
Sunset provision same as House
version ISA to sunset December 31,
2016.
Additional Provisions That are Not Amendments to ISA
Modification to U.S. Ban on Trade
With and Investment in Iran:
No provision
Section 103(b)(1) would ban all
imports of Iranian origin from the
United States, with the exception of
informational material. Currently,
modifications to the U.S. trade ban
with Iran (Executive Order 12959 of
May 6, 1995) that became effective in
2000 permit imports of Iranian
luxury goods, such as carpets, caviar,
nuts, and dried fruits.
- Section 103(b)(2)) generally
reiterates/codifies current provisions
of U.S. trade ban related to U.S.
exports to Iran. Provision would
prohibit exports to Iran of all goods
except food and medical devices,
informational material, articles used
for humanitarian assistance to Iran,
or goods needed to ensure safe
operation of civilian aircraft.
Freezing of Assets/Travel Restriction
on Revolutionary Guard and Related
Entities and Persons.
No provision
Application of U.S. Trade Ban to
Subsidiaries:
No provision
Congressional Research Service
Conference Report
Same as Senate version. However,
contains a new section that the
existing U.S. ban (by Executive
order) on most exports to Iran not
include the exportation of services
for Internet communications.
Provision also states that the ban on
most exports should not include
goods or services needed to help
non-governmental organizations
support democracy in Iran.
Both provisions designed to support
opposition protesters linked to Iran’s
“Green movement.”
Section 103(b)(3) mandates the
President to freeze the assets of
Iranian diplomats, IRGC, or other
Iranian official personnel deemed a
threat to U.S. national security under
the International Emergency
Economic Powers Act (50 U.S.C.
1701 et seq.). Provision would
require freezing of assets of families
and associates of persons so
designated. Section 109 calls for a
ban on travel of IRGC and affiliated
persons.
Similar to Senate version
Section 104 would apply the
provisions of the U.S. trade ban with
Iran (Executive Order 12959) to
subsidiaries of U.S. firms if the
subsidiary is established or
maintained for the purpose of
avoiding the U.S. ban on trade with
Iran . The definition of subsidiary,
under the provision, is any entity
that is more than 50% owned or is
directed by a U.S. person or firm.
No provision
1416
Iran Sanctions
House Version
Mandatory Sanctions on Financial
Institutions that Help Iran’s
Sanctioned Entities:
Senate Version
No provision
No provision
Conference Report/Final Law
Contains new section that requires
the Treasury Department to develop
regulations to prohibit U.S. financial
transactions with any foreign financial
institution that:
- facilitates efforts by the
Revolutionary Guard to acquire
WMD or fund terrorism
- facilitate the activities of any person
sanctioned under U.N. resolutions
on Iran.
- facilitates the efforts by Iran’s
Central Bank to support the Guard’s
WMD acquisition efforts or support
any U.N.- sanctioned entity
Sanctions on Iranian Human Rights
Abusers:
No provision
Section 105 makes ineligible for a
U.S. visa, blocks U.S, property, and
prevents transactions with any
Iranian official determined complicit
in serious human rights abuses
against Iranian citizens since the June
12, 2009 Iranian presidential election.
Section 105 prohibits U.S. executive
agencies from contracting with firms
that export sensitive technology to
Iran. “Sensitive technology” is
defined as hardware, software,
telecommunications equipment, or
other technology that restricts the
free flow of information in Iran or
which monitor or restrict “speech”
of the people of Iran.
Section 106 of the conference report
is similar to Senate version.
Section 106(b) authorizes $64.611
million for FY2010 (and “such sums
as may be necessary” for FY2011 and
2012) for the Treasury Department’s
Office of Terrorism and Financial
Intelligence. The funds are
authorized to ensure that countries
such as Iran are not misusing the
international financial system for
illicit purposes. Iran is not mentioned
specifically. $104.26 million is
authorized by the section for FY2010
for the Department’s Financial
Crimes Enforcement Network.
Section 109 authorizes $102 million
for FY2011 and “sums as may be
necessary” for FY2012 and 2013 to
the Treasury Department Office of
Terrorism and Financial Intelligence.
Another $100 million is authorized
for FY2011 for the Financial Crimes
Enforcement Network, and $113
million for FY2011 for the Burea of
Industry and Security for the
Department of Commerce
No provision
Sanctioning Certain Information
Technology Sales to Iran:
No provision
Treasury Department Authorization
to prevent misuse of the U.S.
financial system by iran or other
countries.
No provision
Congressional Research Service
1517
Iran Sanctions
House Version
Hezbollah
No specific provision, although, as
noted above, the House bill does
expand ISA reporting requirements
to include Iran’s activities to support
terrorist movements. Lebanese
Hezbollah is named as a Foreign
Terrorist Organization (FTO) by the
U.S. State Department.
Divestment
No provisions
Senate Version
Conference Report/Final Law
Section 110 contains a sense of
Congress that the President impose
the full range of sanctions under the
International Emergency Economic
Powers Act (50 U.S.C. 1701) on
Hezbollah, and that the President
renew international efforts to disarm
Hezbollah in Lebanon (as called for
by U.N. Security Council Resolutions
1559 and 1701).
Section 113 similar to Senate
version.
Title II of the Senate bill (Section
203) prevents criminal, civil, or
administrative action against any
investment firm or officer or adviser
based on its decision to divest from
securities that:
Similar to Senate version
- have investments or operations in
Sudan described in the Sudan
Accountability and Divestment Act
of 2007
- or, engage in investments in Iran
that would be considered
sanctionable by the Senate bill.
Prevention of Transshipment,
Reexportation, or Diversion of
Sensitive Items to Iran
No provision
Section 302 requires a report by the
Director of National Intelligence that
identifies all countries considered a
concern to allow transshipment or
diversion of WMD-related
technology to Iran (technically:
“items subject to the provision of
the Export Administration
Regulations”).
Similar to Senate version, but does
not provide for prior negotiations
before designating a country as a
“Destination of Possible Diversion
Concern.”
Section 303 requires the Secretary of
Commerce to designate a country as
a “Destination of Possible Diversion
Concern” if such country is
considered to have inadequate
export controls or is unwilling to
prevent the diversion of U.S.
technology to Iran. The provision
stipulates government-togovernment discussions are to take
place to improve that country’s
export control systems.
If such efforts did not lead to
improvement, the section would
mandate designation of that country
as a “Destination of Diversion
Concern” and would set up a strict
licensing requirement for U.S.
exports of sensitive technologies to
that country.
Congressional Research Service
1618
Iran Sanctions
Conference Action on H.R. 2194: Content, Effects and Timing
A public meeting of the House-Senate conference, chaired by Representative Berman on the
House side, and Senator Dodd on the Senate side, was held on April 28, 2010. Obama
Administration officials were said to be concerned by some provisions of H.R. 2194 because of
the legislation’s potential to weaken allied unity on Iran. The Administration sought successfully
to persuade Members to delay further work on H.R. 2194 until a new U.N. sanctions resolution is
adopted—for fear that some P5+1 countries might refuse to support the U.N. resolution if there is
a chance they will be sanctioned by a new U.S. law. Apparently responding to the Administration
argument, House Foreign Affairs Committee Chairman Berman announced on May 15, 2010, that
the conference committee on H.R. 2194 would not complete its work until after the U.N.
resolution is adopted and in order to assess the results of a June 16, 2010, European Union
meeting, which will discuss Iran. The U.N. Resolution was adopted on June 9, 2010, presumably
moving aside that obstacle to conference action completion. The conference report is in the
process of being finalized as of June 23, 2010, and might be voted on the week of June 28.
As widely predicted, the version of the conference report now circulating appears to contain
was agreed on
June 22, 2010 and was submitted on June 23, 2010. On June 24, 2010, the Senate passed it 99-0,
and the House passed it 408-8, with one voting “present.” President Obama welcomed the
passage and signed it into law on July 1, 2010.
As widely predicted, the final version contained many of the extensive provisions of the Senate
version, and some of the efforts to compel
sanctions on violating firms from the House version.
The Administration reportedly insisted that
any agreed bill automatically exempt from sanctions
firms of countries that are cooperating
against the Iranian nuclear program. The Administration
concern is that countries which fear
penalties under a new U.S. law would withdraw their
cooperation with the United States on future
sanctions resolutions and measures against Iran. That concern is addressed in the conference
report, although it appears to expand waiver authority rather than provide a blanket exemption for
“cooperating countries.” As
concern was not directly met in the final version, although, as noted, the final law allows for
waivers, delayed mandatory investigations of violations, and for non-investigation of companies
that promise to end their business in Iran. As was widely predicted, the conference report contains
provisions to
sanction Iranian human rights abusers, including denial of visas for their travel to
the United
States and freezing of their assets.
Those supporting these bills say that the legislationwho supported CISADA say it will strengthen President Obama’s ability to
obtain an
agreement with Iran that might impose limitations on its nuclear program. The
legislation might
demonstrate to Iran that there are substantial downsides to rebuffing
international criticism of its
nuclear program. Iran’s dependence on gasoline imports could, at the
very least, cause Iran’s
government to have to spend more for such imports. Others, however,
believe the government
would not import more gasoline, but rather ration it or reduce subsidies
for it in an effort to
reduce gasoline consumption. Many believe that Iran has many willing
gasoline suppliers who
might ignore a U.S. law along these lines. Still others believe that a
gasoline ban would cause
Iranians to blame the United States and United Nations for its plight
and cause Iranians to rally
around President Ahmadinejad and rebuild his popularity.18
Administration Review of Potential ISA Violations1920 Iran’s leaders have sloughed off
CISADA’s enactment, although many say it might be some time before its effects are clear.
20
Askari, Hossein and Trita Parsi. “Throwing Ahmadinejad a Lifeline.” New York Times op-ed. August 15, 2009.
Congressional Research Service
19
Iran Sanctions
Administration Review of Potential ISA Violations21
Several Members of Congress have, in recent years, questioned why thereno penalties have been no penalties
imposed for violations of ISA. State Department reports to Congress on ISA, required every six
months, have routinely stated that U.S. diplomats raise U.S. policy concerns about Iran with
investing companies and their parent countries. However, these reports have not specifically
18
Askari, Hossein and Trita Parsi. “Throwing Ahmadinejad a Lifeline.” New York Times op-ed. August 15, 2009.
Much of this section is derived from a meeting between the CRS author and officials of the State Department’s
Economics Bureau, which is tasked with the referenced review of investment projects. November 24, 2009.
19
Congressional Research Service
17
Iran Sanctions
stated which foreign companies, if any, were being investigated for ISA violations. No
publication of such deals has been placed in the Federal Register (requirement of Section 5e of
ISA).
In 2008, possibly sensing some congressional unrest over this fact, Under Secretary of State for
Political Affairs William Burns testified on July 9, 2008 (House Foreign Affairs Committee), that
the Statoil project (listed in Table 2) is under review for ISA sanctions. Statoil is incorporated in
Norway, which is not an EU member and which would therefore not fall under the 1998 U.S.-EU
agreement discussed above. Burns did not mention any of the other projects, and no other specific
projects have been named since. Nor was there a formal State Department determination on
Statoil subsequently.
Possibly in response to the new legislative initiatives in the 111th Congress, and to an October
2009 letter signed by 50 Members of Congress referencing the CRS table below, Assistant
Secretary of State for Near Eastern Affairs Jeffrey Feltman testified before the House Foreign
Affairs Committee on October 28, 2009, that the Obama Administration would review
investments in Iran for violations of ISA. Feltman testified that the preliminary review would be
completed within 45 days (by December 11) to determine which projects, if any, require further
investigation. Feltman testified that some announced projects were for political purposes and did
not result in actual investment. State Department officials told CRS in November 2009 that
projects involving Iran and Venezuela appeared to fall into the category of symbolic
announcement rather than actual implemented projects.
On February 25, 2010, Secretary of State Clinton testified before the House Foreign Affairs
Committee that the State Department’s preliminary review was completed in early February and
that some of the cases reviewed “deserve[] more consideration” and were undergoing additional
scrutiny. The preliminary review, according to the testimony, was conducted, in part, through
State Department officials’ contacts with their counterpart officials abroad and corporation
officials. The additional investigations of problematic investments will involve the intelligence
community, according to Secretary Clinton. State Department officials told CRS in November
2009 that any projects that the State Department plan is to complete the additional investigation
and determine violations within 180 days of the completion of the preliminary review. (The 180day time frame is, according to the Department officials, consistent with the Iran Freedom
Support Act amendments to ISA discussed above.)
In part because the preliminary review was not completed by mid-December 2009, as was
expected, Representative Mark Kirk and Representative Ron Klein circulated a “Dear Colleague”
letter requesting support for “The Iran Sanctions Enhancement Act” providing for a monthly
GAO report on potential ISA violators, and completion of an investigation of potential violations
within 45 days of any GAO identification of possible violations.
21
Much of this section is derived from a meeting between the CRS author and officials of the State Department’s
Economics Bureau, which is tasked with the referenced review of investment projects. November 24, 2009.
Congressional Research Service
20.
Congressional Research Service
18
Table 2. Post-1999 Major Investments/Major Development Projects in Iran’s Energy Sector
Date
Field/Project
February
1999
Doroud (oil)
April
1999
Balal (oil)
Nov.
1999
Soroush and Nowruz (oil)
April
2000
Anaran bloc (oil)
July 2000
March
2001
June 2001
May 2002
Sept.
2002
October
2002
CRS-19
(Energy Information Agency, Department of Energy, August 2006.)
(“Balal Field Development in Iran Completed,” World Market Research Centre, May 17, 2004.)
(“News in Brief: Iran.” Middle East Economic Digest, (MEED) January 24, 2003.)
(MEED Special Report, December 16, 2005, pp. 48-50.)
Phase 4 and 5, South Pars (gas)
(Petroleum Economist, December 1, 2004.)
Caspian Sea oil exploration—construction of submersible drilling rig for Iranian partner
(IPR Strategic Business Information Database, March 11, 2001.)
Darkhovin (oil)
June 2001
May 2002
Sept.
2002
October
2002
CRS-21
(“Darkhovin Production Doubles.” Gulf Daily News, May 1, 2008.) ENI told CRS in April 2010
it would close out all Iran operations by 2013.
Masjid-e-Soleyman (oil)
(“CNPC Gains Upstream Foothold.” MEED, September 3, 2004.)
Phase 9 + 10, South Pars (gas)
Company(ies)/Status
(If Known)
Value
Output/Goal
Totalfina Elf (France)/ENI
(Italy)
$1 billion
205,000 bpd
Totalfina Elf/ Bow Valley
(Canada)/ENI
$300 million
40,000 bpd
Royal Dutch Shell
(Netherlands)/Japex (Japan)
$800 million
190,000 bpd
Norsk Hydro
(Norway)/Gazprom
(Russia)/Lukoil (Russia)
No production to date
$120 million
65,000
Gas onstream as of Dec.
2004
$1.9 billion
2 billion
cu.ft./day (cfd)
GVA Consultants (Sweden)
$225 million
NA
$1 billion
100,000 bpd
$80 million
25,000 bpd
$1.6 billion
2 billion cfd
$2.65 billion
3 billion cfd
ENI
Darkhovin (oil)
ENI
(“Darkhovin Production Doubles.” Gulf Daily News, May 1, 2008.)
Field in production
Masjid-e-Soleyman (oil)
(“CNPC Gains Upstream Foothold.” MEED, September 3, 2004.)
Phase 9 + 10, South Pars (gas)
ENI
Field in production
Sheer Energy (Canada)/China
National Petroleum Company
(CNPC). Local partner is
Naftgaran Engineering
LG (South Korea)
(“OIEC Surpasses South Korean Company in South Pars.” IPR Strategic Business Information
Database, November 15, 2004.)
On stream as of early 2009
Phase 6, 7, 8, South Pars (gas)
Statoil (Norway)
(Petroleum Economist, March 1, 2006.)
began producing late 2008
Date
Field/Project
January
2004
Azadegan (oil)
(“Japan Mulls Azadegan Options.” APS Review Oil Market Trends, November 27, 2006.)
Tusan Block
August
2004
October
2004
2005
(“Iran-Petrobras Operations.” APS Review Gas Market Trends, April 6, 2009; “Brazil’s
Petrobras Sees Few Prospects for Iran Oil,” (http://www.reuters.com/article/
idUSN0317110720090703.)
Yadavaran (oil)
(“Iran, China’s Sinopec Ink Yadavaran Oilfield Development Contract.” Payvand’s Iran News,
December 9, 2009.)
Saveh bloc (oil)
GAO report, cited below
Company(ies)/Status
(If Known)
Value
Output/Goal
Inpex (Japan) 10% stake.
CNPC. agreed to develop
“north Azadegan” in Jan.
2009
$200 million
(Inpex stake);
China $1.76
billion
260,000 bpd
$178 million
No production
Sinopec (China), deal finalized
December 9, 2007
$2 billion
300,000 bpd
PTT (Thailand)
?
?
Sinopec (China)
$20 million
?
Sinopec (China); JGC (Japan)
$959 million
Expansion to
produce 250,000
bpd
Norsk Hydro (Norway)
$49 million
?
Petrobras (Brazil)
Oil found in block in Feb.
2009, but not in commercial
quantity, according to the
firm
Garmsar bloc (oil)
June 2006
Deal finalized in June 2009
(“China’s Sinopec signs a deal to develop oil block in Iran – report,” Forbes, 20 June 2009,
http://www.forbes.com/feeds/afx/2006/06/20/afx2829188.html.)
Arak Refinery expansion
July 2006
(GAO report; Fimco FZE Machinery Website; http://www.fimco.org/index.php?option=
com_content&task=view&id=70&Itemid=78.)
Sept.
2006
Khorramabad block (oil)
March
2007
(PR Strategic Business Information Database, September 18, 2006)
Esfahan refinery upgrade
(“Daelim, Others to Upgrade Iran’s Esfahan Refinery.” Chemical News and Intelligence, March
19, 2007.)
Daelim (S. Korea)
NA
Golshan and Ferdows onshore and offshore gas fields and LNG plant
Dec.
2007
contract modified but reaffirmed December 2008
(GAO report; Oil Daily, January 14, 2008.)
CRS-2022
SKS Ventures, Petrofield
Subsidiary (Malaysia)
$16 billion
3.4 billion cfd
Date
Field/Project
Company(ies)/Status
(If Known)
2007
(unspec.)
Jofeir Field (oil)
Belneftekhim (Belarus)
GAO report cited below
No production to date
2008
Dayyer Bloc (Persian Gulf, offshore, oil)
GAO report cited below
Edison (Italy)
Value
Output/Goal
$450 million
40,000 bpd
$44 million
?
February
2008
Lavan field (offshore natural gas)
PGNiG (Poland)
GAO report cited below
Status unclear
April
2008
Moghan 2 (onshore oil and gas, Ardebil province)
?
January
2009
Nov.
2009
GAO report cited below
Kermanshah petrochemical plant (new construction)
GAO report cited below
INA (Croatia)
Value
Output/Goal
$450 million
40,000 bpd
$44 million
?
$2 billion
$40-$140
million
(dispute over
size)
300,000 metric
tons/yr
Uhde (Germany)
“North Azadegan”
(Chinadaily.com. “CNPC to Develop Azadegan Oilfield,” http://www.chinadaily.com.cn/
bizchina/2009-01/16/content_7403699.htm.)
March
2008
Danan Field (on-shore oil)
Petro Vietnam Exploration
and Production Co.
(Vietnam)
?
?
April
2008
Moghan 2 (onshore oil and gas, Ardebil province)
INA (Croatia)
$40-$140
million
(dispute over
size)
?
?
January
2009
“PVEP Wins Bid to Develop Danan Field.” Iran Press TV, March 11, 2008
GAO report cited below
Kermanshah petrochemical plant (new construction)
GAO report cited below
$2 billion
300,000 metric
tons/yr
Uhde (Germany)
“North Azadegan”
(Chinadaily.com. “CNPC to Develop Azadegan Oilfield,” http://www.chinadaily.com.cn/
bizchina/2009-01/16/content_7403699.htm.)
CNPC (China)
$1.75 billion
G and S Engineering and
Construction (South Korea)
$1.4 billion
Daelim (S. Korea)—Part 2;
Tecnimont (Italy)—Part 3
$4 billion ($2
bn each part)
CNPC (China)
$4.7 billion
South Pars Gas Field – Phases 6-8, Gas Sweetening Plant
Oct.
2009
CRS conversation with Embassy of S. Korea in Wasshington, D.C, July 2010
Contract signed but then abrogated by S. Korean firm
Nov.
2009
South Pars: Phase 12—Part 2 and Part 3
(“Italy, South Korea To Develop South Pars Phase 12.” Press TV (Iran), November 3, 2009,
http://www.presstv.com/pop/Print/?id=110308.)
CNPC (China)
$1.75 billion
Daelim (S. Korea)—Part 2;
Tecnimont (Italy)—Part 3
$4 billion ($2
bn each part)
CNPC (China)
$4.7 billion
South Pars: Phase 11
February
2010
Drilling to Begin in March 2010
(“CNPC in Gas Deal, Beefs Up Tehran Team—Source,” Reuters India, February 10, 2010,
http://in.reuters.com.articlePrint?articleId=INTOE61909U20100210.)
Totals: $41 billion investment
CRS-21
?23
75,000 bpd
Company(ies)/Status
(If Known)
Value
Output/Goal
China National Offshore
Oil Co.
$16 billion
3.6 billion cfd
Royal Dutch Shell, Repsol
(Spain)
$4.3 billion
?
Phase 22, 23, 24 - South Pars (gas), incl. transport Iranian gas to Turkey, and on to Europe and building
three power plants in Iran. Initialed July 2007; not finalized to date.
Turkish Petroleum Company
(TPAO)
$12. billion
2 billion cfd
Iran’s Kish gas field (April 2008) Includes pipeline from Iran to Oman
Oman (co-financing of
project)
$7 billion
1 billion cfd
Phase 12 South Pars (gas)—part 1. Incl. LNG terminal construction and Farzad-B natural gas bloc
(March 2009)
China-led consortium;
project originally subscribed
in May 2007 by OMV
(Austria); possibly taken over
by Indian firms (ONGC, Oil
India Ltd., Hinduja, Petronet)
$8 billion+
20 million
tonnes of LNG
annually by 2012
South Pars gas field (September 2009)
Petroleos de Venezuela S.A.;
10% stake in venture
$760 million
Sinopec
up to $6
billion if new
refinery is
built
Date
Field/Project
Other Pending/Preliminary Deals
North Pars Gas Field (offshore gas). Includes gas purchases (December 2006)
(http://english.peopledaily.com.cn/200705/19/print20070519_376139.html.)
Phase 13, 14 - South Pars (gas); (Feb. 2007).
Deadline to finalize as May 20, 2009 apparently not met; firms submitted revised proposals to Iran in
June 2009.
(http://www.rigzone.com/news/article.asp?a_id=77040&hmpn=1.)
(http://www.presstv.ir/detail.aspx?id=112062§ionid=351020103.)
Abadan refinery
Upgrade and expansion; building a new refinery at Hormuz on the Persian Gulf coast (August 2009)
Sources: As noted in table, a wide variety of other press announcements and sources, CRS conversations with officials of the State Department Bureau of Economics
(November 2009), CRS conversations with officials of embassies of the parent government of some of the listed companies (2005-2009). Some reported deals come from a
March 2010 GAO report, “Firms Reported in Open Sources as Having Commercial Activity in Iran’s Oil, Gas, and Petrochemical Sectors.” GAO-10-515R Iran’s Oil, Gas,
and Petrochemical Sectors. http://www.gao.gov/new.items/d10515r.pdf. The GAO report lists 41 firms with “commercial activity in Iran’s energy sector; several of the listed
agreements do not appear to constitute “investment,” as defined in ISA.
Note: CRS has neither the authority nor the means to determine which of these projects, if any, might constitute a violation of the Iran Sanctions Act. CRS has no way to
confirm the precise status of any of the announced investments, and some investments may have been resold to other firms or terms altered since agreement. In virtually
all cases, such investments and contracts represent private agreements between Iran and its instruments and the investing firms, and firms are not necessarily required to
confirm or publicly release the terms of their arrangements with Iran. $20 million+ investments in oil and gas fields, refinery upgrades, and major project leadership are
included in this table. Responsibility for a project to develop Iran’s energy sector is part of ISA investment definition.
CRS-2224
Iran Sanctions
Ban on U.S. Trade and Investment With Iran
ISA was enacted, in part, because U.S. allies refused to adopt a ban on trade with and investment
in Iran. Such a U.S. ban was imposed on May 6, 1995, when President Clinton issued Executive
Order 12959.2022 This followed an earlier March 1995 executive order barring U.S. investment in
Iran’s energy sector. The trade and investment ban was 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 (and most recently on March 10, 2010), the U.S. Administration has renewed a declaration
of a state of emergency that triggered the investment ban. The operation of the trade regulations is
stipulated in Section 560 of the Code of Federal Regulations (Iranian Transactions Regulations,
ITR’s).
Some modifications to the trade ban since 1999 account for the trade between the United States
and Iran which was about $350 million worth of goods for all of 2009 ($281 million in exports to
Iran, and $67 million in imports from Iran). That is about half the value of the bilateral trade in
2008.
The U.S. ban on trade and investment does not apply to foreign firms. Neither is foreign trade
with Iran in purely civilian goods banned by any U.N. Security Council resolution. A very wide
range of foreign firms conduct trade with or have a corporate presence with Iran. Some of the
well-known firms include Alcatel-Lucent of France; Bank of Tokyou-Mitsubishi UFJ; BNP
Paribas of France; Bosch of Germany; Canon of Japan; Fiat SPA of Italy; Ericsson of Sweden;
ING Group of the Netherlands; Mercedes of Germany; Renault of France; Samsung of South
Korea; Sony of Japan; Volkswagen of Germany; Volvo of Sweden; ThyssenKrupp of Germany;
and numerous others. As discussed further later, Siemens of Germany was active in the Iran
telecommunications infrastructure market, but announced in February 2010 that it would cease
pursuing business in Iran. KPMG of the Netherlands reportedly pulled out of the Iran market as
of April 2010.
Some of the foreign firms that trade with Iran, such as Mitsui and Co. of Japan; Mitsui of Japan,
ABB Ltd of Switzerland, Alstom of France, and Schneider Electric of France, are discussed in the
March 7, 2010, New York Times article on foreign firms that do business with Iran and also
receive U.S. contracts or financing. The Times article does not claim that these firms have
violated any U.S. sanctions laws.
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 George W. Bush
Administration, in the interests of safe operations of civilian aircraft, permitted a
sale by General Electric of Airbus engine spare parts to be installed on several
Iran Air passenger aircraft (by European airline contractors).
20
22
The Executive Order was issued under the authority of: 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.; Section 505 of the International Security
and Development Cooperation Act of 1985 (22 U.S.C. 2349aa-9) and Section 301 of Title 3, United States Code. 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.
Congressional Research Service
23
Iran Sanctions
25
Iran Sanctions
sale by General Electric of Airbus engine spare parts to be installed on several
Iran Air passenger aircraft (by European airline contractors).
•
U.S. firms may not negotiate with Iran or to trade Iranian oil overseas, but U.S.
companies may apply for licenses to conduct “swaps” of Caspian Sea oil with
Iran. A Mobil Corporation application to do so was denied in April 1999.
•
According to the regulations that implement the trade ban (Iranian Transactions
Regulations, Part 560 of the Code of Federal Regulations) the ban does not apply
to personal communications, or to humanitarian donations. U.S. non-government
organizations (NGOs) require a specific license to operate in Iran. Some NGOs
say the licensing requirements are too onerous to make work in Iran practical.
•
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. No U.S. Administration has authorized credit guarantees, to date.
•
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 mid-2007, the product most imported from Iran by
U.S. importers is pomegranate juice concentrate. In the 110th Congress, H.R.
1400, S. 970, S. 3445, and H.R. 7112 would have reimposed the full import ban.
Application to Foreign Subsidiaries of U.S. Firms
The U.S. 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. The March 7, 2010, New York
Times article, cited above, discusses some subsidiaries of U.S. firms that have been active in Iran
and which have received U.S. government contracts, grants, loans, or loan guarantees.
Among major foreign subsidiaries of U.S. firms that have traded with Iran are the following:
•
Halliburton. On January 11, 2005, Iran said it had contracted with 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
Congressional Research Service
2426
Iran Sanctions
ban or the Iran Sanctions Act (ISA)2123—because the deals 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
were, as promised in January 2005, no longer operating in Iran.
•
General Electric (GE). The firm announced in February 2005 that it would seek
no new business in Iran, and it reportedly wound down preexisting contracts by
July 2008. GE was selling Iran equipment and services for hydroelectric, oil and
gas services, and medical diagnostic projects through Italian, Canadian, and
French subsidiaries.
•
Foreign subsidiaries of several other U.S. energy equipment firms have been and
may still be in the Iranian market, according to their “10-K” filings with the
Securities and Exchange Commission. These include Natco Group,2224 Overseas
Shipholding Group, 2325 UOP (a Honeywell subsidiary),24 Itron2526 Itron27, Fluor, 2628
Flowserve,2729 Parker Drilling, Vantage Energy Services, 2830 Weatherford, 29and31and a
few others. However, in March 2010, Ingersoll Rand, maker of air compressors
and cooling systems, said it would no longer allow its subsidiaries to do business
in Iran.3032 On March 1, 2010, Caterpillar Corp. said it had altered its policies to
prevent foreign subsidiaries from selling equipment to independent dealers that
have been reselling the equipment to Iran.3133 In April 2010, it was reported that
foreign partners of several U.S. or other U.S. accounting firms had cut their ties
with Iran, including partners of PricewaterhouseCoopers and Ernst and Young. 3234
The pullout of KPMG was discussed above.
•
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.
2123
“Iran Says Halliburton Won Drilling Contract.” Washington Times, January 11, 2005.
Form 10-K Filed for fiscal year ended December 31, 2008.
2325
Prada, Paulo, and Betsy McKay. Trading Outcry Intensifies. Wall Street Journal, March 27, 2007; Brush, Michael.
Are You Investing in Terrorism? MSN Money, July 9, 2007.
2426
New York Times, March 7, 2010, cited previously.
2527
Subsidiaries of the Registrant at December 31, 2009. http://www.sec.gov/Archives/edgar/data/780571/
000078057110000007/ex_21-1.htm.
2628
“Exhibit to 10-K Filed February 25, 2009.” Officials of Fluor claim that their only dealings with Iran involve
property in Iran owned by a Fluor subsidiary, which the subsidiary has been unable to dispose of. CRS conversation
with Fluor, December 2009.
2729
Form 10-K for Fiscal year ended December 31, 2009.
2830
Form 10-K for Fiscal year ended December 31, 2007.
22
2924
31
Form 10-K for Fiscal year ended December 31, 2008, claims firm directed its subsidiaries to cease new business in
Iran and Cuba, Syria, and Sudan as of September 2007.
3032
Nixon, Ron. “2 Corporations Say Business With Tehran Will Be Curbed.” New York Times, March 11, 2010.
3133
“Caterpillar Says Tightens ‘No-Iran’ Business Policy.” Reuters, March 1, 2010.
3234
Baker, Peter. “U.S. and Foreign Companies Feeling Pressure to Sever Ties With Iran.” New York Times, April 24,
2010.
Congressional Research Service
2527
Iran Sanctions
In the 110th Congress, S. 970, S. 3227, S. 3445, and three House-passed bills (H.R. 1400, H.R.
7112, and H.R. 957)—would have applied sanctions to the parent companies of U.S. subsidiaries
if those subsidiaries are directed by the parent company to trade with Iran. The Senate version of
H.R. 2194, which awaits conference action, contains a similar provisioncontained a similar provision, but it was taken out in conference action.
Treasury Department “Targeted
Financial Measures”
Various “targeted financial measures” have been undertaken by the Treasury Department,
particularly the office of Under Secretary of the Treasury Stuart Levey (who has remained in the
Obama Administration). Since 2006, strengthened by leverage provided in five U.N. Security
Council Resolutions, Levey and other officials have been able to convince numerous foreign
banks that dealing with Iran entails financial risk and furthers terrorism and proliferation.
Treasury Secretary Timothy Geithner has described Levey as having “led the design of a
remarkably successful program”3335 with regard to targeting Iran’s proliferation networks. The
actions have, according to the International Monetary Fund, partly dried up financing for energy
industry and other projects in Iran. The United States has also worked extensively with its
partners in the multilateral Financial Action Task Force (FATF) to achieve a directive by that
group in February 2010 that its members “protect the international financial system from the
ongoing and substantial money laundering and terrorist financing risks from Iran.”
In a major summation of the effort, Treasury and State Departments officials, in April 17, 2008,
testimony before the House Foreign Affairs Committee, said they hadas of 2010, say that
they have persuaded at least 4080 banks
not to provide financing for exports to Iran or to process
dollar transactions for Iranian banks.
Among those that have pulled out of Iran are UBS
(Switzerland), HSBC (Britain), Germany’s
Commerzbank A.G. and Deutsche Bank AG. U.S.
financial diplomacy has reportedly convinced
Kuwaiti banks to stop transactions with Iranian
accounts,3436 and some banks in Asia (primarily
South Korea and Japan) and the rest of the Middle
East have done the same. The International
Monetary Fund and other sources report that these
measures are making it more difficult to fund
energy industry and other projects in Iran and for
importers/exporters to conduct trade in
expensive items.
Some of these results have come about through 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 in December 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). In the biggest such instance, on
December 16, 2009, the Treasury Department announced that Credit Suisse would pay a $536
million settlement to the United States for illicitly processing Iranian transactions with U.S.
banks. Credit Suisse, according to the Treasury Department, saw business opportunity by picking
up the transactions business from a competitor who had, in accordance with U.S. regulations
discussed below, ceased processing dollar transactions for Iranian banks. Credit Suisse also
pledged to cease doing business with Iran.
33
35
Hearing of the Financial Services and General Government Subcommittee of the House Appropriations Committee,
Federal News Service, May 21, 2009.
3436
Mufson, Steven and Robin Wright. “Iran Adapts to Economic Pressure.” Washington Post, October 29, 2007.
Congressional Research Service
2628
Iran Sanctions
In action intended to cut Iran off from the U.S. banking system, on September 6, 2006, the
Treasury Department barred 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. 3537 Bank Sepah is subject to asset freezes and transactions
limitations as a result of Resolutions 1737 and 1747. The Treasury Department extended that UTurn restriction to all Iranian banks on November 6, 2008.
Thus far, the Treasury Department has not designated any bank as a “money laundering entity”
for Iran-related transactions (under Section 311 of the USA Patriot Act), although some say that
step has been threatened at times. Nor has Treasury imposed any specific 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. Several European
countries reportedly oppose such a sanction as an extreme step with potential humanitarian
consequences, for example by preventing Iran from keeping its currency stable. S. 3445, a Senate
bill in the 110th Congress, and a counterpart passed by the House on September 26, 2008 (H.R.
7112), called for this sanction. The Senate version of H.R. 2194, the “Dodd-Shelby” bill,
referenced above, in the 111th Congress hashad a similar provision, which was included in
conference action. Resolution 1929 references the
need for vigilance in dealing with Iran’s
Central Bank but does not mandate any new sanctions
against it.
In enforcing U.S. sanctions, on December 17, 2008, the U.S. Attorney for the Southern District of
New York filed a civil action seeking to seize the assets of the Assa Company, a UK-chartered
entity. Assa allegedly was maintaining the interests of Bank Melli in an office building in New
York City. An Iranian foundation, the Alavi Foundation, allegedly is an investor in the building.
However, Treasury Department officials say that some of these efforts have gone as far as
possible and, in concert with statements by Secretary of State Clinton and other officials in early
2010, Treasury officials are attempting to target the Revolutionary Guard and its corporate arms
and suppliers. Four Guard-related Iranian firms, and one Guard official affiliated with the Guard’s
corporate activities, were designated by the Treasury Department as proliferation entities under
Executive Order 13382. Revolutionary Guard-affiliated firms are targeted extensively for
sanctions under Resolution 1929. On June 16, 2010, several more Guard officials and affiliate
firms were designated under Executive Order 13382.
Terrorism List Designation-Related Sanctions
Several U.S. sanctions are in effect as a result of Iran’s presence on the U.S. “terrorism list.” The
list was established by Section 6(j) of the Export Administration Act of 1979 (P.L. 96-72, as
amended), sanctioning countries determined to have provided repeated support for acts of
international terrorism. Iran was added to the list in January 1984, following the October 1983
bombing of the U.S. Marine barracks in Lebanon (believed perpetrated by Hezbollah). Sanctions
imposed as a consequence include a ban on U.S. foreign aid to Iran; restrictions on U.S. exports
to Iran of dual use items; and requires the United States to vote against international loans to Iran.
•
35
The terrorism list designation restricts sales of U.S. dual use items (Export
Administration Act, as continued through presidential authorities under the
37
Kessler, Glenn. “U.S. Moves to Isolate Iranian Banks.” Washington Post, September 9, 2006.
Congressional Research Service
27
Iran Sanctions
29
Iran Sanctions
•
The terrorism list designation restricts sales of U.S. dual use items (Export
Administration Act, as continued through presidential authorities under the
International Emergency Economic Powers Act, IEEPA, as implemented by
executive orders), and, under other laws, bans direct U.S. financial assistance
(Section 620A of the Foreign Assistance Act, FAA, P.L. 87-195) and arms sales
(Section 40 of the Arms Export Control Act, P.L. 95-92, as amended), and
requires the United States to vote to oppose multilateral lending to the designated
countries (Section 327 of the 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.
•
The Anti-Terrorism and Effective Death Penalty Act (Sections 325 and 326 of
P.L. 104-132) requires the President 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 military flew in 68,000
kilograms of supplies to Bam.
In the Bam case, there was also a temporary exemption made in the regulations to allow for
donations to Iran of humanitarian goods by American citizens and organizations. Those
exemptions were extended several times but expired in March 2004.
Executive Order 13224
The separate, but related, Executive Order 13324 (September 23, 2001) authorizes the President
to freeze the assets of and bar U.S. transactions with entities determined to be supporting
international terrorism. This order, issued two weeks after the September 11 attacks, under the
authority of the IEEPA, the National Emergencies Act, the U.N. Participation Act of 1945, and
Section 301 of the U.S. Code, was intended to primarily target Al Qaeda-related entities.
However, it has increasingly been applied to Iranian entities. Such Iran-related entities named and
sanctioned under this order are in Table 4 at the end of this report. Table 4 includes the names of
Iranian entities sanctioned under other orders and under United Nations resolutions pertaining to
Iran’s nuclear program.
Congressional Research Service
2830
Iran Sanctions
Proliferation-Related Sanctions
Iran is prevented from receiving advanced technology from the United States under relevant and
Iran-specific anti-proliferation laws36laws38 and by Executive Order 13382 (June 28, 2005).
Iran-Iraq Arms Nonproliferation Act
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-Iraq Act (Section 1603) also provides for a “presumption of denial” for all dual use exports
to Iran (which would include computer software). A waiver to permit such exports, on a case-bycase basis, is provided for.
Iran-Syria-North Korea Nonproliferation Act
The Iran Nonproliferation Act (P.L. 106-178), now called the Iran-Syria-North Korea NonProliferation Act) authorizes sanctions on foreign persons (individuals or corporations, not
countries or governments) that are determined by the Administration to have assisted 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.3739 (A Continuing Resolution for FY2009, which funded the U.S. government through
March 2009, waived this law to allow NASA to continue to use Russian vehicles to access the
International Space Station.)
Executive Order 13382
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.
Foreign Aid Restrictions for Suppliers of Iran
In addition, successive foreign aid appropriations punish 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.
3638
Such laws include the Atomic Energy Act of 1954 and the Energy Policy Act of 2005 (P.L. 109-58).
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.
3739
Congressional Research Service
2931
Iran Sanctions
Implementation
The George W. Bush Administration decided to impose sanctions for violations of the executive
orders and laws discussed above, and it sanctioned numerous entities as discussed below. The
Obama Administration has continued to sanction entities under these provisions, as shown in
Table 4. Iranian entities
designated under these laws and orders are listed in Table 4 at the end of this report, including the
, including
the four Revolutionary Guard-affiliated firms designated under E.O. 13382 in February 2010.
Despite these efforts, Iran has used loopholes and other devices, such as front companies, to elude
U.S. and international sanctions. Some of these efforts focus on countries perceived as having lax
enforcement of export control laws, such as UAE and Malaysia. In some cases, Iran has been
able, according to some reports, to obtain sophisticated technology even from U.S. firms.3840
Relations to International Sanctions
The U.S. sanctions discussed in this report are more comprehensive than those imposed, to date,
by the United Nations Security Council. However, there is some overlap between the U.N.
sanctions and those imposed by the United States and some of its allies under their separate
national authorities.
As part of a multilateral process of attempting to convince Iran to choose the path of negotiations
or face further penalty, during 2006-2008, three U.N. Security Council resolutions—1737, 1747,
and 1803—imposed sanctions primarily on Iran’s weapons of mass destruction (WMD)
infrastructure. While pressing for sanctions, the multilateral group negotiation with Iran (“P5+1:”
the Security Council permanent members, plus Germany) at the same time offered Iran incentives
to suspend uranium enrichment; the last meeting between Iran and the P5+1 to discuss these
issues was in July 2008. The negotiations made little progress, and then entered a hiatus for the
U.S. presidential election, the establishment of the Obama Administration, and then the Iranian
presidential election. However, after many months of negotiations, Resolution 1929 was adopted
on June 9, 2010, by a vote of 12-2 (Turkey and Brazil), with one abstention (Lebanon). (Iranian
entities and persons sanctioned by the United Nations are included in Table 4 at the end of this
report.)
The main points of the resolution are: 39Resolution 1929 are: 41
•
It targets several additional firms affiliated with the Revolutionary Guard firms
for asset freezes.
•
It makes mandatory a ban on travel for Iranian persons named in it and in
previous resolutions—including those Iranians for whom there was a nonbinding travel ban in previous resolutions.
38•
It gives countries the authorization to inspect any shipments—and to dispose of
its cargo—if the shipments are suspected to carry contraband items. However,
40
Warrick, Joby. “Iran Using Fronts to Get Bomb Parts From U.S.” Washington Post, January 11, 2009; Institute for
Science and International Security. “Iranian Entities’ Illicit Military Procurement Networks.” David Albright, Paul
Brannan, and Andrea Scheel. January 12, 2009.
3941
Text of the resolution is at http://www.isis-online.org/uploads/isis-reports/documents/
Draft_resolution_on_Iran_annexes.pdf.
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•
It gives countries the authorization to inspect any shipments—and to dispose of
its cargo—if the shipments are suspected to carry contraband items. However,
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inspections on the high seas are subject to concurrence by the country that owns
that ship. This provision is modeled after a similar provision imposed on North
Korea, which did cause that country to reverse some of its shipments.
•
It prohibits countries from allowing Iran to invest in uranium mining and related
nuclear technologies, or nuclear-capable ballistic missile technology.
•
It bans sales to Iran of most categories of heavy arms to Iran and requests
restraint in sales of light arms, but does not bar sales of missiles not on the “U.N.
Registry of Conventional Arms.”
•
It requires countries to insist that their companies refrain from doing business
with Iran if there is reason to believe that such business could further Iran’s
WMD programs.
•
It requests, but does not mandate, that countries prohibit Iranian banks to open in
their countries, or for their banks to open in Iran, if doing so could contribute to
Iran’s WMD activities.
•
The resolution sets up a “panel of experts,” which the Obama Administration
says will be chaired by longtime arms control official Robert Einhorn, to assess
the effect of the resolution and previous Iran resolutions, and suggest ways of
more effective implementation.
•
The resolution did not make mandatory some measures discussed in press reports
on the negotiations, including barring any foreign investment in Iranian bond
offerings; banning insurance for transport contracts for shipments involving Iran;
banning international investment in Iran’s energy sector; banning the provision of
trade credits to Iran, or banning all financial dealings with Iranian banks.
The resolution attracted mixed reviews; President Obama, in a statement, said it “…will put in
place the toughest sanctions ever faced by the Iranian government.”4042 Some experts and press
accounts said the resolution is unlikely to affect Iran’s nuclear decisionmaking. President Obama,
Secretary of State Clinton, and a joint P5+1 statement expressed that the intent of the Resolution
was to bring Iran back to the bargaining table in earnest. An annex to the Resolution reinforced
that point; the Annex presents the modified offer of incentives and a new relationship between
Iran and the international community, presented to Iran in June 2008. On June 11, 2010, the
European Union foreign policy representative, Baroness Catherine Ashton, wrote to Iran’s nuclear
negotiator, Sayed Jallili, inviting him to restart formal nuclear talks.
However, in order to keep pressure on Iran, on June 16, 2010, the EU began a foreign ministerial
meeting that resulted in a declaration, subject to technical subsequent expert talks and ministerial
affirmation, to implement many of the authorities of Resolution 1929. The measures announced
included an EU ban on new investment in Iran’s energy sector, particular its ability to refine oil
into gasoline. 41
40
The text of President Obama’s statement is at http://www.whitehouse.gov/the-press-office/remarks-president-unitednations-security-council-resolution-iran-sanctions.
41
Fidler, Stephen. “EU Shapes Expanded Sanctions Against Iran.” Wall Street Journal, June 16, 2010.
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President Ahmadinejad
subsequently said that, because new sanctions were imposed, any new talks would have to wait
until August 2010.
The head of Iran’s civilian atomic energy agency said in July 2010 that international sanctions
might “slow” Iran’s nuclear program, while other Iranian officials minimized any likely effects.
However, there is a consensus among experts that U.S. and international sanctions have not, to
date, clearly affected Iran’s nuclear decisionmaking processes or its decisions.
In order to keep pressure on Iran, on June 17, 2010, the EU ended a foreign ministerial meeting
that resulted in a declaration, subject to technical subsequent expert talks and ministerial
42
The text of President Obama’s statement is at http://www.whitehouse.gov/the-press-office/remarks-president-unitednations-security-council-resolution-iran-sanctions.
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affirmation, to implement many of the authorities of Resolution 1929. The measures to be
undertaken are to include an EU ban on new investment in Iran’s energy sector, particular its
ability to refine oil into gasoline. 43
Table 3. Summary of Provisions of U.N. Resolutions on Iran Nuclear Program
(1737, 1747, 1803, and 1929)
Require Iran to suspend uranium enrichment, and to refrain from any development of ballistic missiles that are
nuclear capable (1929)
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
Prohibit Iran from investing abroad in uranium mining, related nuclear technologies or nuclear capable ballistic missile
technology
Freeze the assets of over 80 named Iranian persons and entities, including Bank Sepah, and several corporate affiliates
of the Revolutionary Guard.
Require that countries ban the travel of over 40 named Iranians
Mandates that countries not export major combat systems to Iran
Calls for “vigilance” (a non-binding call to cut off business) with respect to all Iranian banks, particularly Bank Melli and
Bank Saderat.
Calls for vigilance (voluntary restraint) with respect to providing international lending to Iran and providing trade
credits and other financing and financial interactions.
Calls on countries to inspect cargoes carried by Iran Air Cargo and Islamic Republic of Iran Shipping Lines – or by any
ships in national or international waters - if there are indications they carry cargo banned for carriage to Iran.
Searches in international waters would require concurrence of the country where the ship is registered.
A Sanctions Committee, composed of the fifteen members of the Security Council, monitors Implementation of all
Iran sanctions and collects and disseminates information on Iranian violations and other entities involved in banned
activities. A “panel of experts” is empowered by 1929 to make recommendations for improved enforcement.
Source: Text of U.N. Security Council resolutions 1737, 1747, 1803, and 1929. http://www.un.org. More
information on specific provisions of each of these resolutions is in CRS Report. CRS Report RL32048, Iran: U.S.
Concerns and Policy Responses, by Kenneth Katzman.
European/Japanese/Other Foreign Country Policy on Sanctions
and Trade Agreements
U.S. allies support the Obama Administration approach toward Iran more so than the George W.
Bush Administration approach, which was perceived as primarily punitive. U.S. and
European/allied approaches have been converging since 2002, when the nuclear issue came to the
fore. The EU countries have begun to implement some sanctions that exceed those mandated in
Security Council resolutions. In line with U.N. resolutions, EU countries have banned all dual use
exports for military end users in Iran. Several EU countries are discouraging their companies
from making any new investments in or soliciting any new business with Iran, and several
European and Asian firms have pulled out of the Iran market in 2010. Several EU countries now
support sanctions on Iran that they opposed in earlier years.
43
Fidler, Stephen. “EU Shapes Expanded Sanctions Against Iran.” Wall Street Journal, June 16, 2010.
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Negotiations with Iran on a “Trade and Cooperation Agreement” (TCA) are not currently being
held; such an agreement would have lowered the tariffs or increased quotas for Iranian exports to
the EU countries.4244 Similarly, there is insufficient international support to grant Iran membership
42
During the active period of talks, which began in December 2002, there were working groups 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.
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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 George W. 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, at a WTO meeting in May 2005, no opposition to Iran’s
application was registered, and Iran formally began accession talks.
Current allied policies are a shift since the 1990s, when 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 killing Iranian dissidents in Germany, but resumed in May 1998 during Khatemi’s
presidency. 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.
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 (which require the United States to vote against international loans to countries
named by the United States as sponsors of international terrorism), 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 FY1994FY1996 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. 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 2003-May 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.
44
During the active period of talks, which began in December 2002, there were working groups 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.
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Efforts to Promote Divestment
A growing trend not only in Congress but in several 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). 4345 The concept of these sanctions is to
express the view of Western and other democracies that Iran is an outcast internationally.
43
For information on the steps taken by individual states, see National Conference of State Legislatures. State
Divestment Legislation.
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Legislation in the 110th Congress, H.R. 1400, did not require divestment, but requires a
presidential report on firms that have invested in Iran’s energy sector. Another bill, H.R. 1357,
required government pension funds to divest of shares in firms that have made ISA-sanctionable
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.
In the 111th Congress, H.R. 1327 (Iran Sanctions Enabling Act), a bill similar to H.R. 2347 of the
110th Congress, was reported by the Financial Services Committee on April 28, 2009. It passed
the House on October 14, 2009, by a vote of 414-6. A similar bill. S. 1065, has been introduced in
the Senate. Some provisions along these lines arewere contained in the Senate version of H.R. 2194conference report on H.R.
2194 (P.L. 111-195).
Sanctions and Other Proposals to Support
Iran’s Opposition
A major trend in the 111th Congress, after the Iran election dispute, has been efforts to promote
the prospects for the domestic opposition in Iran. Proposals to target the Revolutionary Guard for
sanctions represent the trend toward measures that undermine the legitimacy of Iran’s regime and
express support for the growing domestic opposition in Iran. The Revolutionary Guard is
involved in Iran’s WMD programs but it is also the key instrument through which the regime is
trying to suppress the pro-democracy protest. Some of the proposals discussed below could
potentially be included in any House and Senate conference agreement on H.R. 2194.
Expanding Internet and Communications Freedoms
Some Members have focused on expanding Internet freedom in Iran or preventing the Iranian
government from using the Internet to identify opponents. Subtitle D of the FY2010 Defense
Authorization (P.L. 111-84), called the “VOICE” (Victims of Iranian Censorship) Act contains
several provisions to increase U.S. broadcasting to Iran and to identify (in a report to be submitted
180 days after enactment, or April 25, 2009) companies that are selling Iran technology
equipment that it can use to suppress or monitor the internet usage of Iranians. The VOICE Act
also authorizes funds to document Iranian human rights abuses since the June 12, 2009,
presidential election. Another provision of P.L. 111-84 (Section 1241) requires an Administration
45
For information on the steps taken by individual states, see National Conference of State Legislatures. State
Divestment Legislation.
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report, not later than January 31, 2010, on U.S. enforcement of sanctions against Iran, and the
effect of those sanctions on Iran.
S. 1475 and H.R. 3284, the “Reduce Iranian Cyber-Suppression Act,” would authorize the
President to ban U.S. government contracts with foreign companies that sell technology that Iran
could use to monitor or control Iranian usage of the internet. Firms, including a joint venture
between Nokia (Finland) and Siemens (Germany), reportedly sold such technology to Iran in
2008.4446 Perhaps to avoid further embarrassment, Siemens announced on January 27, 2010, that it
would stop signing new business deals in Iran as of mid-2010.45 Some question whether such a
44
45
Rhoads, Christopher. “Iran’s Web Spying Aided by Western Technology.” Wall Street Journal, June 22, 2009.
End, Aurelia. “Siemens Quits Iran Amid Mounting Diplomatic Tensions.” Agence France Press, January 27, 2010.
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47 Some question whether such a
sanction might reduce allied cooperation with the United States if allied companies are so
sanctioned. Some provisions along these lines are contained in the Senate version of H.R. 2194
and in the conference report on the legislation that is now circulatingconference report on H.R.
2194 (P.L. 111-195).
Also in line with this trend, on March 8, 2010, OFAC amended the Iran Transactions Regulations
that implement the U.S.-Iran trade ban to provide for a general license for providing to Iranians
free mass market software in order to facilitate internet communications. The ruling appears to
incorporate the major features of a legislative proposal, H.R. 4301, the “Iran Digital
Empowerment Act.” The OFAC determination required a waiver of the provision of the Iran-Iraq
Arms Nonproliferation Act (Section 1606 waiver provision) discussed above.
Measures to Sanction Human Rights Abuses and Promote
the Opposition
Another reflection of this trend have been efforts to sanction regime officials involved in
suppressing the domestic opposition in Iran. Senator John McCain proposed to offer amendments
to S. 2799 (the Senate version of what is now H.R. 2194) during Senate consideration of the bill.
These amendments would have focused on Iran’s human rights abuses and suppression of
protests. Due to procedural issues, the amendments were not offered and S. 2799 was passed by
voice vote. However, he subsequently introduced S. 3022, the “Iran Human Rights Sanctions
Act,” which would authorize financial sanctions and a ban on U.S. visas for Iranian officials
determined to have committed human rights abuses against Iranian citizens. Companion measures
in the House are H.R. 4647 and H.R. 4649, which differ only slightly with each other. Some
observers say that the conference report on H.R. 2194 is likely to include the major provisions of
these bills.became H.R. 2194) to focus on banning travel and freezing
assets of those Iranians determined to be human rights abusers. These provisions were included in
the conference report on H.R. 2194, P.L. 111-195. The provisions in the final law were similar to
those of Sen. McCain’s earlier stand alone bill, S. 3022, the “Iran Human Rights Sanctions Act.”
Companion measures in the House were H.R. 4647 and H.R. 4649, which differ only slightly
with each other.
Another bill, introduced by Senator Cornyn and Senator Brownback, (S. 3008) the “Iran
Democratic Transition Act,” calls for a forthright declaration that it is the policy of the United
States to support efforts by the Iranian people to remove the regime from power. It calls for the
use of U.S. broadcasting and humanitarian funds to help democratic organizations in Iran.
Blocked Iranian Property and Assets
Iranian leaders continue to assert that the United States is holding Iranian assets, and that this is
an impediment to improved relations. 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
46
47
Rhoads, Christopher. “Iran’s Web Spying Aided by Western Technology.” Wall Street Journal, June 22, 2009.
End, Aurelia. “Siemens Quits Iran Amid Mounting Diplomatic Tensions.” Agence France Press, January 27, 2010.
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$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 Bush
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Administration opposed a terrorism lawsuit against Iran by victims of the U.S. Embassy Tehran
seizure on the grounds of diplomatic obligation.4648
Table 4. Entities Sanctioned Under U.N. Resolutions and
U.S. Laws and Executive Orders
(Persons listed are identified by the positions they held when designated; some have since changed.)
Entities Named for Sanctions Under Resolution 1737
Atomic Energy Organization of Iran (AEIO) Mesbah Energy Company (Arak supplier)
Kalaye Electric (Natanz supplier))
Pars Trash Company (centrifuge program) Farayand Technique (centrifuge program)
Defense Industries Organization (DIO)
7th of Tir (DIO subordinate)
Shahid Hemmat Industrial Group (SHIG)—missile program
Shahid Bagheri Industrial Group (SBIG)—missile program
Fajr Industrial Group (missile program)
Mohammad Qanadi, AEIO Vice President
Behman Asgarpour (Arak manager)
Ehsan Monajemi (Natanz construction manager)
Jafar Mohammadi (Adviser to AEIO)
Gen. Hosein Salimi (Commander, IRGC Air Force)
Dawood Agha Jani (Natanz official)
Ali Hajinia Leilabadi (director of Mesbah Energy)
Lt. Gen. Mohammad Mehdi Nejad Nouri (Malak Ashtar University of Defence Technology rector)
Bahmanyar Morteza Bahmanyar (AIO official)
Reza Gholi Esmaeli (AIO official)
Ahmad Vahid Dastjerdi (head of Aerospace Industries Org., AIO)
Maj. Gen. Yahya Rahim Safavi (Commander in Chief, IRGC)
4648
See CRS Report RL31258, Suits Against Terrorist States by Victims of Terrorism, by Jennifer K. Elsea.
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Entities/Persons Added by Resolution 1747
Ammunition and Metallurgy Industries Group (controls 7th of Tir)
Parchin Chemical Industries (branch of DIO)
Karaj Nuclear Research Center
Novin Energy Company
Cruise Missile Industry Group
Sanam Industrial Group (subordinate to AIO)
Ya Mahdi Industries Group
Kavoshyar Company (subsidiary of AEIO)
Sho’a Aviation (produces IRGC light aircraft for asymmetric warfare)
Bank Sepah (funds AIO and subordinate entities)
Esfahan Nuclear Fuel Research and Production Center and Esfahan Nuclear Technology Center
Qods Aeronautics Industries (produces UAV’s, para-gliders for IRGC asymmetric warfare)
Pars Aviation Services Company (maintains IRGC Air Force equipment)
Gen. Mohammad Baqr Zolqadr (IRGC officer serving as deputy Interior Minister
Brig. Gen. Qasem Soleimani (Qods Force commander)
Fereidoun Abbasi-Davani (senior defense scientist)
Mohasen Fakrizadeh-Mahabai (defense scientist)
Seyed Jaber Safdari (Natanz manager)
Mohsen Hojati (head of Fajr Industrial Group)
Ahmad Derakshandeh (head of Bank Sepah)
Brig. Gen. Mohammad Reza Zahedi (IRGC ground forces commander)
Amir Rahimi (head of Esfahan nuclear facilities)
Mehrdada Akhlaghi Ketabachi (head of SBIG)
Naser Maleki (head of SHIG)
Brig. Gen. Morteza Reza’i (Deputy commander-in-chief, IRGC)
Vice Admiral Ali Akbar Ahmadiyan (chief of IRGC Joint Staff)
Brig. Gen. Mohammad Hejazi (Basij commander)
Entities Added by Resolution 1803
Thirteen Iranians named in Annex 1 to Resolution 1803; all reputedly involved in various aspects of nuclear program.
Bans travel for five named Iranians.
Electro Sanam Co.
Abzar Boresh Kaveh Co. (centrifuge production)
Barzaganin Tejaral Tavanmad Saccal
Jabber Ibn Hayan
Khorasan Metallurgy Industries
Niru Battery Manufacturing Co. (Makes batteries for Iranian military and missile systems)
Ettehad Technical Group (AIO front co.)
Industrial Factories of Precision
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Joza Industrial Co.
Pshgam (Pioneer) Energy Industries
Tamas Co. (involved in uranium enrichment)
Safety Equipment Procurement (AIO front, involved in missiles)
Entities Added by Resolution 1929
Over 40 entities added; makes mandatory a previously non-binding travel ban on most named Iranians of previous
resolutions. Adds one individual banned for travel – AEIO head Javad Rahiqi
Amin Industrial Complex
Armament Industries Group
Defense Technology and Science Research Center (owned or controlled by Ministry of Defense)…….
Doostan International Company
Farasakht Industries
First East Export Bank, PLC (only bank added by 1929)
Kaveh Cutting Tools Company
M. Babaie Industries
Malek Ashtar University (subordinate of Defense Technology and Science Research Center, above)
Ministry of Defense Logistics Export (sells Iranian made arms to customers worldwide)
Mizan Machinery Manufacturing
Modern Industries Technique Company
Nuclear Research Center for Agriculture and Medicine (research component of the AEIO)
Pejman Industrial Services Corp.
Sabalan Company
Sahand Aluminum Parts Industrial Company
Shahid Karrazi Industries
Shahid Sattari Industries
Shahid Sayyade Shirazi Industries (acts on behalf of the DIO)
Special Industries Group (another subordinate of DIO)
Tiz Pars (cover name for SHIG)
Yazd Metallurgy Industries
The following are Revolutionary Guard affiliated firms, several are subsidiaries of Khatam ol-Anbiya, the main Guard
construction affiliate:
Fater Institute
Garaghe Sazendegi Ghaem
Gorb Karbala
Gorb Nooh
Hara Company
Imensazan Consultant Engineers Institute
Khatam ol-Anbiya
Makin
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Omran Sahel
Oriental Oil Kish
Rah Sahel
Rahab Engineering Institute
Sahel Consultant Engineers
Sepanir
Sepasad Engineering Company
The following are entities owned or controlled by Islamic Republic of Iran Shipping Lines (IRISL):
Irano Hind Shipping Company
IRISL Benelux
South Shipping Line Iran
Entities Designated Under U.S. Executive Order 13382
(many designations coincident with designations under U.N. resolutions)
Entity
Date Named
Shahid Hemmat Industrial Group (Iran)
June 2005, September 2007
Shahid Bakeri Industrial Group (Iran)
June 2005, February 2009
Atomic Energy Organization of Iran
June 2005
Novin Energy Company (Iran)
January 2006
Mesbah Energy Company (Iran)
January 2006
Four Chinese entities: Beijing Alite Technologies, LIMMT
Economic and Trading Company, China Great Wall Industry
Corp, and China National Precision Machinery
Import/Export Corp.
June 2006
Sanam Industrial Group (Iran)
July 2006
Ya Mahdi Industries Group (Iran)
July 2006
Bank Sepah (Iran)
January 2007
Defense Industries Organization (Iran)
March 2007
Pars Trash (Iran, nuclear program)
June 2007
Farayand Technique (Iran, nuclear program)
June 2007
Fajr Industries Group (Iran, missile program)
June 2007
Mizan Machine Manufacturing Group (Iran, missile prog.)
June 2007
Aerospace Industries Organization (AIO) (Iran)
September 2007
Korea Mining and Development Corp. (N. Korea)
September 2007
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 Guard); Bank
Melli Iran Zao (Moscow); Melli Bank PC (U.K.)
October 21, 2007
Bank Kargoshaee
October 21, 2007
Arian Bank (joint venture between Melli and Bank Saderat).
Based in Afghanistan
October 21, 2007
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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 (main IRGC
construction and 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
Hara Company
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 1747
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
Yahya Rahim Safavi (former IRGC Commander in Chief
July 8, 2008
Mohsen Fakrizadeh-Mahabadi (senior Defense Ministry
scientist)
July 8, 2008
Dawood Agha-Jani (head of Natanz enrichment site)
July 8, 2008
Mohsen Hojati (head of Fajr Industries, involved in missile
program)
July 8, 2008
Mehrdada Akhlaghi Ketabachi (heads Shahid Bakeri Industrial
Group)
July 8, 2008
Naser Maliki (heads Shahid Hemmat Industrial Group)
July 8, 2008
Tamas Company (involved in uranium enrichment)
July 8, 2008
Shahid Sattari Industries (makes equipment for Shahid
Bakeri)
July 8, 2008
7th of Tir (involved in developing centrifuge technology)
July 8, 2008
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Ammunition and Metallurgy Industries Group (partner of 7th
of Tir)
July 8, 2008
Parchin Chemical Industries (deals in chemicals used in
ballistic missile programs)
July 8, 2008
Karaj Nuclear Research Center
August 12, 2008
Esfahan Nuclear Fuel Research and Production Center
(NFRPC)
August 12, 2008
Jabber Ibn Hayyan (reports to Atomic Energy Org. of Iran,
AEIO)
August 12, 2008
Safety Equipment Procurement Company
August 12, 2008
Joza Industrial Company (front company for Shahid Hemmat
Industrial Group, SHIG)
August 12, 2008
Islamic Republic of Iran Shipping Lines (IRISL) and 18
affiliates, including Val Fajr 8; Kazar; Irinvestship; Shipping
Computer Services; Iran o Misr Shipping; Iran o Hind; IRISL
Marine Services; Iriatal Shipping; South Shipping; IRISL
Multimodal; Oasis; IRISL Europe; IRISL Benelux; IRISL China;
Asia Marine Network; CISCO Shipping; and IRISL Malta
September 10, 2008
Firms affiliated to the Ministry of Defense, including
Armament Industries Group; Farasakht Industries; Iran
Aircraft Manufacturing Industrial Co.; Iran Communications
Industries; Iran Electronics Industries; and Shiraz Electronics
Industries
September 17, 2008
Export Development Bank of Iran. Provides financial services
to Iran’s Ministry of Defense and Armed Forces Logistics
October 22, 2008
Assa Corporation (alleged front for Bank Melli involved in
managing property in New York City on behalf of Iran)
December 17, 2008
11 Entities Tied to Bank Melli: Bank Melli Iran Investment
(BMIIC); Bank Melli Printing and Publishing; Melli Investment
Holding; Mehr Cayman Ltd.; Cement Investment and
Development; Mazandaran Cement Co.; Shomal Cement;
Mazandaran Textile; Melli Agrochemical; First Persian Equity
Fund; BMIIC Intel. General Trading
March 3, 2009
IRGC General Rostam Qasemi, head of Khatem ol-Anbiya
Construction Headquarters (key corporate arm of the
IRGC)
February 10, 2010 (see also October 21, 2007)
Fater Engineering Institute (linked to Khatem ol-Anbiya)
February 10, 2010
Imensazen Consultant Engineers Institute (linked to
Khatem ol-Anbiya)
February 10, 2010
Makin Institute (linked to Khatem ol-Anbiya)
February 10, 2010
Rahab Institute (linked to Khatem on-Anbiya)
February 10, 2010
Entities Sanctioned on June 16, 2010 under E.O. 13382:
- Post Bank of Iran
- IRGC Air Force
- IRGC Missile Command
- Rah Sahel and Sepanir Oil and Gas Engineering (for ties to Khatem ol-Anibya IRGC construction affiliate)
- Mohammad Ali Jafari – IRGC Commander-in-Chief since September 2007
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- Mohammad Reza Naqdi – Head of the IRGC’s Basij militia force that suppresses dissent (since October 2009)
- Ahmad Vahedi – Defense Minister
- javedan Mehr Toos, Javad Karimi Sabet (procurement brokers or atomic energy managers)
- Naval Defense Missile InddustryIndustry Group (controlled by the Aircraft Industries Org that manages Iran’s missile
programs)
- Five front companies for IRISL: Hafiz Darya Shipping Co.; Soroush Sarzamin Asatir Ship Management Co.; Safiran
Payam Darya; and Hong Kong-based Seibow Limited and Seibow Logistics.
Also identified on June 16 were 27 vessels linked to IRISKL and 71 new names of already designated IRISL ships.
Several Iranian entities were also designated as owned or controlled by Iran for purposes of the ban on U.S. trade
with Iran.
Entities Sanctioned Under Executive Order 13224 (Terrorism Entities)
Qods Force
October 21, 2007
Bank Saderat (allegedly used to funnel Iranian money to
Hezbollah, Hamas, PIJ, and other Iranian supported terrorist
groups)
October 21, 2007
Al Qaeda Operatives in Iran: Saad bin Laden; Mustafa Hamid;
Muhammad Rab’a al-Bahtiyti; Alis Saleh Husain
January 16, 2009
Entities Sanctioned Under the Iran North Korea Syria Non-Proliferation Act and other
U.S. Proliferation Laws (Executive Order 12938)
Baltic State Technical University and Glavkosmos, both of
Russia
July 30, 1998 (E.O. 12938). Both removed in 2010 –
Baltic on Jan. 29, 2010 and Glavkosmos on March 4,
2010
D. Mendeleyev University of Chemical Technology of Russia
and Moscow Aviation Institute
January 8, 1999 (E.O. 12938). Both removed on May
21, 2010
Norinco (China). For alleged missile technology sale to Iran.
May 2003
Taiwan Foreign Trade General Corporation (Taiwan)
July 4, 2003
Tula Instrument Design Bureau (Russia). For alleged sales of
laser-guided artillery shells to Iran.
September 17, 2003 (also designated under Executive
Order 12938), removed May 21, 2010
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 Ukraine.
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 Enterprise Co.
December 2004 and January 2005
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
August 4, 2006 (see below for Rosobornexport
removal)
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entity (Center for Genetic Engineering and Biotechnology).
9 entities. Rosobornexport, 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 Syria).
January 2007 (see below for Tula and
Rosoboronexport removal)
14 entities, including Lebanese Hezbollah. Some were
penalized for transactions with Syria. Among the new
entities sanctioned for assisting Iran were Shanghai NonFerrous 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
13 entities: China Xinshidai Co.; China Shipbuilding and
Offshore International Corp.; Huazhong CNC (China);
IRGC; Korea Mining Development Corp. (North Korea);
Korea Taesong Trading Co. (NK); Yolin/Yullin Tech, Inc.
(South Korea); Rosoboronexport (Russia sate arms export
agency); Sudan Master Technology; Sudan Technical Center
Co; Army Supply Bureau (Syria); R and M International
FZCO (UAE); Venezuelan Military Industries Co. (CAVIM);
October 23, 2008. Rosoboronexport removed
May 21, 2010.
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
kidnapings and planned assassination attempts against Iraqi
Sunni politicians
January 9, 2008
Mishan al-Jabburi. Financier of Sunni insurgents, owner of
pro-insurgent Al-Zawra television, now banned
January 9, 2008
Al Zawra Television Station
January 9, 2008
Khata’ib Hezbollah (pro-Iranian Mahdi splinter group)
July 2, 2009
Abu Mahdi al-Muhandis
July 2, 2009
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Author Contact Information
Kenneth Katzman
Specialist in Middle Eastern Affairs
kkatzman@crs.loc.gov, 7-7612
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