Iran Sanctions
Kenneth Katzman
Specialist in Middle Eastern Affairs
June 23, 2010
Congressional Research Service
7-5700
www.crs.gov
RS20871
CRS Report for Congress
P
repared 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. belief is that
sanctions, particularly those targeting Iran’s energy sector, which provides about 80% of
government revenues, can 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 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 restrict U.S. trade with and investment in Iran, prohibit U.S. foreign
aid to Iran, and require 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.
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
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 report 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
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 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 ......................................................... 2
Available Sanctions Under ISA ....................................................................................... 3
Waiver and Termination Authority................................................................................... 3
ISA Sunset ...................................................................................................................... 4
Implementation, Effectiveness, and Ongoing Challenges....................................................... 4
Application to Energy Routes.......................................................................................... 4
Application to Energy Purchases From or Sales to Iran.................................................... 6
Application to Iranian Firms or the Revolutionary Guard ................................................ 6
Effectiveness of ISA ....................................................................................................... 6
Efforts in the 111th Congress to Expand ISA Application to Gasoline Production and
Sales—H.R. 2194 .............................................................................................................. 7
Legislation in the 111th Congress ..................................................................................... 9
Administration Review of Potential ISA Violations ....................................................... 17
Ban on U.S. Trade and Investment With Iran............................................................................. 23
Application to Foreign Subsidiaries of U.S. Firms ............................................................... 24
Treasury Department “Targeted Financial Measures” ................................................................ 26
Terrorism List Designation-Related Sanctions ........................................................................... 27
Executive Order 13224 ....................................................................................................... 28
Proliferation-Related Sanctions ................................................................................................. 29
Iran-Iraq Arms Nonproliferation Act ................................................................................... 29
Iran-Syria-North Korea Nonproliferation Act ...................................................................... 29
Executive Order 13382 ....................................................................................................... 29
Foreign Aid Restrictions for Suppliers of Iran...................................................................... 29
Implementation ................................................................................................................... 30
Relations to International Sanctions........................................................................................... 30
European/Japanese/Other Foreign Country Policy on Sanctions
and Trade Agreements................................................................................................ 32
World Bank Loans ........................................................................................................ 33
Efforts to Promote Divestment .................................................................................................. 33
Sanctions and Other Proposals to Support Iran’s Opposition...................................................... 34
Expanding Internet and Communications Freedoms ............................................................ 34
Measures to Sanction Human Rights Abuses and Promote the Opposition ........................... 35
Blocked Iranian Property and Assets ......................................................................................... 35
Tables
Table 1. Comparison of Major Versions of H.R. 2194................................................................ 10
Table 2. Post-1999 Major Investments/Major Development Projects in
Iran’s Energy Sector............................................................................................................... 19
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Table 3. Summary of Provisions of U.N. Resolutions on Iran Nuclear Program (1737,
1747, 1803, and 1929)............................................................................................................ 32
Table 4. Entities Sanctioned Under U.N. Resolutions and
U.S. Laws and Executive Orders ............................................................................................ 36
Contacts
Author Contact Information ...................................................................................................... 43
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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 Iran. That approach was not initially altered because of
the Iranian dispute over its June 12, 2009, elections. However, with subsequent negotiations
yielding no firm Iranian agreement to compromise, the Administration turned 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, Iran 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 States. 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 act to curtail additional types of
activity, such as selling gasoline and gasoline shipping 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 its onshore oil fields and oil industry infrastructure are aging and need substantial
investment. Its large natural gas resources (940 trillion cubic feet, exceeded only by Russia) were
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 to try to harm Iran’s energy sector came in November 1995, when Iran opened
its energy sector to foreign investment. To accommodate its ideology to retain 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
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
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
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
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
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, ISA requires the imposition of two of a menu of six
sanctions on that firm. The available sanctions 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
3. denial of U.S. bank loans exceeding $10 million in one year
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).
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 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 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
scheduled to sunset on December 31, 2011 (as provided by P.L. 109-293).
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
project determined to be in violation. That project was a $2 billion4 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.5
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 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.6 In May 2009, Iran
and Armenia inaugurated a natural gas pipeline between the two, built by Gazprom of Russia.
Iran-India Pipeline
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
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.
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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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. 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 would 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.
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 somewhat to about 3.8 million barrels
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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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, have announced pullouts from some of their Iran projects, declined to make 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.
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
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 2015.7 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
is dependent on gasoline imports to supply about 25%-35% of its gasoline needs. To try to 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 would not appear to constitute “investment” under the current 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 could constitute sanctionable projects under ISA because ISA’s definition of 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
sanctionable activity under ISA. There appears to be 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
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);10
• Trafigura of Switzerland (which also says it has stopped sales);
• Glencore of Switzerland;
• Total of France;
• Reliance Industries of India (reportedly has promised to end sales to Iran);11
• Petronas of Malaysia (said in mid-April 2010 it had stopped sales to Iran;12
• Lukoil of Russia (reportedly said in April 2010 that it will end sales to Iran);13
• Royal Dutch Shell of the Netherlands (which says it stopped sales to Iran in
2009);14
• 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 Sanctions
• Petroleos de Venezuela (reportedly reached a September 2009 deal to supply Iran
with gasoline);
• Kuwait’s Independent Petroleum Group supplies Iran;16 and
• Munich Re, Allianz, and Hannover Re reportedly have exited the market for
insuring gasoline shipments for Iran.17
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 number of ideas to expand ISA’s application to gasoline sales to Iran have been 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
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.
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.
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.
Iran Refined Petroleum Sanctions Act (IRPSA) and Comprehensive Iran
Sanctions, Accountability, and Divestment Act (H.R. 2194)
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 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
17 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
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Iran Sanctions
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.
Table 1. Comparison of Major Versions of H.R. 2194
House Version
Senate Version
Conference Report
General Goals: Seeks to expand the
Sanctions sales of gasoline to Iran
General y closer to the Senate
authorities of the Iran Sanctions Act
similar to House version of H.R.
version, but adds new provisions
(ISA, P.L. 104-172) to deter sales by
2194, but also would affect several
sanctioning Iranians determined to
foreign companies of gasoline to
other U.S. sanctions against Iran
be involved in human rights abuses
Iran.
already in place, including revoking
and requires Treasury Department
some exemptions to the U.S. ban on
to prohibit transactions with foreign
imports from Iran.
banks that conduct business with
Revolutionary Guard and U.N.-
sanctioned Iranian entities.
Statement of U.S. Policy on
Section 108 urges the President to
Section 104 (see below) contains
Sanctioning Iran’s Central Bank
use existing U.S. authorities to
sense of Congress urging U.S.
(Bank Markazi):
impose U.S. sanctions against the
sanctions against Iranian Central
Iranian Central Bank or other Iranian Bank and would prohibit U.S. bank
Section2(c) and 3(a) state that it
banks engaged in proliferation or
dealings with any financial institution
shall be U.S. policy to fully enforce
support of terrorist groups.
that helps the Central Bank facilitate
ISA to encourage foreign
circumvention of U.N. resolutions
governments:
Such authorities could include
on Iran.
Section 311 of the USA Patriot Act
- to cease investing in Iran’s energy
(31 U.S.C. 5318A), which authorizes
sector.
designation of foreign banks as “of
- to sanction Iran’s Central Bank and
primary money laundering concern”
other financial institutions that do
and thereby cut off their relations
business with the Iranian Central
with U.S. banks.
Bank (or any Iranian bank involved in
proliferation or support of terrorist
activities).
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House Version
Senate Version
Conference Report
Extension of ISA to Sales of
Section 102(a) contains similar
Section 102(a) contains provisions
Gasoline:
provisions regarding both gasoline
sanctioning sales of gasoline and
sales and sales of equipment and
refining services and equipment
Section 3(a) would amend ISA to
services for Iran to expand its own
similar to both versions. Sets dollar
make sanctionable:
refinery capacity. However, sets the
value “trigger” at $5 million
- the sale to Iran of equipment or
aggregate one-year sale value at $1
aggregate value (equipment or
services (of over $200,000 in value,
million—double the level of the
gasoline sales) in a one year period.
or $500,000 combined sales in one
House bill.
Specifies that what is sanctionable
year) that would enable Iran to
includes helping Iran develop not
maintain or expand its domestic
only oil and natural gas resources,
production of refined petroleum.
but also liquefied natural gas (LNG).
—or, the sale to Iran of refined
Products whose sales is sanctionable
petroleum products or ships,
is specified to include LNG tankers
vehicles, or insurance or reinsurance
and pipelines used to transport oil or
to provide such gasoline to Iran
LNG.
(same dollar values as sale of
equipment).
Expansion of ISA Sanctions:
Similar to House bill (Section
Section 102(b) would add the three
102(a)).
sanctions contained in the House
Section 3(b) would mandate certain
and Senate versions, but: it would
sanctions (not currently authorized
add these three to the existing menu of
by ISA) on sel ers of the equipment,
six sanctions in ISA. The President
gasoline, or services described in
would be required to impose 3 out of
Section 3(a) to include:
the 9 specified sanctions on entities
- prohibition of any transactions in
determined to be violators. (As it
foreign exchange with sanctioned
now exists, ISA requires the
entity;
imposition of two out of six
sanctions of the menu.)
- 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
Section 103(b)(4) contains a similar
Section 102(b) contains a provision
Mechanism:
provision, but mandates that the
similar to the House version
head of a U.S. agency may not
requiring new Treasury Dept.
Section 3(b) also requires the heads
contract with a person that meets
regulations that mandate that firms
of U.S. Government agencies to
criteria of sanctionability in the act.
to certify that they are not in
ensure that their agencies contract
Would not require the
violating of ISA as a condition of
with firms that certify to the U.S.
bidding/contracting firm to certify its
receiving a U.S. government
agency that they are not selling any
own compliance, thereby placing the
contract, and providing for penalties
of the equipment, products, or
burden of verifying such compliance
for any falsification.
services to Iran (gasoline and related on the U.S. executive agency.
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
Senate Version
Conference Report
Additional Sanctions Against
No equivalent, although, as noted
Section 102(a)(2) contains a
Suppliers of Nuclear, Missile, or
below, the Senate bill does contain
prohibition on licensing of nuclear
Advanced Conventional Weapons
several proliferation-related
materials, facilities, or technology to
Technology to Iran:
provisions.
any entity determined sanctioned
under ISA (as amended).
Section 3(c) provides an additional
ISA sanction to be imposed on any
Waiver is provided on vital national
country whose entity(ies) violate ISA
security interest grounds.
by providing nuclear weapons-
related technology or missile
technology to Iran.
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
No similar provisions
Implementation and waiver
Implementation Provisions:
provisions closer to House version.
Section 102(g) amends ISA to make
Section 3(d)(1) imposes a
mandatory the beginning of an
requirement (rather than an non-
investigation of potentially
binding exhortation in the existing
sanctionable activity, and makes
law) that the Administration
mandatory a decision on
“immediately” initiate an
sanctionability within 180 days of the
investigation of any potentially
beginning of such an investigation.
sanctionable activity under ISA.
(Currently, 180 day period is non-
Section 3(d)(2) would require the
binding.)
President to certify that a waiver of
Section 102(c) sets waiver standard
penalties on violating entities
as “necessary to the national
described above is “vital to the
interest”
national security interest of the
United States.” rather than, as
Section 102(g) also alters existing
currently stipulated in ISA, is
4(c) ISA waiver to delay sanctions
“important to the national interest
on firms of countries that are
of the United States.”
“closely cooperating” with U.S.
efforts against Iran’s WMD
programs. (This is not an automatic
“carve out” for cooperating
countries widely discussed in the
press.
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House Version
Senate Version
Conference Report
Required Reports:
Section 107 contains a provision
Various reporting requirements
similar to the new reporting
throughout, including the report on
Section 3(e) would amend ISA’s
requirement of the House bill with
Iran-G-20 trade of the House
current Administration reporting
regard to firms that sold gasoline and version.
requirements to also include an
related equipment and services to
assessment of Iran’s support for
Iran, and invested in Iran’s energy
Includes new reporting requirement,
militant movements and to acquire
sector.
not in either version, on the
weapons of mass destruction
potential for ethanol and related
technology.
The Senate bill does not require
products and services to benefit and
reporting on the IRGC that is
enhance Iran’s energy sector.
A new reporting requirement would
stipulated in the House bill, or the
be created (every six months) on
report on Iran-G-20 trade.
Requires report on investment in
firms providing Iran gasoline and
Iran’s energy sector.
related equipment and services
However, the Senate bill (Section
specified above, as well as the names 109) expresses the sense of
Requires report on the beneficiaries
and dates of such activity, and any
Congress that the United States
of export credit agencies of foreign
contracts such entities have with
“continue to target” the IRGC for
countries (presumably the extent to
U.S. Government agencies.
supporting terrorism, its role in
which these agencies are
proliferation, and its oppressive
guaranteeing financing for trade with
The required report is to include
activities against the people of Iran.
Iran).
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.
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:
Similar provision contained in
Would not include export credit
Section 102(d).
agencies as a sanctionable entity
Section 3(f) would expand the
under ISA (as amended).
definitions of investing entities, or
persons, contained in ISA, to include:
- 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:
Title IV would terminate the act’s
Terminates ISA if the President
provisions 30 days after the
certifies that Iran has ceased WMD
Section 3(g) would terminate
President certifies that Iran has:
development, has been removed
sanctions against persons who are
from the U.S. terrorism list, and
sanctioned, under the act, for sales
- ceased support for international
poses no significant threat to U.S.
of WMD-related technology, if the
terrorism and qualifies for removal
national security, interests, or allies.
President certifies that Iran has
from the U.S. “terrorism list”
ceased activities to acquire a nuclear
device and has ceased enrichment of
- and, has ceased the pursuit and
uranium and other nuclear activities. development of WMD and ballistic
missile technology.
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Iran Sanctions
House Version
Senate Version
Conference Report
ISA Sunset:
No similar provision
Sunset provision same as House
version.
Section 3(h) would extend al
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
Section 103(b)(1) would ban al
Same as Senate version. However,
With and Investment in Iran:
imports of Iranian origin from the
contains a new section that the ban
United States, with the exception of
on most exports to Iran not include
No provision
informational material. Currently,
the exportation of services for
modifications to the U.S. trade ban
Internet communications.
with Iran (Executive Order 12959 of
May 6, 1995) that became effective in Provision also states that the ban on
2000 permit imports of Iranian
most exports should not include
luxury goods, such as carpets, caviar,
goods or services needed to help
nuts, and dried fruits.
non-governmental organizations
support democracy in Iran.
- Section 103(b)(2)) general y
reiterates/codifies current provisions
Both provisions designed to support
of U.S. trade ban related to U.S.
opposition protesters linked to Iran’s
exports to Iran. Provision would
“Green movement.”
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 Section 103(b)(3) mandates the
Similar to Senate version
on Revolutionary Guard and Related President to freeze the assets of
Entities and Persons.
Iranian diplomats, IRGC, or other
Iranian official personnel deemed a
No provision
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.
Application of U.S. Trade Ban to
Section 104 would apply the
No provision
Subsidiaries:
provisions of the U.S. trade ban with
Iran (Executive Order 12959) to
No provision
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.
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House Version
Senate Version
Conference Report
Mandatory Sanctions on Financial
No provision
Contains new section that requires
Institutions that Help Iran’s
the Treasury Department to develop
Sanctioned Entities:
regulations to prohibit U.S. financial
transactions with any foreign financial
No provision
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
No provision
Section 105 makes ineligible for a
Abusers:
U.S. visa, blocks U.S, property, and
prevents transactions with any
No provision
Iranian official determined complicit
in serious human rights abuses
against Iranian citizens since the June
12, 2009 Iranian presidential election.
Sanctioning Certain Information
Section 105 prohibits U.S. executive
Section 106 of the conference report
Technology Sales to Iran:
agencies from contracting with firms
is similar to Senate version.
that export sensitive technology to
No provision
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.
Treasury Department Authorization
Section 106(b) authorizes $64.611
Section 109 authorizes $102 million
to prevent misuse of the U.S.
million for FY2010 (and “such sums
for FY2011 and “sums as may be
financial system by iran or other
as may be necessary” for FY2011 and necessary” for FY2012 and 2013 to
countries.
2012) for the Treasury Department’s the Treasury Department Office of
Office of Terrorism and Financial
Terrorism and Financial Intelligence.
No provision
Intelligence. The funds are
Another $100 million is authorized
authorized to ensure that countries
for FY2011 for the Financial Crimes
such as Iran are not misusing the
Enforcement Network, and $113
international financial system for
million for FY2011 for the Burea of
illicit purposes. Iran is not mentioned Industry and Security for the
specifically. $104.26 million is
Department of Commerce
authorized by the section for FY2010
for the Department’s Financial
Crimes Enforcement Network.
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House Version
Senate Version
Conference Report
Hezbollah
Section 110 contains a sense of
Section 113 similar to Senate
Congress that the President impose
version.
No specific provision, although, as
the ful range of sanctions under the
noted above, the House bill does
International Emergency Economic
expand ISA reporting requirements
Powers Act (50 U.S.C. 1701) on
to include Iran’s activities to support
Hezbol ah, and that the President
terrorist movements. Lebanese
renew international efforts to disarm
Hezbollah is named as a Foreign
Hezbollah in Lebanon (as called for
Terrorist Organization (FTO) by the by U.N. Security Council Resolutions
U.S. State Department.
1559 and 1701).
Divestment
Title II of the Senate bill (Section
Similar to Senate version
203) prevents criminal, civil, or
No provisions
administrative action against any
investment firm or officer or adviser
based on its decision to divest from
securities that:
- 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,
Section 302 requires a report by the
Similar to Senate version, but does
Reexportation, or Diversion of
Director of National Intelligence that not provide for prior negotiations
Sensitive Items to Iran
identifies all countries considered a
before designating a country as a
concern to al ow transshipment or
“Destination of Possible Diversion
No provision
diversion of WMD-related
Concern.”
technology to Iran (technically:
“items subject to the provision of
the Export Administration
Regulations”).
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-to-
government 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.
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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
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 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 legislation 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 Violations19
Several Members of Congress have, in recent years, questioned why there 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.
19 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.
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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 180-
day 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.
Congressional Research Service
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Table 2. Post-1999 Major Investments/Major Development Projects in Iran’s Energy Sector
Date Field/Project
Company(ies)/Status
(If Known)
Value Output/Goal
February
Doroud (oil)
Totalfina Elf (France)/ENI
1999
(Energy Information Agency, Department of Energy, August 2006.)
(Italy)
$1 billion
205,000 bpd
April
Balal (oil)
Totalfina Elf/ Bow Valley
1999
(“Balal Field Development in Iran Completed,” World Market Research Centre, May 17, 2004.)
(Canada)/ENI
$300 million
40,000 bpd
Nov.
Soroush and Nowruz (oil)
Royal Dutch Shell
1999
(“News in Brief: Iran.” Middle East Economic Digest, (MEED) January 24, 2003.)
(Netherlands)/Japex (Japan)
$800 million
190,000 bpd
Norsk Hydro
April
Anaran bloc (oil)
(Norway)/Gazprom
2000
$120 million
65,000
(MEED Special Report, December 16, 2005, pp. 48-50.)
(Russia)/Lukoil (Russia)
No production to date
Phase 4 and 5, South Pars (gas)
ENI
July 2000
$1.9 billion
2 billion
(Petroleum Economist, December 1, 2004.)
Gas onstream as of Dec.
cu.ft./day (cfd)
2004
March
Caspian Sea oil exploration—construction of submersible drilling rig for Iranian partner
2001
GVA Consultants (Sweden)
$225 million
NA
(IPR Strategic Business Information Database, March 11, 2001.)
Darkhovin (oil)
ENI
June 2001
$1 billion
100,000 bpd
(“Darkhovin Production Doubles.” Gulf Daily News, May 1, 2008.)
Field in production
Sheer Energy (Canada)/China
Masjid-e-Soleyman (oil)
May 2002
National Petroleum Company $80 million
25,000 bpd
(“CNPC Gains Upstream Foothold.” MEED, September 3, 2004.)
(CNPC). Local partner is
Naftgaran Engineering
Phase 9 + 10, South Pars (gas)
Sept.
LG (South Korea)
2002
(“OIEC Surpasses South Korean Company in South Pars.” IPR Strategic Business Information
$1.6 billion
2 billion cfd
Database, November 15, 2004.)
On stream as of early 2009
October
Phase 6, 7, 8, South Pars (gas)
Statoil (Norway)
2002
$2.65 billion
3 billion cfd
(Petroleum Economist, March 1, 2006.)
began producing late 2008
CRS-19
Date Field/Project
Company(ies)/Status
(If Known)
Value Output/Goal
Inpex (Japan) 10% stake.
$200 million
January
Azadegan (oil)
CNPC. agreed to develop
(Inpex stake);
2004
260,000 bpd
(“Japan Mul s Azadegan Options.” APS Review Oil Market Trends, November 27, 2006.)
“north Azadegan” in Jan.
China $1.76
2009
billion
Tusan Block
Petrobras (Brazil)
August
(“Iran-Petrobras Operations.” APS Review Gas Market Trends, April 6, 2009; “Brazil’s
Oil found in block in Feb.
2004
$178 million
No production
Petrobras Sees Few Prospects for Iran Oil,” (http://www.reuters.com/article/
2009, but not in commercial
idUSN0317110720090703.)
quantity, according to the
firm
Yadavaran (oil)
October
Sinopec (China), deal finalized
2004
(“Iran, China’s Sinopec Ink Yadavaran Oilfield Development Contract.” Payvand’s Iran News,
December 9, 2007
$2 billion
300,000 bpd
December 9, 2009.)
Saveh bloc (oil)
2005
PTT (Thailand)
?
?
GAO report, cited below
Garmsar bloc (oil)
June 2006 Deal finalized in June 2009
Sinopec (China)
$20 million
?
(“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
Expansion to
July 2006 (GAO report; Fimco FZE Machinery Website; http://www.fimco.org/index.php?option=
Sinopec (China); JGC (Japan)
$959 million
produce 250,000
com_content&task=view&id=70&Itemid=78.)
bpd
Sept.
Khorramabad block (oil)
2006
Norsk Hydro (Norway)
$49 million
?
(PR Strategic Business Information Database, September 18, 2006)
Esfahan refinery upgrade
March
2007
(“Daelim, Others to Upgrade Iran’s Esfahan Refinery.” Chemical News and Intelligence, March
Daelim (S. Korea)
NA
19, 2007.)
Golshan and Ferdows onshore and offshore gas fields and LNG plant
Dec.
SKS Ventures, Petrofield
2007
contract modified but reaffirmed December 2008
Subsidiary (Malaysia)
$16 billion
3.4 billion cfd
(GAO report; Oil Daily, January 14, 2008.)
CRS-20
Date Field/Project
Company(ies)/Status
(If Known)
Value Output/Goal
2007
Jofeir Field (oil)
Belneftekhim (Belarus)
(unspec.)
$450 million
40,000 bpd
GAO report cited below
No production to date
Dayyer Bloc (Persian Gulf, offshore, oil)
2008
Edison (Italy)
$44 million
?
GAO report cited below
February
Lavan field (offshore natural gas)
PGNiG (Poland)
2008
$2 billion
GAO report cited below
Status unclear
$40-$140
April
Moghan 2 (onshore oil and gas, Ardebil province)
million
2008
INA (Croatia)
?
GAO report cited below
(dispute over
size)
Kermanshah petrochemical plant (new construction)
?
Uhde (Germany)
300,000 metric
GAO report cited below
tons/yr
“North Azadegan”
January
2009
(Chinadaily.com. “CNPC to Develop Azadegan Oilfield,” http://www.chinadaily.com.cn/
CNPC (China)
$1.75 billion
75,000 bpd
bizchina/2009-01/16/content_7403699.htm.)
South Pars: Phase 12—Part 2 and Part 3
Nov.
Daelim (S. Korea)—Part 2;
$4 billion ($2
2009
(“Italy, South Korea To Develop South Pars Phase 12.” Press TV (Iran), November 3, 2009,
Tecnimont (Italy)—Part 3
bn each part)
http://www.presstv.com/pop/Print/?id=110308.)
South Pars: Phase 11
February
Drilling to Begin in March 2010
2010
CNPC (China)
$4.7 billion
(“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
Date Field/Project
Company(ies)/Status
(If Known)
Value Output/Goal
Other Pending/Preliminary Deals
North Pars Gas Field (offshore gas). Includes gas purchases (December 2006)
China National Offshore
(http://english.peopledaily.com.cn/200705/19/print20070519_376139.html.)
Oil Co.
$16 billion
3.6 billion cfd
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
Royal Dutch Shell, Repsol
June 2009.
(Spain)
$4.3 billion
?
(http://www.rigzone.com/news/article.asp?a_id=77040&hmpn=1.)
Phase 22, 23, 24 - South Pars (gas), incl. transport Iranian gas to Turkey, and on to Europe and building
Turkish Petroleum Company
three power plants in Iran. Initialed July 2007; not finalized to date.
(TPAO)
$12. billion
2 billion cfd
Iran’s Kish gas field (April 2008) Includes pipeline from Iran to Oman
Oman (co-financing of
(http://www.presstv.ir/detail.aspx?id=112062§ionid=351020103.)
project)
$7 billion
1 billion cfd
China-led consortium;
project originally subscribed
Phase 12 South Pars (gas)—part 1. Incl. LNG terminal construction and Farzad-B natural gas bloc
in May 2007 by OMV
20 million
(March 2009)
(Austria); possibly taken over $8 billion+
tonnes of LNG
annual y by 2012
by Indian firms (ONGC, Oil
India Ltd., Hinduja, Petronet)
South Pars gas field (September 2009)
Petroleos de Venezuela S.A.;
10% stake in venture
$760 million
up to $6
Abadan refinery
Sinopec
billion if new
Upgrade and expansion; building a new refinery at Hormuz on the Persian Gulf coast (August 2009)
refinery is
built
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-22
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 12959.20 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.
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 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
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Iran Sanctions
• 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
24
Iran Sanctions
ban or the Iran Sanctions Act (ISA)21—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,22 Overseas
Shipholding Group, 23 UOP (a Honeywell subsidiary),24 Itron25, Fluor, 26
Flowserve,27 Parker Drilling, Vantage Energy Services,28 Weatherford, 29and 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.30 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.31 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.32
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.
21 “Iran Says Halliburton Won Drilling Contract.” Washington Times, January 11, 2005.
22 Form 10-K Filed for fiscal year ended December 31, 2008.
23 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.
24 New York Times, March 7, 2010, cited previously.
25 Subsidiaries of the Registrant at December 31, 2009. http://www.sec.gov/Archives/edgar/data/780571/
000078057110000007/ex_21-1.htm.
26 “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.
27 Form 10-K for Fiscal year ended December 31, 2009.
28 Form 10-K for Fiscal year ended December 31, 2007.
29 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.
30 Nixon, Ron. “2 Corporations Say Business With Tehran Will Be Curbed.” New York Times, March 11, 2010.
31 “Caterpillar Says Tightens ‘No-Iran’ Business Policy.” Reuters, March 1, 2010.
32 Baker, Peter. “U.S. and Foreign Companies Feeling Pressure to Sever Ties With Iran.” New York Times, April 24,
2010.
Congressional Research Service
25
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 provision.
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”33 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 had persuaded at least 40 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,34 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 Hearing of the Financial Services and General Government Subcommittee of the House Appropriations Committee,
Federal News Service, May 21, 2009.
34 Mufson, Steven and Robin Wright. “Iran Adapts to Economic Pressure.” Washington Post, October 29, 2007.
Congressional Research Service
26
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.35 Bank Sepah is subject to asset freezes and transactions
limitations as a result of Resolutions 1737 and 1747. The Treasury Department extended that U-
Turn 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 has a similar provision. 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.
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.
• The terrorism list designation restricts sales of U.S. dual use items (Export
Administration Act, as continued through presidential authorities under the
35 Kessler, Glenn. “U.S. Moves to Isolate Iranian Banks.” Washington Post, September 9, 2006.
Congressional Research Service
27
Iran Sanctions
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
28
Iran Sanctions
Proliferation-Related Sanctions
Iran is prevented from receiving advanced technology from the United States under relevant and
Iran-specific anti-proliferation laws36 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-by-
case 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 Non-
Proliferation 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.37 (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.
36 Such laws include the Atomic Energy Act of 1954 and the Energy Policy Act of 2005 (P.L. 109-58).
37 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.
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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. Iranian entities
designated under these laws and orders are listed in Table 4 at the end of this report, 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.38
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: 39
• 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 non-
binding travel ban in previous resolutions.
38 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.
39 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,
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.”40 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-united-
nations-security-council-resolution-iran-sanctions.
41 Fidler, Stephen. “EU Shapes Expanded Sanctions Against Iran.” Wall Street Journal, June 16, 2010.
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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.
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.42 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 FY1994-
FY1996 foreign aid appropriations (P.L. 103-87, P.L. 103-306, and P.L. 104-107) cut the amount
appropriated for the U.S. contribution to the Bank by the amount of those loans. The legislation
contributed to a temporary halt in new Bank lending to Iran.
During 1999-2005, Iran’s moderating image had led the World Bank to consider new loans over
U.S. 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.
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).43 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 are contained in the Senate version of H.R. 2194.
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
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
2008.44 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 Rhoads, Christopher. “Iran’s Web Spying Aided by Western Technology.” Wall Street Journal, June 22, 2009.
45 End, Aurelia. “Siemens Quits Iran Amid Mounting Diplomatic Tensions.” Agence France Press, January 27, 2010.
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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 circulating.
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.
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
$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.46
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)
46 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 Metal urgy 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; al 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 Metal urgy 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 Metal urgy 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 fol owing 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
June 2006
Economic and Trading Company, China Great Wall Industry
Corp, and China National Precision Machinery
Import/Export Corp.
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
October 21, 2007
Melli Iran Zao (Moscow); Melli Bank PC (U.K.)
Bank Kargoshaee
October 21, 2007
Arian Bank (joint venture between Melli and Bank Saderat).
October 21, 2007
Based in Afghanistan
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Bank Mellat (provides banking services to Iran’s nuclear
October 21, 2007
sector); Mellat Bank SB CJSC (Armenia). Reportedly has
$1.4 billion in assets in UAE
Persia International Bank PLC (U.K.)
October 21, 2007
Khatam ol Anbiya Gharargah Sazendegi Nooh (main IRGC
October 21, 2007
construction and contracting arm, with $7 billion in oil, gas
deals)
Oriental Oil Kish (Iranian oil exploration firm)
October 21, 2007
Ghorb Karbala; Ghorb Nooh (synonymous with Khatam ol
October 21, 2007
Anbiya)
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,
October 21, 2007
see above under Resolution 1737)
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
October 21, 2007
Resolution 1747
Mohammad Hejazi (Basij commander). Also, Resolution
October 21, 2007
1747
Ali Akbar Ahmadian (Chief of IRGC Joint Staff). Resolution
October 21, 2007
1747
Hosein Salimi (IRGC Air Force commander). Resolution
October 21, 2007
1737
Qasem Soleimani (Qods Force commander). Resolution
October 21, 2007
1747
Future Bank (Bahrain-based but al egedly control ed by Bank
March 12, 2008
Melli)
Yahya Rahim Safavi (former IRGC Commander in Chief
July 8, 2008
Mohsen Fakrizadeh-Mahabadi (senior Defense Ministry
July 8, 2008
scientist)
Dawood Agha-Jani (head of Natanz enrichment site)
July 8, 2008
Mohsen Hojati (head of Fajr Industries, involved in missile
July 8, 2008
program)
Mehrdada Akhlaghi Ketabachi (heads Shahid Bakeri Industrial July 8, 2008
Group)
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
July 8, 2008
Bakeri)
7th of Tir (involved in developing centrifuge technology)
July 8, 2008
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Ammunition and Metal urgy Industries Group (partner of 7th July 8, 2008
of Tir)
Parchin Chemical Industries (deals in chemicals used in
July 8, 2008
ballistic missile programs)
Karaj Nuclear Research Center
August 12, 2008
Esfahan Nuclear Fuel Research and Production Center
August 12, 2008
(NFRPC)
Jabber Ibn Hayyan (reports to Atomic Energy Org. of Iran,
August 12, 2008
AEIO)
Safety Equipment Procurement Company
August 12, 2008
Joza Industrial Company (front company for Shahid Hemmat August 12, 2008
Industrial Group, SHIG)
Islamic Republic of Iran Shipping Lines (IRISL) and 18
September 10, 2008
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
Firms affiliated to the Ministry of Defense, including
September 17, 2008
Armament Industries Group; Farasakht Industries; Iran
Aircraft Manufacturing Industrial Co.; Iran Communications
Industries; Iran Electronics Industries; and Shiraz Electronics
Industries
Export Development Bank of Iran. Provides financial services October 22, 2008
to Iran’s Ministry of Defense and Armed Forces Logistics
Assa Corporation (alleged front for Bank Melli involved in
December 17, 2008
managing property in New York City on behalf of Iran)
11 Entities Tied to Bank Melli: Bank Melli Iran Investment
March 3, 2009
(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
IRGC General Rostam Qasemi, head of Khatem ol-Anbiya
February 10, 2010 (see also October 21, 2007)
Construction Headquarters (key corporate arm of the
IRGC)
Fater Engineering Institute (linked to Khatem ol-Anbiya)
February 10, 2010
Imensazen Consultant Engineers Institute (linked to
February 10, 2010
Khatem ol-Anbiya)
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 Inddustry 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 control ed 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 (al egedly used to funnel Iranian money to
October 21, 2007
Hezbollah, Hamas, PIJ, and other Iranian supported terrorist
groups)
Al Qaeda Operatives in Iran: Saad bin Laden; Mustafa Hamid; January 16, 2009
Muhammad Rab’a al-Bahtiyti; Alis Saleh Husain
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
July 30, 1998 (E.O. 12938). Both removed in 2010 –
Russia
Baltic on Jan. 29, 2010 and Glavkosmos on March 4,
2010
D. Mendeleyev University of Chemical Technology of Russia
January 8, 1999 (E.O. 12938). Both removed on May
and Moscow Aviation Institute
21, 2010
Norinco (China). For al eged 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
September 17, 2003 (also designated under Executive
laser-guided artillery shells to Iran.
Order 12938), removed May 21, 2010
13 entities sanctioned including companies from Russia,
April 7, 2004
China, Belarus, Macedonia, North Korea, UAE, and Taiwan.
14 entities from China, North Korea, Belarus, India (two
September 29, 2004
nuclear scientists, Dr. Surendar and Dr. Y.S.R. Prasad),
Russia, Spain, and Ukraine.
14 entities, mostly from China, for al eged supplying of Iran’s December 2004 and January 2005
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.
9 entities, including those from China (Norinco yet again),
December 26, 2005
India (two chemical companies), and Austria. Sanctions
against Dr. Surendar of India (see September 29, 2004) were
ended, presumably because of information exonerating him.
7 entities. Two Indian chemical companies (Balaji Amines
August 4, 2006 (see below for Rosobornexport
and Prachi Poly Products); two Russian firms
removal)
(Rosobornexport and aircraft manufacturer Sukhoi); two
North Korean entities (Korean Mining and Industrial
Development, and Korea Pugang Trading); and one Cuban
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entity (Center for Genetic Engineering and Biotechnology).
9 entities. Rosobornexport, Tula Design, and Komna Design January 2007 (see below for Tula and
Office of Machine Building, and Alexei Safonov (Russia); Zibo Rosoboronexport removal)
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).
14 entities, including Lebanese Hezbollah. Some were
April 23, 2007
penalized for transactions with Syria. Among the new
entities sanctioned for assisting Iran were Shanghai Non-
Ferrous Metals Pudong Development Trade Company
(China); Iran’s Defense Industries Organization; Sokkia
Company (Singapore); Challenger Corporation (Malaysia);
Target Airfreight (Malaysia); Aerospace Logistics Services
(Mexico); and Arif Durrani (Pakistani national).
13 entities: China Xinshidai Co.; China Shipbuilding and
October 23, 2008. Rosoboronexport removed
Offshore International Corp.; Huazhong CNC (China);
May 21, 2010.
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);
Entities Designated as Threats to Iraqi Stability under Executive Order 13438
Ahmad Forouzandeh. Commander of the Qods Force
January 9, 2008
Ramazan Headquarters, accused of fomenting sectarian
violence in Iraq and of organizing training in Iran for Iraqi
Shiite militia fighters
Abu Mustafa al-Sheibani. Iran based leader of network that
January 9, 2008
funnels Iranian arms to Shiite militias in Iraq.
Isma’il al-Lami (Abu Dura). Shiite militia leader, breakaway
January 9, 2008
from Sadr Mahdi Army, alleged to have committed mass
kidnapings and planned assassination attempts against Iraqi
Sunni politicians
Mishan al-Jabburi. Financier of Sunni insurgents, owner of
January 9, 2008
pro-insurgent Al-Zawra television, now banned
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
Author Contact Information
Kenneth Katzman
Specialist in Middle Eastern Affairs
kkatzman@crs.loc.gov, 7-7612
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