Iran Sanctions
Kenneth Katzman
Specialist in Middle Eastern Affairs
August 3, 2010
Congressional Research Service
7-5700
www.crs.gov
RS20871
CRS Report for Congress
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repared for Members and Committees of Congress
Iran Sanctions
Summary
There appears to be a growing international consensus to adopt progressively strict economic
sanctions against Iran to try to compel it to compromise on its further nuclear development.
Measures adopted in 2010 by the United Nations Security Council and the European Union and
other countries complement the numerous U.S. laws and regulations that have long sought to try
to slow Iran’s weapons of mass destruction (WMD) programs and curb its support for militant
groups. The U.S. view—increasingly shared by major allies—is that sanctions should target Iran’s
energy sector that provides about 80% of government revenues. U.S. efforts to curb international
energy investment in Iran’s energy sector began in 1996 with the Iran Sanctions Act (ISA), a U.S.
law that authorized the imposition of U.S. penalties against foreign companies that invest in Iran’s
energy sector. ISA represented a U.S. effort, which is now broadening, to persuade foreign firms
to choose between the Iranian market and the much larger U.S. market.
ISA has been expanded significantly in 2010 to sanction firms that help Iran meet its needs for
importation and additional production of gasoline. In the 111th Congress, H.R. 2194 (signed into
law on July 1—P.L. 111-195) adds as ISA violations selling refined gasoline to Iran; providing
shipping insurance or other services to deliver gasoline to Iran; or supplying equipment to or
performing the construction of oil refineries in Iran. The new law also adds a broad range of other
measures further restricting the already limited amount of U.S. trade with Iran and restricting
some trade with countries that allow WMD-useful technology to reach Iran. The enactment of this
law follows the June 9, 2010, adoption of U.N. Security Council Resolution 1929, which imposes
a ban on sales of heavy weapons to Iran and sanctions many additional Iranian entities affiliated
with its Revolutionary Guard, but does not mandate sanctions on Iran’s energy or broad financial
sector. European Union sanctions, imposed July 27, 2010, align the EU with the U.S. position, to
a large extent, by prohibiting EU involvement in Iran’s energy sector and restricting financial
relationships with Iran, among other measures.
The effectiveness of U.S. and international sanctions on Iran, by most accounts, has been unclear.
A growing number of experts feel that the cumulative effect of U.S., U.N., and other sanctions is
harming Iran’s economy. However, when measured against the overall strategic objectives of the
sanctions, there is a consensus that U.S. and U.N. sanctions have not, to date, caused a
demonstrable shift in Iran’s commitment to its nuclear program. Still, there has been a stream of
announcements by major international firms during 2010 that they are exiting the Iranian market.
Iran’s oil production has fallen slightly to about 3.9 million barrels per day, from over 4.1 million
barrels per day several years ago, although Iran now has small natural gas exports that it did not
have before Iran opened its fields to foreign investment in 1996. Possibly in an effort to
accomplish the separate objective of promoting the cause of the domestic opposition in Iran, the
Obama Administration and Congress are increasingly emphasizing measures that would sanction
Iranian officials who are human rights abusers, facilitate the democracy movement’s access to
information, and express outright U.S. support for the opposition. For a broader analysis of policy
on Iran, see CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth
Katzman.
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Iran Sanctions
Contents
Overview .................................................................................................................................... 1
The Iran Sanctions Act (ISA) ...................................................................................................... 1
Legislative History and Provisions ........................................................................................ 2
Key ”Triggers”................................................................................................................ 2
Requirement and Time Frame to Investigate Violations ................................................... 4
Available Sanctions Under ISA ....................................................................................... 4
Waiver and Termination Authority................................................................................... 5
ISA Sunset ...................................................................................................................... 6
Interpretations and Implementation ....................................................................................... 6
Application to Energy Pipelines ...................................................................................... 7
Application to Iranian Firms or the Revolutionary Guard ................................................ 8
Application to Liquefied Natural Gas .............................................................................. 8
The Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010,
H.R. 2194/P.L. 111-195...................................................................................................... 9
Gasoline Sales................................................................................................................. 9
Legislation in the 111th Congress/CISADA and Other Bills............................................ 10
Administration Review of Potential ISA Violations ....................................................... 20
Ban on U.S. Trade and Investment With Iran............................................................................. 27
Application to Foreign Subsidiaries of U.S. Firms ............................................................... 28
Foreign Country Civilian Trade With Iran ........................................................................... 29
Treasury Department “Targeted Financial Measures” ................................................................ 30
Terrorism List Designation-Related Sanctions ........................................................................... 31
Executive Order 13224 ....................................................................................................... 32
Proliferation-Related Sanctions ................................................................................................. 32
Iran-Iraq Arms Nonproliferation Act ................................................................................... 33
Iran-Syria-North Korea Nonproliferation Act ...................................................................... 33
Executive Order 13382 ....................................................................................................... 33
Foreign Aid Restrictions for Suppliers of Iran...................................................................... 34
Implementation ................................................................................................................... 34
U.S. Efforts to Promote Divestment .......................................................................................... 34
U.S. Sanctions and Other Efforts Intended to Support Iran’s Opposition .................................... 35
Expanding Internet and Communications Freedoms ............................................................ 35
Measures to Sanction Human Rights Abuses and Promote the Opposition ........................... 36
Blocked Iranian Property and Assets ......................................................................................... 36
Comparative Analysis: Relationships of U.S. to International and Multilateral Sanctions ........... 36
U.N. Sanctions .................................................................................................................... 37
Other Foreign Country Sanctions ........................................................................................ 38
World Bank Loans ........................................................................................................ 40
Overall Effect of U.S., U.N. and Other Country Sanctions......................................................... 43
Effect on Nuclear Development........................................................................................... 43
Effect on the Energy Sector ................................................................................................. 44
Gasoline Availability and Importation ........................................................................... 45
Effect on Broader Foreign Business Involvement and Business Climate .............................. 45
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Tables
Table 1. Comparison of Major Versions of H.R. 2194/P.L. 111-195............................................ 13
Table 2. Post-1999 Major Investments/Major Development Projects in
Iran’s Energy Sector............................................................................................................... 22
Table 3. Summary of Provisions of U.N. Resolutions on Iran Nuclear Program (1737,
1747, 1803, and 1929)............................................................................................................ 38
Table 4. Points of Comparison Between U.S., U.N., and EU Sanctions Against Iran .................. 40
Table 5. Entities Sanctioned Under U.N. Resolutions and
U.S. Laws and Executive Orders ............................................................................................ 46
Contacts
Author Contact Information ...................................................................................................... 53
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Overview
The Obama Administration’s overall policy approach toward Iran has contrasted with the Bush
Administration’s by attempting to couple the imposition of sanctions to an active and sustained
effort to engage Iran in negotiations on the nuclear issue. That approach was not initially altered
because of the Iranian dispute over its June 12, 2009, elections. However, with subsequent
negotiations yielding no firm Iranian agreement to compromise, as of 2010 the Administration
turned its focus to achieving the imposition of additional U.N., U.S., and allied country sanctions
whose cumulative effect would be to diplomatically and economically isolate Iran.
U.N. sanctions on Iran (the latest of which are imposed by Resolution 1929, adopted June 9,
2010) are a relatively recent (post-2006) development. However, since its 1979 Islamic
revolution, Iran has been subjected to progressively more comprehensive and stringent U.S.
sanctions. Many of the U.S. sanctions overlap each other as well as the several U.N. sanctions
now in place. The Obama Administration and Congress have also begun to also alter some U.S.
laws and regulations to help Iran’s domestic opposition that has seethed since the June 12, 2009
presidential election in Iran. In February and June 2010, the Administration sanctioned additional
firms linked to Iran’s Revolutionary Guard, which was a target of Resolution 1929 and which is
viewed as the backbone of Iran’s apparatus of repression. President Obama renewed for another
year the U.S. trade and investment ban on Iran (Executive Order 12959) in March 2010.
A focus of Iran-related legislation in the 111th Congress has been to expand the provisions of the
Iran Sanctions Act (ISA) to apply to sales to Iran of gasoline and related equipment and services.
For at least ten years after it was enacted, ISA had caused differences of opinion between the
United States and its European allies because it mandates U.S. imposition of sanctions on foreign
firms. Successive Administrations have sought to ensure that the congressional sanctions
initiative does not hamper cooperation with key international partners whose support is needed to
adopt stricter international sanctions. This concern was incorporated, to a large extent, in the
Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA, P.L. 111-
195). As an indication that U.S. allies are now aligning with the U.S. position on sanctioning Iran,
the European Union, on July 27, 2010, adopted sanctions against Iran, targeting its energy and
financial sector.
The Iran Sanctions Act (ISA)
The Iran Sanctions Act (ISA) is one among many U.S. sanctions in place against Iran. Since its
first enactment, it has attracted substantial attention because it authorizes penalties against foreign
firms, many of which are incorporated in countries that are U.S. allies. 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. As noted, a law
enacted in the 111th Congress (Comprehensive Iran Sanctions, Accountability, and Divestment
Act of 2010, P.L. 111-195) amended ISA to try to curtail additional types of activity, such as
selling gasoline and gasoline production-related equipment and services to Iran, and to restrict
international banking relationships with Iran (among other provisions discussed below).
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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, and 80% of its government revenue. Iran’s oil sector is as old as the petroleum
industry itself, and Iran’s onshore oil fields and oil industry infrastructure are far past peak
production and in need of substantial investment. Its large natural gas resources (940 trillion
cubic feet, exceeded only by Russia) were virtually undeveloped when ISA was first enacted. Iran
has 136.3 billion barrels of proven oil reserves, the third-largest after Saudi Arabia and Canada.
The opportunity for the United States to try to harm Iran’s energy sector came in November 1995,
when Iran opened the sector to foreign investment. To accommodate its insistence on retaining
control of its national resources, Iran used a “buy-back” investment program in which foreign
firms recoup their investments from the proceeds of oil and gas discoveries. 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 ”Triggers”
ISA consists of a number of “triggers”—transactions with Iran that would be considered
violations of ISA and could cause a firm or entity to be sanctioned under ISA’s provisions. When
triggered, ISA provides a number of different sanctions that the President could impose that
would harm a foreign firm’s business opportunities in the United States. ISA does not, and
probably could not practically, compel any foreign government to take action against one of its
firms. Amendments added by P.L. 111-195, the Comprehensive Iran Sanctions, Accountability,
and Divestment Act of 2010 (CISADA), provide a means for firms to avoid any possibility of
U.S. sanctions by unilaterally ending their involvement with Iran.
The pre-2010 version of ISA requires the President to sanction companies (entities, persons) that
make an “investment”1 of more than $20 million2 in one year in Iran’s energy sector,3 or that sell
1 The definition of “investment” in ISA (Section 14 (9)) includes not only equity and royalty arrangements (including
additions to existing investment, as added by P.L. 107-24) but any contract that includes “responsibility for the
development of petroleum resources” of Iran. As amended by P.L. 111-195, these definitions include pipelines to or
through Iran, as well as contracts to lead the construction, upgrading, or expansions of energy projects. 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 Under the original law, the threshold had been $40 million, dropping to $20 million after one year when U.S. allies
did not join a multilateral sanctions regime against Iran. However, P.L. 111-195 explicit sets the threshold investment
level at $20 million.
3 The definition of energy sector had included oil and natural gas, but now, as a consequence of the enactment of P.L.
(continued...)
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to Iran weapons of mass destruction (WMD) technology or “destabilizing numbers and types” of
advanced conventional weapons.4 ISA primarily targets foreign firms, because American firms
are already prohibited from investing in Iran under the 1995 trade and investment ban discussed
earlier. As shown in the table below, P.L. 111-195 added new triggers: selling to Iran (over
specified threshold amounts) refined petroleum (gasoline, aviation fuel, and other fuels included
in the definitions); and equipment or services for Iran to expand its own ability to produce refined
petroleum.
Activities That Do Not Constitute ISA Violations
Purchases of oil or natural gas from Iran do not constitute violations of ISA, because ISA
sanctions investment in Iran’s energy sector and (following enactment of P.L. 111-195) sales to
Iran of gasoline or gasoline-related services or equipment. Some of the deals listed in the chart
later in this report involve combinations of investment and purchase. Nor does ISA sanction sales
to Iran of equipment that Iran could use to explore or extract its own oil or gas resources. For
example, selling Iran an oil or gas drill rig or motors or other gear that Iran will use to drill for oil
or gas would not appear to be sanctionable. However, as a result of enactment of P.L. 111-195,
sanctionable activity includes sales of equipment to Iran to enhance or expand its oil refineries, or
equipment with which Iran could import gasoline (such as tankers), and of equipment that Iran
could use to construct an energy pipeline.
Several significant examples of major purchases of Iran oil and gas resources have occurred in
recent years. 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.
Official credit guarantee agencies are not considered sanctionable entities under ISA. 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
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.
Some versions of CISADA would have made these entities sanctionable but these provisions
were not included in the final law, probably out of concern for alienating U.S. allies in Europe.
(...continued)
111-195, also includes liquefied natural gas (LNG), oil or LNG tankers, and products to make or transport pipelines
that transport oil or LNG.
4 This latter “trigger” was added by P.L. 109-293.
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Requirement and Time Frame to Investigate Violations
In the original version of ISA, there was no time frame for the Administration to determine that a
firm has violated ISA’s provisions. Some might argue that the amendments of P.L. 111-195 still
do not set a binding determination deadline, although the parameters are narrowed significantly.
Earlier, P.L. 109-293, the “Iran Freedom Support Act” (signed September 30, 2006) amended ISA
by calling for, but not requiring, a 180-day time limit for a violation determination (there is no
time limit in the original law). Other ISA amendments under that law included recommending
against U.S. nuclear agreements with countries that supply nuclear technology to Iran and
expanding provisions of the USA Patriot Act (P.L. 107-56) to curb money-laundering for use to
further WMD programs.
In restricting the Administration’s ability to choose not to act on information about potential
violations, P.L. 111-195 makes mandatory that the Administration begin an investigation of
potential ISA violations when there is credible information about a potential violation. P.L. 111-
195 also makes mandatory the 180 day time limit for a determination (with the exception that the
mandatory investigations and time limit go into effect one year after enactment, with respect to
gasoline related sales to Iran. ) There is also a “special rule” provided for by P.L. 111-195 which
allows the Administration to avoid investigating any company that ends or pledges to end the
sanctionable activity with Iran.
Earlier versions of legislation (H.R. 282, S. 333) that ultimately became P.L. 109-293 contained
ISA amendment proposals that were viewed by the Bush Administration as too inflexible and
restrictive, and potentially harmful to U.S. relations with its allies. These provisions included
setting a mandatory 90-day time limit for the Administration to determine whether an investment
is a violation; cutting U.S. foreign assistance to countries whose companies violate ISA; and
applying the U.S.-Iran trade ban to foreign subsidiaries of U.S. firms.
Available Sanctions Under ISA
Once a firm is determined to be a violator, the original version of ISA required the imposition of
two of a menu of six sanctions on that firm. P.L. 111-195 added three new possible sanctions and
requires the imposition of at least three out of the nine against violators. The available sanctions
against the sanctioned entity that the President can select from (Section 6) include:
1. denial of Export-Import Bank loans, credits, or credit guarantees for U.S. exports
to the sanctioned entity;
2. denial of licenses for the U.S. export of military or militarily useful technology to
the entity;
3. denial of U.S. bank loans exceeding $10 million in one year to the entity;
4. if the entity is a financial institution, a prohibition on its service as a primary
dealer in U.S. government bonds; and/or a prohibition on its serving as a
repository for U.S. government funds (each counts as one sanction);
5. prohibition on U.S. government procurement from the entity;
6. restriction on imports from the violating entity, in accordance with the
International Emergency Economic Powers Act (IEEPA, 50 U.S.C. 1701);
7. prohibitions in transactions in foreign exchange by the entity;
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8. prohibition on any credit or payments between the entity and any U.S. financial
institution;
9. prohibition of the sanctioned entity from acquiring, holding, or trading any U.S.-
based property.
New Mandatory Sanction
P.L. 111-195 adds a provision to incent companies not to violate ISA. It requires companies, as a
condition of obtaining a U.S. government contract, to certify to the relevant U.S. government
agency, that the firm is not violating ISA, as amended. A contract may be terminated—and further
penalties imposed—if it is determined that the company’s certification of compliance was false.
Waiver and Termination Authority
The President has had the authority under ISA to waive sanctions if he certifies that doing so is
important to the U.S. national interest (Section 9(c)). There was also waiver authority (Section
4c) if the parent country of the violating firm joined a sanctions regime against Iran, but this
waiver provision was changed by P.L. 109-293 to allow for a waiver determination based on U.S.
vital national security interests. P.L. 111-195 changes the 9(c) waiver standard to “necessary” to
the national interest.
The Section 4(c) waiver was altered by P.L. 111-195 to provide for a six month (extendable)
waiver if doing so is vital to the national interest and if the parent country of the violating entity is
“closely cooperating” with U.S. efforts against Iran’s WWMD and advanced conventional
weapons program. The criteria of “closely cooperating” are defined in the conference report, with
primary focus on implementing all U.N. sanctions against Iran. However, it is not clear why a
Section 4 waiver would be used as opposed to a Section 9 waiver, although it could be argued that
using a Section 4 waiver would support U.S. diplomacy with the parent country of the offending
entity.
In its entirety, ISA application to Iran would terminate if Iran is determined by the Administration
to have ceased its efforts to acquire WMD; is removed from the U.S. list of state sponsors of
terrorism; and no longer “poses a significant threat” to U.S. national security and U.S. allies.5
However, the amendments to ISA made by P.L. 111-195 would terminate if the first two of these
criteria are met.
ISA (Section5(f)) also contains several exceptions such that the President is not required to
impose sanctions that prevent procurement of defense articles and services under existing
contracts, in cases where a firm is the sole source supplier of a particular defense article or
service. The President also is not required to prevent procurement or importation of essential
spare parts or component parts.
5 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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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. ISA was scheduled to sunset on
December 31, 2011 (as provided by P.L. 109-293). The sunset is now December 31, 2016, as
provided for in the CISADA, P.L. 111-195).
Interpretations and Implementation
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 billion6 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. Then Secretary of
State Albright, in a statement, indicated that similar future such projects by EU firms in Iran
would not be sanctioned, provided overall EU cooperation against Iranian terrorism and
proliferation continued.7 (The EU sanctions against Iran, announced July 27, 2010, might render
the issue moot since the EU has now banned EU investment in and supplies of equipment and
services to Iran’s energy sector.)
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 stalled, not reached final
agreement, or may not have resulted in actual production.
6 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.
7 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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Application to Energy Pipelines
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
interpreted by successive administrations to include construction of energy pipelines to or through
Iran. That interpretation has been reinforced by the amendments to ISA in P.L. 111-195 which
include in the definition of petroleum resources “products used to construct or maintain pipelines
used to transport oil or liquefied natural gas.” 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.
One major pipeline involving Iran has been constructed—a line built in 1997 to carry natural gas
from Iran to Turkey. Each country constructed the pipeline on its side of their border. At the time
the project was under construction, State Department testimony stated that Turkey would be
importing gas originating in Turkmenistan, not Iran, under a swap arrangement. That was one
reason given for why the State Department did not determine that the project was sanctionable
under ISA. However, many believe the decision not to sanction the pipeline was because the line
was viewed as crucial to Turkey, a key U.S. ally. That explanation was reinforced when direct
Iranian gas exports to Turkey through the line began in 2001, and no determination of
sanctionability was made.
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.8 In May 2009, Iran
and Armenia inaugurated a natural gas pipeline between the two, built by Gazprom of Russia.
Iran-India Pipeline and Undersea Routes
Another pending pipeline project would carry Iranian gas, by pipeline, to Pakistan. India had been
a part of the $7 billion project, which would take about three years to complete, but India was
reported in June 2010 to be largely out of the project. India did not sign a memorandum between
Iran and Pakistan finalizing the deal on June 12, 2010. 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. 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. During the Bush Administration, Secretary of State
Rice on several occasions “expressed U.S. concern” about the pipeline deal or called it
8 http://www.kuwaittimes.net/read_news.php?newsid=NDQ0OTY1NTU4; http://english.farsnews.com/newstext.php?
nn=8901181055.
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“unacceptable,” but no U.S. official in either the Bush or the Obama Administration has stated
outright that it would be sanctioned. Ambassador Richard Holbrooke, the Administration
representative on Pakistan and Afghanistan, has raised with Pakistan the possibility that the
project could be sanctioned if it is undertaken, citing enactment of CISADA, P.L. 111-195.
India may envision an alternative to the pipeline project, as a means of tapping into Iran’s vast gas
resources. During high level economic talks in early July 2010, Iranian and Indian officials
reportedly raised the issue of constructing an underwater natural gas pipeline, which would avoid
going through Pakistani territory. However, such a route would presumably be much more
expensive to construct than would be an overland route.
European Gas Pipeline Routes
Iran also is attempting to position itself as a gas exporter to Europe. A potential project involving
Iran is the Nabucco pipeline project, which would transport Iranian gas to western Europe. Iran,
Turkey, and Austria reportedly have negotiated on that project. The Bush Administration did not
support Iran’s participation in the project, and the Obama Administration apparently takes the
same view, even though the project might make Europe less dependent on Russian gas supplies.
Iran’s Energy Minister Gholam-Hossein Nozari said on April 2, 2009, that Iran is considering
negotiating a gas export route—the “Persian Pipeline”—that would send gas to Europe via Iraq,
Syria, and the Mediterranean Sea.
Application to Iranian Firms or the Revolutionary Guard
Although ISA is widely understood to apply to firms around the world that reach an investment
agreement with Iran, the provisions could also be applied to Iranian firms and entities subordinate
to the National Iranian Oil Company (NIOC), which is supervised by the Oil Ministry. However,
such entities do not do business in the United States and would not likely be harmed by any of the
penalties that could be imposed under ISA. 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.
Application to Liquefied Natural Gas
The original version of ISA did not apply to the development of liquefied natural gas. 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. However, CISADA, P.L. 111-195) includes LNG in the definition
of petroleum resources and therefore makes investment in LNG (or supply of LNG tankers or
pipelines) sanctionable.
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The Comprehensive Iran Sanctions, Accountability, and
Divestment Act of 2010, H.R. 2194/P.L. 111-195
ISA, as initially constituted, had limited evident applications to Iran’s gasoline dependency. Iran
is dependent on gasoline imports to supply about 25%-35% of its gasoline needs. To try to reduce
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 did not appear to constitute “investment” under the previous definition
of ISA. However, taking responsibility for constructing oil refineries or petrochemical plants in
Iran has always constituted 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
Many in the 111th Congress took exception to the fact that selling or shipping gasoline to Iran did
not previously constitute sanctionable activity under ISA. There have been a relatively limited
group of major gasoline suppliers to Iran, and many in Congress believed that trying to stop such
sells could put economic pressure on Iran’s leaders. In March 2010, well before the passage of
CSIDA on June 24, 2010, several gas suppliers to Iran, anticipating this legislation, announced
that they had stopped or would stop supplying gasoline to Iran.9 As noted in a New York Times
report of March 7, 2010,10 some firms that have supplied Iran have received U.S. credit
guarantees or contracts. The main suppliers to Iran and the status of their sales to Iran are:
• Vitol of Switzerland (which said in March 2010 it has stopped sales of gasoline
to Iran);11
• Trafigura of Switzerland (said in March 2010 it has stopped sales);
• Glencore of Switzerland (said in March 2010 it has stopped selling gasoline to
Iran;
• Total of France (announced a halt to sales in early July 2010);
• Reliance Industries of India (reportedly has ended sales to Iran as of the end of
2009);12
• Petronas of Malaysia (said in mid-April 2010 it had stopped sales to Iran);13
9 Information in this section derived from, Blas, Javier. “Traders Cut Iran Petrol Line.” Financial Times, March 8,
2010.
10 Becker, Jo and Ron Nixon. “U.S. Enriches Companies Defying Its Policy on Iran.” New York Times, March 7, 2010.
11 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
12 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
13 http://www.ft.com/cms/s/0/009370f0-486e-11df-9a5d-00144feab49a.html.
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• Lukoil of Russia (reportedly said in April 2010 that it will end sales to Iran);14
• Royal Dutch Shell of the Netherlands (which says it stopped sales to Iran in
2009);15
• British Petroleum of United Kingdom (told CRS in e-mail conversation in late
2009 that it is not selling gasoline to Iran), and reportedly has refused to renew its
jet fuel contract with Iran Air;
• ZhenHua Oil, Unipec, and China Oil of China (China’s firms reportedly supply
one-third of Iran’s gasoline imports);16
• Tupras (Turkey);
• Petroleos de Venezuela (reportedly reached a September 2009 deal to supply Iran
with gasoline);
• Kuwait’s Independent Petroleum Group supplies Iran;17
• Some accounts say refineries in Bahrain and UAE are supplying gasoline to Iran.
• Other press reports in July 2010 said that oil and oil products are being shipped
into Iran via the Kurdish autonomous region of Iraq.18
• Munich Re, Allianz, Hannover Re (Germany) were providing insurance and re-
insurance for gasoline shipments to Iran. However, they reportedly have exited
the market for insuring gasoline shipments for Iran.19
• Lloyd’s (Britain). The major insurer had been the main company insuring Iranian
gas (and other) shipping, but reportedly has ended that business as of July 2010;
• Various aviation gasoline suppliers at various airports in Europe (including BP, as
noted) reportedly have suspended some refueling of Iran Air passenger aircraft
after enactment of P.L. 111-195 because that law’s definition of refined petroleum
includes aviation fuel.
Legislation in the 111th Congress/CISADA and Other Bills
Aside from CSIDA, a number of ideas to expand ISA’s application to gasoline sales to Iran were
advanced, although some believe that a sanction such as this would only be effective if it applied
to all countries under a U.N. Security Council resolution rather than a unilateral U.S. sanction. In
the 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 were adopted prior to CSIDA. Using U.S. funds to fill the
Strategic Petroleum Reserve with products from firms that sell over $1 million worth of gasoline
14 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
15 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
16 Blas, Javier, Carola Hoyas, and Daniel Dombey. “Chinese Companies Supply Iran With Petrol.” Financial Times,
September 23, 2009.
17 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
18 Dagher, Sam. “Smugglers in Iraq Blunt Sanctions Against Iran.” New York Times, July 9, 2010.
19 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
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to Iran is prevented by the FY2010 Energy and Water Appropriation (H.R. 3183, P.L. 111-85,
signed October 28, 2009). A provision of the FY2010 consolidated appropriation (P.L. 111-117)
would deny Eximbank credits to any firm that sells gasoline to Iran, provides equipment to Iran
that it can use to expand its oil refinery capabilities, or performs gasoline production projects in
Iran. The Senate version of a FY2011 defense authorization bill (S. 3454) would prohibit Defense
Department contracts for companies that sell gasoline to Iran or otherwise violate ISA; this
provision would seem to be redundant with a provision of CSIDA, which is now law.
In the past, some threats to sanction foreign gasoline sellers to Iran have deterred sales to Iran.
The Reliance Industries Ltd. of India decision to cease new sales of refined gasoline to Iran (as of
December 31, 2008), mentioned above, came after several Members of Congress urged the Exim
Bank of the United States to suspend assistance to Reliance, on the grounds that it was assisting
Iran’s economy with the gas sales. The Exim Bank, in August 2008, had extended a total of $900
million in financing guarantees to Reliance to help it expand.
Iran Refined Petroleum Sanctions Act (IRPSA) and Comprehensive Iran
Sanctions, Accountability, and Divestment Act (H.R. 2194, P.L. 111-195)
In April 2009, several bills were introduced—H.R. 2194, S. 908, H.R. 1208, and H.R. 1985—that
would amend ISA to make sanctionable efforts by foreign firms to supply refined gasoline to Iran
or to supply equipment to Iran that could be used by Iran to expand or construct oil refineries.
H.R. 2194 and S. 908 were both titled the Iran Refined Petroleum Sanctions Act of 2009
(IRPSA). H.R. 2194 passed the House on December 15, 2009, by a vote of 412-12, with four
others voting “present” and six others not voting. The opposing and “present” votes included
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 contained
very similar provisions of the Iran Refined Petroleum Sanctions Act, but, as discussed in Table 1
below, added provisions affecting U.S.-Iran trade and other issues.
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 would discuss Iran. The U.N. Resolution was adopted on June 9, 2010,
presumably moving aside that obstacle to conference action completion. The conference report
was agreed on June 22, 2010 and was submitted on June 23, 2010. On June 24, 2010, the Senate
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Iran Sanctions
passed it 99-0, and the House passed it 408-8, with one voting “present.” President Obama
welcomed the passage and signed it into law on July 1, 2010.
As widely predicted, and as shown in the table below, the final version contained many of the
extensive provisions of the Senate version, and some of the efforts to compel sanctions on
violating firms from the House version. The Administration reportedly insisted that any agreed
bill automatically exempt from sanctions firms of countries that are cooperating against the
Iranian nuclear program. The Administration concern is that countries which fear penalties under
a new U.S. law would withdraw their cooperation with the United States on future sanctions
resolutions and measures against Iran. That concern was not directly met in the final version,
although, as noted, the final law allows for waivers, delayed mandatory investigations of
violations, and for non-investigation of companies that promise to end their business in Iran. As
was widely predicted, the conference report contains provisions to sanction Iranian human rights
abusers, including denial of visas for their travel to the United States and freezing of their assets.
Those who supported CISADA said it would 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. It was argued that 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, believed
the Iranian 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.20
20 Askari, Hossein and Trita Parsi. “Throwing Ahmadinejad a Lifeline.” New York Times op-ed. August 15, 2009.
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Table 1. Comparison of Major Versions of H.R. 2194/P.L. 111-195
House Version
Senate Version
Conference Report/Final Law
General Goals and Overview: Seeks
Broader goals than House: sanctions
General y closer to the Senate
to expand the authorities of the Iran
sales of gasoline to Iran similar to
version, but adds new provisions
Sanctions Act (ISA, P.L. 104-172) to
House version of H.R. 2194, but also
sanctioning Iranians determined to
deter sales by foreign companies of
would affect several other U.S.
be involved in human rights abuses
gasoline to Iran.
sanctions against Iran already in
and requires Treasury Department
place, including revoking some
to prohibit transactions with foreign
exemptions to the U.S. ban on
banks that conduct business with
imports from Iran.
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).
Extension of ISA to Sales of
Section 102(a) contains similar
Section 102(a) contains provisions
Gasoline:
provisions regarding both gasoline
amending ISA to include sales of
sales and sales of equipment and
gasoline and refining services and
Section 3(a) would amend ISA to
services for Iran to expand its own
equipment as sanctionable (similar to
make sanctionable:
refinery capacity. However, sets the
both versions). Sets dollar value
- the sale to Iran of equipment or
aggregate one-year sale value at $1
“trigger” at $1million transaction, or
services (of over $200,000 in value,
million—double the level of the
$5 million aggregate value
or $500,000 combined sales in one
House bill.
(equipment or gasoline sales) in a
year) that would enable Iran to
one year period.
maintain or expand its domestic
Specifies that what is sanctionable
production of refined petroleum.
includes helping Iran develop not
—or, the sale to Iran of refined
only oil and natural gas resources,
petroleum products or ships,
but also liquefied natural gas (LNG).
vehicles, or insurance or reinsurance
Products whose sales is sanctionable
to provide such gasoline to Iran
includes LNG tankers and products
(same dollar values as sale of
to build pipelines used to transport
equipment).
oil or LNG. Includes aviation fuel in
definition of refined petroleum.
Formally reduces investment
threshold to $20 million to trigger
sanctionability.
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House Version
Senate Version
Conference Report/Final Law
Expansion of ISA Sanctions:
Similar to House bill (Section
Section 102(b) amends ISA to add
102(a)).
the three sanctions contained in the
Section 3(b) would mandate certain
House and Senate versions, but: it
sanctions (not currently authorized
would add these three to the existing
by ISA) on sel ers of the equipment,
menu of six sanctions in ISA. The
gasoline, or services described in
President would be required to
Section 3(a) to include:
impose 3 out of the 9 specified
- prohibition of any transactions in
sanctions on entities determined to
foreign exchange with sanctioned
be violators. (As previously existed,
entity;
ISA required the 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) amends ISA by adding
Mechanism:
provision, but mandates that the
a provision similar to the House
head of a U.S. agency may not
version: requiring new Treasury
Section 3(b) also requires the heads
contract with a person who meets
Dept. regulations that mandate that
of U.S. Government agencies to
criteria of sanctionability in the act.
firms 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/Final Law
Additional Sanctions Against
No equivalent, although, as noted
Section 102(a)(2) amends ISA by
Suppliers of Nuclear, Missile, or
below, the Senate bill does contain
adding a prohibition on licensing of
Advanced Conventional Weapons
several proliferation-related
nuclear materials, facilities, or
Technology to Iran:
provisions.
technology to any country which is
the parent country of an entity
Section 3(c) provides an additional
determined to be sanctioned under
ISA sanction to be imposed on any
ISA for providing WMD technology
country whose entity(ies) violate ISA
to Iran.
by providing nuclear weapons-
related technology or missile
Waiver is provided on vital national
technology to Iran.
security interest grounds.
The sanction to be imposed on such
country is a ban on any nuclear
cooperation agreement with the
United States under the Atomic
Energy Act of 1954, and a
prohibition on U.S. sales to that
country of nuclear technology in
accordance with such an agreement.
The sanction can be waived if the
President certifies to Congress that
the country in question is taking
effective actions against its violating
entities.
Alterations to Waiver and
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 9(c) waiver
penalties on violating entities
standard as “necessary to the
described above is “vital to the
national 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 on
“important to the national interest
firms of countries that are “closely
of the United States.”
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. )
Section 102(g)(3) adds to ISA a
“special rule” that no investigation of
a potential violation need be started
if a firm has ended or pledged to end
its violating activity in/with Iran.
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House Version
Senate Version
Conference Report/Final Law
Required Reports:
Section 3(e) would amend ISA’s
Section 107 contains a provision
Various reporting requirements
current Administration reporting
similar to the new reporting
throughout (separate from those
requirements to also include an
requirement of the House bill with
required to trigger or justify the
assessment of Iran’s support for
regard to firms that sold gasoline and various sanctions or waivers). These
militant movements and to acquire
related equipment and services to
reporting requirements are:
weapons of mass destruction
Iran, and invested in Iran’s energy
technology.
sector.
- Amendment of section 10 of ISA to
include a report, within 90 days of
A new reporting requirement would
The Senate bill does not require
enactment, and annual thereafter, on
be created (every six months) on
reporting on the IRGC that is
trade between Iran and the countries
firms providing Iran gasoline and
stipulated in the House bill, or the
of the Group of 20 Finance Ministers
related equipment and services
report on Iran-G-20 trade.
and Central Bank Governors. (From
specified above, as well as the names
House version)
and dates of such activity, and any
However, the Senate bill (Section
contracts such entities have with
109) expresses the sense of
- Section 110 of the law (not am
U.S. Government agencies.
Congress that the United States
amendment to ISA) requires a report
“continue to target” the IRGC for
within 90 days, and every 180 days
The required report is to include
supporting terrorism, its role in
hence, on investments made in Iran’s
information on persons the
proliferation, and its oppressive
energy sector since January 1, 2006.
President determines is affiliated
activities against the people of Iran.
The report must include significant
with Iran’s Islamic Revolutionary
joint ventures outside Iran in which
Guard Corp (IRGC), as well as
Iranian entities are involved.
persons providing material support
to the IRGC or conducting financial
- The Section 110 report is to
transactions with the IRGC or its
include an estimate of the value of
affiliates.
ethanol imported by Iran during the
reporting period.
Also required is an Administration
report, within one year of
- Section 111 (not an ISA
enactment, on trade between Iran
amendment) requires a report within
and countries in the G-20.
90 days on the activities of export
credit agencies of foreign countries
in guaranteeing financing for trade
with Iran).
Expansion of ISA Definitions:
Section 3(f) would expand the
Similar provision contained in
Does not include export credit
definitions of investing entities, or
Section 102(d).
agencies as a sanctionable entity
persons, contained in ISA, to include:
under ISA (as amended). (However,
a report is required on export credit
- export credit agencies. (Such a
agency activity, as discussed under
provision is widely considered
“reporting requirements”)
controversial because export credit
agencies are arms of their
Does include LNG as petroleum
governments, and therefore
resources.
sanctioning such agencies is
considered a sanction against a
government.)
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House Version
Senate Version
Conference Report/Final Law
Termination Provisions:
Section 3(g) would terminate the
Title IV would terminate the act’s
Same as Senate version, which means
bill’s sanctions against persons who
provisions 30 days after the
that the amendments to ISA in this
are sanctioned, under the act, for
President certifies that Iran has:
law terminate if the President
sales of WMD-related technology, if
certifies that Iran has ceased WMD
the President certifies that Iran has
- ceased support for international
development, and has qualified for
ceased activities to acquire a nuclear
terrorism and qualifies for removal
removal from the U.S. terrorism list.
device and has ceased enrichment of
from the U.S. “terrorism list”
uranium and other nuclear activities.
However, the pre-existing version of
- and, has ceased the pursuit and
ISA would continue to apply until the
development of WMD and ballistic
President also certifies that Iran
missile technology.
poses no significant threat to U.S.
national security, interests, or allies.
ISA Sunset:
Section 3(h) would extend al
No similar provision.
Sunset provision same as House
provisions of ISA until December 31,
version ISA to sunset December 31,
2016. It is currently scheduled to
2016.
“sunset” on December 31, 2011, as
amended by the Iran Freedom
Support Act (P.L. 109-293).
Additional Provisions That Are Not Amendments to ISA
Modification to U.S. Ban on Trade
With and Investment in Iran:
No provision
Section 103(b)(1) would ban al
Same as Senate version. However,
imports of Iranian origin from the
contains a new section that the
United States, with the exception of
existing U.S. ban (by Executive
informational material. Currently,
order) on most exports to Iran not
modifications to the U.S. trade ban
include the exportation of services
with Iran (Executive Order 12959 of
for Internet communications.
May 6, 1995) that became effective in
2000 permit imports of Iranian
Provision also states that the ban on
luxury goods, such as carpets, caviar,
most exports should not include
nuts, and dried fruits.
goods or services needed to help
non-governmental organizations
- Section 103(b)(2)) general y
support democracy in Iran.
reiterates/codifies current provisions
of U.S. trade ban related to U.S.
Both provisions designed to support
exports to Iran. Provision would
opposition protesters linked to Iran’s
prohibit exports to Iran of all goods
“Green movement.”
except food and medical devices,
informational material, articles used
for humanitarian assistance to Iran,
or goods needed to ensure safe
operation of civilian aircraft.
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House Version
Senate Version
Conference Report/Final Law
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.
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 requires, within 90 days,
Abusers:
a report listing Iranian officials (or
affiliates) determined responsible for
No provision
or complicit in serious human rights
abuses since the June 12, 2009
Iranian election. Those listed are
ineligible for a U.S. visa, their U.S,
property is to be blocked, and
transactions with those listed are
prohibited.
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House Version
Senate Version
Conference Report/Final Law
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.
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.
Congressional Research Service
19
Iran Sanctions
House Version
Senate Version
Conference Report/Final Law
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
List of countries that are believed to
the Export Administration
be allowing diversion of specified
Regulations”).
goods or technology to Iran to be
named in a report provided within
Section 303 requires the Secretary of 180 days of enactment.
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.
Administration Review of Potential ISA Violations21
Several Members of Congress have, in recent years, questioned why no penalties have been
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
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. Nor was there a
formal State Department determination on Statoil subsequently.
21 Much of this section is derived from a meeting between the CRS author and officials of the State Department’s
Economics Bureau, which is tasked with the referenced review of investment projects. November 24, 2009.
Congressional Research Service
20
Iran Sanctions
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, 2009) 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 would involve the intelligence
community, according to Secretary Clinton. State Department officials told CRS in November
2009 that any projects that the State Department plan was 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.) That would mean that a final determination of
sanctionability would be due in early August 2010 (180 days from “early February). On June 22,
2010, Assistant Secretary of State William Burns testified before the Senate Foreign Relations
Committee that there are “less than 10” cases in which it appears there may have been violations
of ISA, and that Secretary of State Clinton is consulting with “other agencies” about what actions
are appropriate, as preparation for a sanctionability determination.
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
21
Table 2. Post-1999 Major Investments/Major Development Projects in Iran’s Energy Sector
Company(ies)/Status
Date Field/Project
(If Known)
Value Output/Goal
February
Doroud (oil)
Totalfina Elf (France)/ENI
$1 billion
205,000 bpd
1999
(Italy)
(Energy Information Agency, Department of Energy, August 2006.)
April
Balal (oil)
Totalfina Elf/ Bow Valley
$300 million
40,000 bpd
1999
(Canada)/ENI
(“Balal Field Development in Iran Completed,” World Market Research Centre, May 17, 2004.)
Nov.
Soroush and Nowruz (oil)
Royal Dutch Shell
$800 million
190,000 bpd
1999
(Netherlands)/Japex (Japan)
(“News in Brief: Iran.” Middle East Economic Digest, (MEED) January 24, 2003.)
April
Anaran bloc (oil)
Norsk Hydro
$120 million
65,000
2000
(Norway)/Gazprom
(MEED Special Report, December 16, 2005, pp. 48-50.)
(Russia)/Lukoil (Russia)
No production to date
July 2000
Phase 4 and 5, South Pars (gas)
ENI
$1.9 billion
2 billion
cu.ft./day (cfd)
(Petroleum Economist, December 1, 2004.)
Gas onstream as of Dec.
2004
March
Caspian Sea oil exploration—construction of submersible drilling rig for Iranian partner
GVA Consultants (Sweden)
$225 million
NA
2001
(IPR Strategic Business Information Database, March 11, 2001.)
June 2001 Darkhovin (oil)
ENI
$1 billion
100,000 bpd
(“Darkhovin Production Doubles.” Gulf Daily News, May 1, 2008.) ENI told CRS in April 2010
Field in production
it would close out al Iran operations by 2013.
May 2002 Masjid-e-Soleyman (oil)
Sheer Energy (Canada)/China
$80 million
25,000 bpd
National Petroleum Company
(“CNPC Gains Upstream Foothold.” MEED, September 3, 2004.)
(CNPC). Local partner is
Naftgaran Engineering
Sept.
Phase 9 + 10, South Pars (gas)
LG Engineering and
$1.6 billion
2 billion cfd
2002
Construction Corp. (now
(“OIEC Surpasses South Korean Company in South Pars.” IPR Strategic Business Information
known as GS Engineering and
Database, November 15, 2004.)
Construction Corp., South
Korea)
On stream as of early 2009
CRS-22
Company(ies)/Status
Date Field/Project
(If Known)
Value Output/Goal
October
Phase 6, 7, 8, South Pars (gas)
Statoil (Norway)
$2.65 billion
3 billion cfd
2002
(Petroleum Economist, March 1, 2006.)
began producing late 2008
January
Azadegan (oil)
Inpex (Japan) 10% stake.
$200 million
260,000 bpd
2004
CNPC. agreed to develop
(Inpex stake);
(“Japan Mul s Azadegan Options.” APS Review Oil Market Trends, November 27, 2006.)
“north Azadegan” in Jan.
China $1.76
2009
billion
August
Tusan Block
Petrobras (Brazil)
$178 million
No production
2004
(“Iran-Petrobras Operations.” APS Review Gas Market Trends, April 6, 2009; “Brazil’s
Oil found in block in Feb.
Petrobras Sees Few Prospects for Iran Oil,” (http://www.reuters.com/article/
2009, but not in commercial
idUSN0317110720090703.)
quantity, according to the
firm
October
Yadavaran (oil)
Sinopec (China), deal finalized $2 billion
300,000 bpd
2004
December 9, 2007
(“Iran, China’s Sinopec Ink Yadavaran Oilfield Development Contract.” Payvand’s Iran News,
December 9, 2009.)
2005
Saveh bloc (oil)
PTT (Thailand)
?
?
GAO report, cited below
June 2006 Garmsar bloc (oil)
Sinopec (China)
$20 million
?
Deal finalized in June 2009
(“China’s Sinopec signs a deal to develop oil block in Iran – report,” Forbes, 20 June 2009,
http://www.forbes.com/feeds/afx/2006/06/20/afx2829188.html.)
July 2006 Arak Refinery expansion
Sinopec (China); JGC (Japan)
$959 million
Expansion to
produce 250,000
(GAO report; Fimco FZE Machinery Website; http://www.fimco.org/index.php?option=
bpd
com_content&task=view&id=70&Itemid=78.)
Sept.
Khorramabad block (oil)
Norsk Hydro (Norway)
$49 million
?
2006
(PR Strategic Business Information Database, September 18, 2006)
Feb. 2007 LNG Tanks at Tombak Port
Daelim (S. Korea)
$320 million
200,000 ton
capacity
Contract to build three LNG tanks at Tombak, 30 miles north of Assaluyeh Port.
(May not constitute “investment” as defined in pre-2010 version of ISA, because that definition
did not specify LNG as “petroleum resource” of Iran.)
“Central Bank Approves $900 Million for Iran LNG Project.” Tehran Times, June 13, 2009.
CRS-23
Company(ies)/Status
Date Field/Project
(If Known)
Value Output/Goal
March
Esfahan refinery upgrade
Daelim (S. Korea)
NA
2007
(“Daelim, Others to Upgrade Iran’s Esfahan Refinery.” Chemical News and Intelligence, March
19, 2007.)
Dec.
Golshan and Ferdows onshore and offshore gas fields and LNG plant
SKS Ventures, Petrofield
$16 billion
3.4 billion cfd
2007
Subsidiary (Malaysia)
contract modified but reaffirmed December 2008
(GAO report; Oil Daily, January 14, 2008.)
2007
Jofeir Field (oil)
Belneftekhim (Belarus)
$450 million
40,000 bpd
(unspec.)
GAO report cited below
No production to date
2008
Dayyer Bloc (Persian Gulf, offshore, oil)
Edison (Italy)
$44 million
?
GAO report cited below
February
Lavan field (offshore natural gas)
PGNiG (Poland)
$2 billion
2008
GAO report cited below
Status unclear
March
Danan Field (on-shore oil)
Petro Vietnam Exploration
? ?
2008
and Production Co.
“PVEP Wins Bid to Develop Danan Field.” Iran Press TV, March 11, 2008
(Vietnam)
April
Moghan 2 (onshore oil and gas, Ardebil province)
INA (Croatia)
$40-$140
?
2008
million
GAO report cited below
(dispute over
size)
?
Kermanshah petrochemical plant (new construction)
Uhde (Germany)
300,000 metric
tons/yr
GAO report cited below
January
“North Azadegan”
CNPC (China)
$1.75 billion
75,000 bpd
2009
(Chinadaily.com. “CNPC to Develop Azadegan Oilfield,” http://www.chinadaily.com.cn/
bizchina/2009-01/16/content_7403699.htm.)
CRS-24
Company(ies)/Status
Date Field/Project
(If Known)
Value Output/Goal
Oct.
South Pars Gas Field—Phases 6-8, Gas Sweetening Plant
G and S Engineering and
$1.4 billion
2009
Construction (South Korea)
CRS conversation with Embassy of S. Korea in Washington, D.C, July 2010
Contract signed but then abrogated by S. Korean firm
Nov.
South Pars: Phase 12—Part 2 and Part 3
Daelim (S. Korea)—Part 2;
$4 billion ($2
2009
Tecnimont (Italy)—Part 3
bn each part)
(“Italy, South Korea To Develop South Pars Phase 12.” Press TV (Iran), November 3, 2009,
http://www.presstv.com/pop/Print/?id=110308.)
February
South Pars: Phase 11
CNPC (China)
$4.7 billion
2010
Drilling to Begin in March 2010
(“CNPC in Gas Deal, Beefs Up Tehran Team—Source,” Reuters India, February 10, 2010,
http://in.reuters.com.articlePrint?articleId=INTOE61909U20100210.)
Totals: $41 billion investment
Other Pending/Preliminary Deals
North Pars Gas Field (offshore gas). Includes gas purchases (December 2006)
China National Offshore
$16 billion
3.6 billion cfd
Oil Co.
(http://english.peopledaily.com.cn/200705/19/print20070519_376139.html.)
Phase 13, 14—South Pars (gas); (Feb. 2007).
Royal Dutch Shell, Repsol
$4.3 billion
?
(Spain)
Deadline to finalize as May 20, 2009, apparently not met; firms submitted revised proposals to Iran in
June 2009.
(http://www.rigzone.com/news/article.asp?a_id=77040&hmpn=1.)
Phase 22, 23, 24—South Pars (gas), incl. transport Iranian gas to Turkey, and on to Europe and building
Turkish Petroleum Company
$12. billion
2 billion cfd
three power plants in Iran. Initialed July 2007; not finalized to date.
(TPAO)
Iran’s Kish gas field (April 2008) Includes pipeline from Iran to Oman
Oman (co-financing of
$7 billion
1 billion cfd
project)
(http://www.presstv.ir/detail.aspx?id=112062§ionid=351020103.)
Phase 12 South Pars (gas)—part 1. Incl. LNG terminal construction and Farzad-B natural gas bloc
China-led consortium;
$8 billion+
20 million
(March 2009)
project originally subscribed
tonnes of LNG
in May 2007 by OMV
annual y by 2012
(Austria); possibly taken over
by Indian firms (ONGC, Oil
India Ltd., Hinduja, Petronet)
CRS-25
Company(ies)/Status
Date Field/Project
(If Known)
Value Output/Goal
South Pars gas field (September 2009)
Petroleos de Venezuela S.A.;
$760 million
10% stake in venture
Abadan refinery
Sinopec
up to $6
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. Reported $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-26
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 12959.22 This followed an earlier March 1995 executive order barring U.S. investment in
Iran’s energy sector. The trade and investment ban was intended to blunt criticism that U.S. trade
with Iran made U.S. appeals for multilateral containment of Iran less credible. Each March since
1995 (and most recently on March 10, 2010), the U.S. Administration has renewed a declaration
of a state of emergency that triggered the investment ban. The operation of the trade regulations is
stipulated in Section 560 of the Code of Federal Regulations (Iranian Transactions Regulations,
ITR’s).
Some modifications to the trade ban since 1999 account for the trade between the United States
and Iran which was about $350 million worth of goods for all of 2009 ($281 million in exports to
Iran, and $67 million in imports from Iran). That is about half the value of the bilateral trade in
2008.
The 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).
• 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
22 The Executive Order was issued under the authority of: The International Emergency Economic Powers Act (IEEPA,
50 U.S.C. 1701 et seq.; the National Emergencies Act (50 U.S.C. 1601 et seq.; Section 505 of the International Security
and Development Cooperation Act of 1985 (22 U.S.C. 2349aa-9) and Section 301 of Title 3, United States Code. An
August 1997 amendment to the trade ban (Executive Order 13059) prevented U.S. companies from knowingly
exporting goods to a third country for incorporation into products destined for Iran.
Congressional Research Service
27
Iran Sanctions
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. Financing was permitted for U.S.
importers of these goods. 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. CISADA has not re-imposed 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
ban or the Iran Sanctions Act (ISA)23—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,24 Overseas
23 “Iran Says Halliburton Won Drilling Contract.” Washington Times, January 11, 2005.
24 Form 10-K Filed for fiscal year ended December 31, 2008.
Congressional Research Service
28
Iran Sanctions
Shipholding Group, 25 UOP (a Honeywell subsidiary),26 Itron27, Fluor, 28
Flowserve,29 Parker Drilling, Vantage Energy Services,30 Weatherford, 31and a
few others.
• 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.
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
CISADA contained a similar provision, but it was taken out in conference action.
Foreign Country Civilian Trade With Iran
Neither the U.S. ban on trade and investment with Iran, nor U.N. sanctions, nor European Union
sanctions on Iran, ban trade with Iran in purely civilian goods. A very wide range of foreign firms
have been conducting trade with or have had a corporate presence with Iran, although, as
discussed later, this level of interaction is changing because of the mounting global consensus to
isolate Iran. Some of the well-known firms include Alcatel-Lucent of France; Bank of Tokyo-
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. 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.
25 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.
26 New York Times, March 7, 2010, cited previously.
27 Subsidiaries of the Registrant at December 31, 2009. http://www.sec.gov/Archives/edgar/data/780571/
000078057110000007/ex_21-1.htm.
28 “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.
29 Form 10-K for Fiscal year ended December 31, 2009.
30 Form 10-K for Fiscal year ended December 31, 2007.
31 Form 10-K for Fiscal year ended December 31, 2008, claims firm directed its subsidiaries to cease new business in
Iran and Cuba, Syria, and Sudan as of September 2007.
Congressional Research Service
29
Iran Sanctions
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”32 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, as of early 2010,
say that they had persuaded at least 80 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,33 and some banks in Asia (primarily South Korea and Japan) and the rest of the Middle
East have done the same. The July 27, 2010 EU sanctions discussed below impose restrictions on
European country banking relationships with Iran.
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.
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.34 Bank Sepah is subject to asset freezes and transactions
32 Hearing of the Financial Services and General Government Subcommittee of the House Appropriations Committee,
Federal News Service, May 21, 2009.
33 Mufson, Steven and Robin Wright. “Iran Adapts to Economic Pressure.” Washington Post, October 29, 2007.
34 Kessler, Glenn. “U.S. Moves to Isolate Iranian Banks.” Washington Post, September 9, 2006.
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Iran Sanctions
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 still 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 had a similar provision, which was included in
conference action. Resolution 1929 references the need for vigilance in dealing with Iran’s
Central Bank but does not mandate any new sanctions against it.
In enforcing U.S. sanctions, on December 17, 2008, the U.S. Attorney for the Southern District of
New York filed a civil action seeking to seize the assets of the Assa Company, a UK-chartered
entity. Assa allegedly was maintaining the interests of Bank Melli in an office building in New
York City. An Iranian foundation, the Alavi Foundation, allegedly is an investor in the building.
Treasury Department officials say that some of these efforts have gone as far as possible and, in
concert with statements by Secretary of State Clinton and other officials in early 2010, Treasury
officials are attempting to target the Revolutionary Guard and its corporate arms and suppliers.
Four Guard-related Iranian firms, and one Guard official affiliated with the Guard’s corporate
activities, were designated by the Treasury Department as proliferation entities under Executive
Order 13382. Revolutionary Guard-affiliated firms are targeted extensively for sanctions under
Resolution 1929. On June 16, 2010, several more Guard officials and affiliate firms were
designated under Executive Order 13382. The EU sanctions imposed July 27, 2010 appear to
align the EU with the United States by designated numerous Guard entities as subject to asset
freezes.
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
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
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Iran Sanctions
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. 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 a general licensing (no need for a specific license) for donations to
Iran of humanitarian goods by American citizens and organizations. Those exemptions were
extended several times but expired in March 2004. When that expiration occurred, the policy
reverted to a requirement for specific licensing (application to OFAC) and approval process for
donations and operations in Iran of U.S.-based humanitarian NGO’s.
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 5 at the end of this report. Table 5 includes the names of
Iranian entities sanctioned under other orders and under United Nations resolutions pertaining to
Iran’s nuclear program.
Proliferation-Related Sanctions
Iran is prevented from receiving advanced technology from the United States under relevant and
Iran-specific anti-proliferation laws35 and by Executive Order 13382 (June 28, 2005). Some of
these laws and executive measures seek to penalize foreign firms and countries that provide
equipment to Iran’s WMD programs.
35 Such laws include the Atomic Energy Act of 1954 and the Energy Policy Act of 2005 (P.L. 109-58).
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Iran Sanctions
Iran-Iraq Arms Nonproliferation Act
The Iran-Iraq Arms Nonproliferation Act (P.L. 102-484) imposes a number of sanctions on
foreign entities that supply Iran with WMD technology or “destabilizing numbers and types of
conventional weapons.” Sanctions imposed on violating entities include a ban, for two years, on
U.S. government procurement from that entity, and a two year ban on licensing U.S. exports to
that entity. A discretionary sanction of a ban on imports to the United States from that entity is
authorized.
If the violator is determined to be a foreign country, sanctions to be imposed are: a one year ban
on U.S. assistance to that country; a one year requirement that the United States vote against
international lending to it; a one year suspension of U.S. co-production agreements with the
country; a one year suspension of technical exchanges with the country in military or dual use
technology; and a one year ban on sales of U.S. arms to the country. The President is also
authorized to deny the country most-favored-nation trade status; and to impose a ban on U.S.
trade with the country.
The Iran-Iraq Arms Nonproliferation 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.36 (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. The table at the end
of this paper lists Iran-related entities sanctioned under the Order.
36 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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Iran Sanctions
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.
Implementation
Both the George W. Bush Administration and the Obama Administration have imposed sanctions
for violations of the executive orders and laws discussed above. Iranian entities designated under
these laws and orders are listed in Table 5, including the Revolutionary Guard-affiliated firms
and entities.
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.37 A
further discussion of the effect of the U.S. and international sanctions on Iran’s WMD programs is
provided later.
U.S. 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).38 The concept of these sanctions is to
express the view of Western and other democracies that Iran is an outcast internationally.
Legislation in the 110th Congress, H.R. 1400, did not require divestment, but would have required
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, was introduced in the
Senate. Provisions along these lines was contained in CISDADA (P.L. 111-195)—in particular
providing a “safe harbor” for investment managers who sell shares of firms that invest in Iran’s
energy sector (as defined by ISA, as amended by CISADA).
37 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.
38 For information on the steps taken by individual states, see National Conference of State Legislatures. State
Divestment Legislation.
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Iran Sanctions
U.S. Sanctions and Other Efforts Intended 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, discussed throughout, represent one facet of 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. Several measures to
support the opposition’s ability to communicate, to reduce the regime’s ability to monitor or
censor Internet communications, and to identify and sanction Iranian human rights abusers were
included in CISADA (P.L. 111-195).
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 Act (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) required 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. This provision, and another which
exempts from the U.S. export ban on Iran equipment to help Iranians communicate and use the
Internet, was incorporated into CISADA (P.L. 111-195). The provisions were directed, in part,
against firms, including a joint venture between Nokia (Finland) and Siemens (Germany),
reportedly sold Internet monitoring and censorship technology to Iran in 2008.39 Perhaps to avoid
further embarrassment, Siemens announced on January 27, 2010, that it would stop signing new
business deals in Iran as of mid-2010.40 Some question whether such a sanction might reduce
allied cooperation with the United States if allied companies are so sanctioned.
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.
39 Rhoads, Christopher. “Iran’s Web Spying Aided by Western Technology.” Wall Street Journal, June 22, 2009.
40 End, Aurelia. “Siemens Quits Iran Amid Mounting Diplomatic Tensions.” Agence France Press, January 27, 2010.
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Measures to Sanction Human Rights Abuses and Promote
the Opposition
Another part of this theme of attempting to help Iran’s opposition has been legislation 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 became H.R. 2194) to focus
on banning travel and freezing assets of those Iranians determined to be human rights abusers.
These provisions were included in the conference report on CISADA (H.R. 2194, P.L. 111-195).
The provisions were similar to those of Senator McCain’s earlier stand alone bill, S. 3022, the
“Iran Human Rights Sanctions Act.” Companion measures in the House were H.R. 4647 and H.R.
4649, which differed only slightly with each other.
Another bill, introduced by Senator Cornyn and Senator Brownback, (S. 3008) the “Iran
Democratic Transition Act,” calls for a forthright declaration that it is the policy of the United
States to support efforts by the Iranian people to remove the regime from power. It calls for the
use of U.S. broadcasting and humanitarian funds to help democratic organizations in Iran.
Blocked Iranian Property and Assets
Iranian leaders continue to assert that the United States is holding Iranian assets, and that this is
an impediment to improved relations. A U.S.-Iran Claims Tribunal at the Hague continues to
arbitrate cases resulting from the 1980 break in relations and freezing of some of Iran’s assets.
Major cases yet to be decided center on hundreds of Foreign Military Sales (FMS) cases between
the United States and the Shah’s regime, which Iran claims it paid for but were unfulfilled. About
$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
Administration opposed a terrorism lawsuit against Iran by victims of the U.S. Embassy Tehran
seizure on the grounds of diplomatic obligation.41
Comparative Analysis: Relationships of U.S. to
International and Multilateral Sanctions
The U.S. sanctions discussed in this report are more comprehensive than those imposed, to date,
by the United Nations Security Council or by individual foreign countries or groups of countries,
such as the European Union. However, there is increasing convergence among all these varying
sets of sanctions.
41 See CRS Report RL31258, Suits Against Terrorist States by Victims of Terrorism, by Jennifer K. Elsea.
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Iran Sanctions
U.N. Sanctions
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 5.)
The main points of Resolution 1929 are: 42
• 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.
• 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.
42 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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• 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.
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.
Other Foreign Country Sanctions
U.S. allies have supported the Obama Administration approach toward Iran, in part because the
approach is perceived as not purely punitive, and in part because concerns about Iran’s nuclear
advancement have increased. U.S. and European/allied approaches have been converging since
2002, when the nuclear issue came to the fore, but there appears to be an unprecedented degree of
global consensus emerging on how to deal with Iran. On June 17, 2010, the EU ended a foreign
ministerial meeting that resulted in a declaration, subject to technical subsequent expert talks and
ministerial affirmation, to implement many of the authorities of Resolution 1929. The measures to
be undertaken are to include an EU ban on new investment in Iran’s energy sector, particular its
ability to refine oil into gasoline.43
43 Fidler, Stephen. “EU Shapes Expanded Sanctions Against Iran.” Wall Street Journal, June 16, 2010.
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Iran Sanctions
In its July 27, 2010 announced sanctions measures, the product of consensus among the EU
states, the EU countries are imposing sanctions on Iran that exceed those mandated in Security
Council resolutions. A comparison between U.S., U.N., and EU sanctions against Iran is
contained in the chart below, although noting that there are differing legal bases and authorities
for these sanctions. For example, a U.S. President cannot mandate a foreign company take any
particular action; however, the U.S. government can penalize or reward foreign firms who take
action that supports U.S. objectives. U.N. Security Council resolutions are considered binding on
U.N. Member states.
Concurrent with the EU announcement of major sanctions on July 27, Canada and Australia
announced sanctions on Iran’s energy and financial sector similar to those of the EU. On July 29,
2010, Robert Einhorn, the State Department official designated to focus on Iran sanctions,
testified (House Oversight and Government Reform Committee) that U.S. officials would soon
visit several countries to try to persuade them to align their policies with those of the United
States and the EU. Countries to be visited include China, which is to be a particular focus because
of its energy relations with Iran, UAE, Japan, South Korea, Lebanon, Bahrain, Brazil, and
Ecuador.
The emerging consensus on Iran sanctions differs from early periods when there was far more
disagreement. Reflecting the traditional European preference for providing incentives rather than
enacting economic punishments, during 2002-2005, there were active negotiations between the
European Union and Iran on a “Trade and Cooperation Agreement” (TCA). Such an agreement
would have lowered the tariffs or increased quotas for Iranian exports to the EU countries.44
However, negotiations were discontinued after the election of Ahmadinejad in June 2005, at
which time Iran’s position on its nuclear program hardened. Similarly, there is insufficient
international support to grant Iran membership in the World Trade Organization (WTO) until
there is progress on the nuclear issue. Iran first attempted to apply to join the WTO in July 1996.
On 22 occasions after that, representatives of the Clinton and then the 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.
Earlier, during the 1990s, 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.
44 During the active period of talks, which began in December 2002, there were working groups focused not only on the
TCA terms and proliferation issues but also on Iran’s human rights record, Iran’s efforts to derail the Middle East peace
process, Iranian-sponsored terrorism, counter-narcotics, refugees, migration issues, and the Iranian opposition PMOI.
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Iran Sanctions
World Bank Loans
The July 28, 2010 EU measures appear to narrow substantially the prior differences between the
EU and the United States over international lending to Iran. As noted above, the United States
representative to international financial institutions is required to vote against international
lending, but that vote, although weighted, is not sufficient to block international lending. 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.
Table 4. Points of Comparison Between U.S., U.N., and EU Sanctions Against Iran
EU Sanctions (including those
U.S. Sanctions
U.N. Sanctions
imposed July 27, 2010)
General Observation: Most sweeping Increasingly sweeping, but still
EU abides by all U.N. sanctions on
sanctions on Iran of virtual y any
intended to primarily target Iran’s
Iran, but new package of Iran
country in the world
nuclear and other WMD programs.
sanctions announced July 27, 2010
No mandatory sanctions on Iran’s
more closely aligns EU sanctions
energy sector.
with those of the U.S. than ever
before.
Ban on U.S. Trade with and
U.N. sanctions do not ban civilian
No general EU ban on trade in
Investment in Iran
trade with Iran or general civilian
civilian goods with Iran, although the
sector investment in Iran. Nor do
July 27, 2010 sanctions ban sales of
Executive order 12959 bans (with
U.N. sanctions mandate restrictions
energy related equipment and
limited exceptions) U.S. firms from
on provision of trade financing or
services.
exporting to Iran, importing from
financing guarantees by national
Iran, or investing in Iran.
export credit guarantee agencies.
EU measures of July 27, 2010 also
ban “medium and long term” trade
There is an exemption for sales to
financing and financing guarantees.
Iran of food and medical products,
Short term financing is permitted,
but no trade financing or financing
but there is a cal for EU states to
guarantees are permitted.
“exercise restraint” on that.
Sanctions on Foreign Firms that Do
No U.N. equivalent exists. However,
July 27, 2010 EU sanctions prohibit
Business With Iran’s Energy Sector.
preambular language in Resolution
EU companies from financing energy
1929 “not[es] the potential
sector projects in Iran (a de-facto
The Iran Sanctions Act, P.L. 104-172
connection between Iran’s revenues
ban on energy sector investment)
(as amended most recently by the
derived from its energy sector and
and ban sales to Iran of equipment
Comprehensive Iran Sanctions,
the funding of Iran’s proliferation-
or services for its energy sector,
Accountability, and Divestment Act
sensitive nuclear activities.” This
including projects outside Iran. No
of 2010, P.L. 111-195) mandates
wording is interpreted by most
ban on buying oil or gas from Iran
specified sanctions on foreign firms
observers as providing U.N. support
or selling gasoline to Iran.
that invest threshold amounts in
for countries who want to ban their
Iran’s Energy Sector or that sell
companies from investing in Iran’s
certain threshold amounts of refined
energy sector.
petroleum or refinery related
equipment or services to Iran.
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Iran Sanctions
EU Sanctions (including those
U.S. Sanctions
U.N. Sanctions
imposed July 27, 2010)
Ban on Foreign Assistance
No U.N. equivalent
EU measures of July 27, 2010 ban
grants, aid, and concessional loans
U.S. foreign assistance to Iran –
to Iran. Also prohibit financing of
other than purely humanitarian aid –
enterprises involved in Iran’s energy
is banned under Section 620A of the
sector.
Foreign Assistance Act . That section
bans U.S. assistance to countries on
the U.S. list of “state sponsors of
terrorism.” Iran has been on this
“terrorism list” since January 1984.
Iran is also routinely denied direct
U.S. foreign aid under the annual
foreign operations appropriations
acts (most recently in Section 7007
of division H of P.L. 111-8).
Ban on Arms Exports to Iran
Resolution 1929 (operative paragraph EU sanctions include a
8) bans al U.N. member states from
comprehensive ban on sale to Iran
Because Iran is on the “terrorism
selling or supplying to Iran major
of all types of military equipment,
list,” it is ineligible for U.S. arms
weapons systems, including tanks,
not just major combat systems.
exports pursuant to Section 40 of
armored vehicles, combat aircraft,
the Arms Export Control Act
warships, and most missile systems,
(AECA, P.L. 95-92). The International or related spare parts or advisory
Trafficking in Arms Regulations
services for such weapons systems.
(ITAR, 22 CFR Part 126.1) also cite
the President’s authority to control
arms exports, and to comply with
U.N. Security Council Resolutions as
a justification to ban arms exports
and imports.
Restriction on Exports to Iran of
The U.N. Resolutions on Iran,
EU bans the sales of dual use items
“Dual Use Items”
cumulatively, ban the export of
to Iran, in line with U.N.
almost all dual-use items to Iran.
resolutions.
Primarily under Section 6(j) of the
Export Administration Act (P.L. 96-
72) and Section 38 of the Arms
Export Control Act, there is a denial
of license applications to sell Iran
goods that could have military
applications.
Sanctions Against International
Resolution 1747 (oper. paragraph 7)
The July 27, 2010 measures prohibit
Lending to Iran
requests, but does not mandate, that
EU members from providing grants,
countries and international financial
aid, and concessional loans to Iran,
Under Section 1621 of the
institutions refrain from making
including through international
International Financial Institutions
grants or loans to Iran, except for
financial institutions.
Act (P.L. 95-118), U.S.
development and humanitarian
representatives to international
purposes.
financial institutions, such as the
World Bank, are required to vote
against loans to Iran by those
institutions.
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Iran Sanctions
EU Sanctions (including those
U.S. Sanctions
U.N. Sanctions
imposed July 27, 2010)
Sanctions Against Foreign Firms that
Resolution 1737 (oper. paragraph 12) The EU measures imposed July 27,
Sel Weapons of Mass Destruction-
imposes a worldwide freeze on the
2010 commit the EU to freezing the
Related Technology to Iran
assets and property of Iranian entities assets of entities named in the U.N.
named in an Annex to the
resolutions, as well as numerous
Several laws and regulations,
Resolution. Each subsequent
other named Iranian entities.
including the Iran-Syria North Korea
Resolution has expanded the list of
Nonproliferation Act (P.L. 106-178),
Iranian entities subject to these
the Iran-Iraq Arms Nonproliferation
sanctions.
Act (P.L. 104-484) and Executive
Order 13382 provide for sanctions
against entities, Iranian or otherwise,
that are determined to be involved in
or supplying Iran’s WMD programs
(asset freezing, ban on transaction
with the entity).
Ban on Transactions With Terrorism No direct equivalent
No direct equivalent, but EU
Supporting Entities
measures taken July 27, 2010
The U.N. Resolutions against Iran are include some IRGC Qods Force and
Executive Order 13224 bans
intended primarily to slow or halt
related persons and entities as
transactions with entities determined Iran’s nuclear and other WMD
subject to a freeze on EU-based
by the Administration to be
programs. However, Resolution
assets.
supporting international terrorism.
1747 (oper. paragraph 5) bans Iran
Numerous entities, including some of from exporting any arms – a
Iranian origin, have been so
provision widely interpreted as trying
designated.
to reduce Iran’s material support to
groups such as Lebanese Hizbollah,
Hamas, Shiite militias in Iraq, and
insurgents in Afghanistan.
Travel Ban on Named Iranians
Resolution 1803 imposed a binding
The EU sanctions announced July
ban on international travel by several
27, 2010 contains an Annex of
The Comprehensive Iran Sanctions,
Iranians named in an Annex to the
named Iranians subject to a ban on
Accountability, and Divestment Act
Resolution. Resolution 1929
travel to the EU countries.
of 2010 (P.L. 111-195) provides for a
extended that ban to additional
prohibition on travel to the U.S. ,
Iranians, and forty Iranians are now
blocking of U.S.–based property, and
subject to the ban. However, the
ban on transactions with Iranians
Iranians subject to the travel ban are
determined to be involved in serious
so subjected because of their
human rights abuses against Iranians
involvement in Iran’s WMD
since the June 12, 2009 presidential
programs, not because of
election there.
involvement in human rights abuses.
Restrictions on Iranian Shipping
Resolution 1803 and 1929 authorize
The EU measures announced July
countries to inspect cargoes carried
27, 2010 bans Iran Air Cargo from
Under Executive Order 13382, the
by Iran Air and Islamic Republic of
access to EU airports. The
U.S. Treasury Dept. has named
Iran Shipping Lines (IRISL) – or any
measures also freeze the EU-based
Islamic Republic of Iran Shipping
ships in national or international
assets of IRISL and its affiliates.
Lines and several affiliated entities as
waters – if there is an indication that
Insurance and re-insurance for
entities whose U.S.-based property is the shipments include goods whose
Iranian firms is banned.
to be frozen.
export to Iran is banned.
Congressional Research Service
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Iran Sanctions
EU Sanctions (including those
U.S. Sanctions
U.N. Sanctions
imposed July 27, 2010)
Banking Sanctions
No direct equivalent
The EU announcement on July 27,
2010 prohibit the opening in EU
A number or provisions and policies
However, two Iranian banks are
countries of any new branches or
have been employed to persuade
named as sanctioned entities under
offices of Iranian banks. The
foreign banks to end their
the U.N. Security Council
measures also prohibit EU banks
relationships with Iranian banks.
resolutions.
from offices or accounts in Iran. In
Several Iranian banks have been
addition, the transfer of funds
named as proliferation or terrorism
exceeding 40,000 Euros (about
supporting entities under Executive
$50,000) between and Iranian bank
Orders 13382 and 13224,
and an EU bank require prior
respectively.
authorization by EU bank
P.L. 111-195 contains a provision
regulators.
that prohibits banking relationships
with U.S. banks for any foreign bank
that conducts transactions with Iran’s
Revolutionary Guard or with Iranian
entities sanctioned under the various
U.N. resolutions.
No direct equivalent, although, as
Resolution 1929 (oper. paragraph 7)
EU measures on July 27, 2010
discussed above, U.S. proliferations
prohibits Iran from acquiring an
require adherence to this provision
laws provide for sanctions against
interest in any country involving
of Resolution 1929.
foreign entities that help Iran with its
uranium mining, production, or use
nuclear and ballistic missile programs. of nuclear materials, or technology
related to nuclear-capable ballistic
missiles.
Operative Paragraph 9 of Resolution
1929 prohibits Iran from undertaking
“any activity” related to ballistic
missiles capable of delivering a
nuclear weapon.
Overall Effect of U.S., U.N., and Other
Country Sanctions
The effectiveness of U.S. and international sanctions on Iran, by most accounts, is a matter of
substantial debate. There are a multiplicity of factors that affect Iran’s decisionmaking and its
economy, and it is very difficult to isolate the contribution of sanctions to any developments in or
decisions by Iran.
Effect on Nuclear Development
A growing number of experts feel that the cumulative effect of U.S., U.N., and other sanctions is
at least beginning to harm Iran’s economy, or have that potential. This is evident not only from
anecdotal and measurable indicators, but also from some statements from Iranian officials.
However, with respect to the core strategic objective of the sanctions, there is a consensus that
U.S. and U.N. sanctions have not, to date, caused a demonstrable shift in Iran’s commitment to its
nuclear program. In July 2010, following the enactment of U.N. Security Council Resolution,
CISADA, and the EU sanctions, Iran told the EU foreign policy director Catherine Ashton that it
would meet with her in September 2010 and would ask the International Atomic Energy Agency
Congressional Research Service
43
Iran Sanctions
(IAEA) for the start of technical talks on a nuclear compromise. It is uncertain whether it was the
imposition of the three sets of sanctions (U.S., U.N. and EU) that prompted Iran to seek new
talks, or whether Iran will be more willing to compromise than it has been to date.
A related issue is whether the cumulative sanctions have, in and of themselves, added bottlenecks
to Iran’s nuclear efforts. Firm evidence is difficult to produce; however, the head of Iran’s civilian
atomic energy agency said in July 2010 that international sanctions might “slow” Iran’s nuclear
program. Other Iranian officials minimized any likely effects.
Effect on the Energy Sector
As noted throughout, the U.S. objective has been to target sanctions against Iran’s energy sector,
hoping thereby to pressure Iranian leaders and possibly to deny Iran resources to develop WMD.
There are clear indications that the sanctions—coupled with the overall sense that Iran is isolated
from the international community—have caused major energy firms to reduce or end their
involvement in the Iran energy sector. Several major European firms—Repsol, Royal Dutch
Shell, Total, and ENI—have either 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 liquefied
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, Malaysia,
and Vietnam. However, these companies are perceived as not being as technically capable as
those that have withdrawn from Iran. Press reports say that activity to develop the large South
Pars gas field is far less than would be expected. In July 2010, after the enactment of Resolution
1929 and CISADA, the Revolutionary Guard’s main construction affiliate, Khatem ol-Anbiya,
announced it had withdrawn from developing Phases 15 and 16 of South Pars—a project worth
$2 billion.45 Khatem ol-Anbiya took over that project in 2006 when Norway’s Kvaerner pulled
out of it. It is likely that the Guard perceived its involvement as likely to scare away foreign
participation in the work because U.S. and U.N. sanctions are targeting the Revolutionary Guard
and its corporate affiliates. It is it highly unlikely that Iran will attract the $145 billion in new
investment over the next 10 years that Iran’s deputy Oil Minister said in November 2008 that Iran
needs.
Possibly as a result of the hesitancy of the most capable firms to stay in the Iranian market, Iran’s
oil production has fallen slightly to about 3.8 million barrels per day (mbd) from about 4.1
million barrels per day (mbd) in the mid-2000s. 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 2015.46 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. Some Members of Congress believe that ISA would have been even more effective if
45 “Iran Revolutionary Guards Pull Out of Gas Deal Over Sanctions.” Platts, July 19, 2010.
46 Stern, Roger. “The Iranian Petroleum Crisis and United States National Security,” Proceedings of the National
Academy of Sciences of the United States of America. December 26, 2006.
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Iran Sanctions
successive administrations had imposed sanctions, and have expressed frustration that the
executive branch has not imposed ISA sanctions.
Gasoline Availability and Importation
There are indications that U.S. and international sanctions are affecting Iran’s supplies of
gasoline. Earlier in this paper was discussion of Iran’s gasoline suppliers, including the
announcements by most of the major gasoline suppliers and insurers that they had ended
supplying or ensuring shipments to Iran. On July 26, Reuters reported47 that Iran had received
only three major cargoes of gasoline for July, when a normal July would see Iran receive about
11-13 such shipments. That same day, Iran’s deputy Oil Minister said Iran would try to invest $46
billion to upgrade its nine refineries and build seven new ones, a far larger amount than Iran had
previously allocated to oil refining capacity. Two days later, Iran announced it would try to
quickly increase domestic gasoline supplies by converting two petrochemical plants to gasoline
production, through a generally inferior process that initially produces benzene.
There have not been, to date, systematic reports of gasoline shortages or widespread gasoline
rationing. This could suggest that Iran is had anticipated difficulty importing gasoline and has
stockpiled the commodity. Some expect Iran will cut subsidies, thus allowing the price to rise, or
it may begin systematic rationing, at the same time it searches for alternative supplies. Building
new refining capacity appears to be Iran’s long term effort to reduce this vulnerability.
Effect on Broader Foreign Business Involvement and
Business Climate
It is highly difficult to gauge the cumulative effect of sanctions on Iran’s broader economy,
because Iran’s economic performance is a product of numerous factors. What appears to be clear
is that numerous major international firms have become are unwilling to risk their position in the
U.S. market to do business with an increasingly isolated Iran. Many experts believe that, over
time, the efficiency of Iran’s economy will decline as foreign expertise departs and Iran invites in
or makes purchases from less capable foreign companies. Numerous reports indicate that Iran’s
large merchants are having trouble obtaining trade financing, which is driving up their costs. This
trend could have contributed to the July 2010 two week strike by major Tehran bazaar merchants,
a stoppage that spread to other cities. The strike was ostensibly in protest of a government attempt
to increase taxation on the merchants by 70%, but it is likely that the broader adverse business
climate contributed to the bazaar stoppages.
Some examples of major firms leaving Iran can be noted. As discussed above, Siemens of
Germany was active in the Iran telecommunications infrastructure market, but announced in
February 2010 that it would cease pursuing business in Iran. In April 2010, it was reported that
foreign partners of several U.S. or other multinational accounting firms had cut their ties with
Iran, including KPMG of the Netherlands, and local affiliates of U.S. firms
PricewaterhouseCoopers and Ernst and Young.48
47 See http://www.reuters.com/article/idUSTRE66P2X620100726.
48 Baker, Peter. “U.S. and Foreign Companies Feeling Pressure to Sever Ties With Iran.” New York Times, April 24,
2010.
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Iran Sanctions
Among foreign subsidiaries of U.S. firms: 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.49 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.50
Table 5. 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)
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)
49 Nixon, Ron. “2 Corporations Say Business With Tehran Will Be Curbed.” New York Times, March 11, 2010.
50 “Caterpillar Says Tightens ‘No-Iran’ Business Policy.” Reuters, March 1, 2010.
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Iran Sanctions
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
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
Congressional Research Service
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Iran Sanctions
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
Omran Sahel
Oriental Oil Kish
Rah Sahel
Rahab Engineering Institute
Sahel Consultant Engineers
Sepanir
Sepasad Engineering Company
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Iran Sanctions
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 Economic
June 2006
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 Melli Iran
October 21, 2007
Zao (Moscow); Melli Bank PC (U.K.)
Bank Kargoshaee
October 21, 2007
Arian Bank (joint venture between Melli and Bank Saderat). Based in
October 21, 2007
Afghanistan
Bank Mellat (provides banking services to Iran’s nuclear sector);
October 21, 2007
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 Anbiya)
October 21, 2007
Sepasad Engineering Company (Guard construction affiliate)
October 21, 2007
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Iran Sanctions
Omran Sahel (Guard construction affiliate)
October 21, 2007
Sahel Consultant Engineering (Guard construction affiliate) October
21,
2007
Hara Company
October 21, 2007
Gharargahe Sazandegi Ghaem
October 21, 2007
Bahmanyar Morteza Bahmanyar (AIO, Iran missile official, see above
October 21, 2007
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 Resolution 1747
October 21, 2007
Mohammad Hejazi (Basij commander). Also, Resolution 1747
October 21, 2007
Ali Akbar Ahmadian (Chief of IRGC Joint Staff). Resolution 1747
October 21, 2007
Hosein Salimi (IRGC Air Force commander). Resolution 1737
October 21, 2007
Qasem Soleimani (Qods Force commander). Resolution 1747
October 21, 2007
Future Bank (Bahrain-based but allegedly controlled by Bank Melli) March 12, 2008
Yahya Rahim Safavi (former IRGC Commander in Chief
July 8, 2008
Mohsen Fakrizadeh-Mahabadi (senior Defense Ministry scientist)
July 8, 2008
Dawood Agha-Jani (head of Natanz enrichment site)
July 8, 2008
Mohsen Hojati (head of Fajr Industries, involved in missile program)
July 8, 2008
Mehrdada Akhlaghi Ketabachi (heads Shahid Bakeri Industrial Group)
July 8, 2008
Naser Maliki (heads Shahid Hemmat Industrial Group)
July 8, 2008
Tamas Company (involved in uranium enrichment)
July 8, 2008
Shahid Sattari Industries (makes equipment for Shahid Bakeri)
July 8, 2008
7th of Tir (involved in developing centrifuge technology)
July 8, 2008
Ammunition and Metal urgy Industries Group (partner of 7th of Tir)
July 8, 2008
Parchin Chemical Industries (deals in chemicals used in ballistic missile July 8, 2008
programs)
Karaj Nuclear Research Center
August 12, 2008
Esfahan Nuclear Fuel Research and Production Center (NFRPC)
August 12, 2008
Jabber Ibn Hayyan (reports to Atomic Energy Org. of Iran, AEIO)
August 12, 2008
Safety Equipment Procurement Company
August 12, 2008
Joza Industrial Company (front company for Shahid Hemmat
August 12, 2008
Industrial Group, SHIG)
Islamic Republic of Iran Shipping Lines (IRISL) and 18 affiliates,
September 10, 2008
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 Armament
September 17, 2008
Industries Group; Farasakht Industries; Iran Aircraft Manufacturing
Industrial Co.; Iran Communications Industries; Iran Electronics
Industries; and Shiraz Electronics Industries
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Iran Sanctions
Export Development Bank of Iran. Provides financial services to Iran’s October 22, 2008
Ministry of Defense and Armed Forces Logistics
Assa Corporation (alleged front for Bank Melli involved in managing
December 17, 2008
property in New York City on behalf of Iran)
11 Entities Tied to Bank Melli: Bank Melli Iran Investment (BMIIC);
March 3, 2009
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 Khatem ol-
February 10, 2010
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
- 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 Industry Group (controlled by the Aircraft Industries Org that manages Iran’s missile programs)
- Five front companies for IRISL: Hafiz Darya Shipping Co.; Soroush Sarzamin Asatir Ship Management Co.; Safiran Payam Darya;
and Hong Kong-based Seibow Limited and Seibow Logistics.
Also identified on June 16 were 27 vessels linked to IRISKL and 71 new names of already designated IRISL ships.
Several Iranian entities were also designated as owned or controlled by Iran for purposes of the ban on U.S. trade with Iran.
Entities Sanctioned Under Executive Order 13224 (Terrorism Entities)
Qods Force
October 21, 2007
Bank Saderat (al egedly used to funnel Iranian money to Hezbollah,
October 21, 2007
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
Qods Force senior officers: Hushang Allahdad, Hossein Musavi,Hasan
August 3, 2010
Mortezavi, and Mohammad Reza Zahedi
Iranian Committee for the Reconstruction of Lebanon, and its
August 3, 2010
director Hesam Khoshnevis, for supporting Lebanese Hizbal ah
Imam Khomeini Relief Committee Lebanon branch, and its director
August 3, 2010
Ali Zuraik, for providing support to Hizbal ah
Razi Musavi, a Syrian based Iranian official allegedly providing support
to Hizballah
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Iran Sanctions
Entities Sanctioned Under the Iran North Korea Syria Non-Proliferation Act and other U.S. Proliferation Laws
(Executive Order 12938)
Baltic State Technical University and Glavkosmos, both of Russia
July 30, 1998 (E.O. 12938). Both removed in 2010 – Baltic
on Jan. 29, 2010 and Glavkosmos on March 4, 2010
D. Mendeleyev University of Chemical Technology of Russia and
January 8, 1999 (E.O. 12938). Both removed on May 21,
Moscow Aviation Institute
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 laser-
September 17, 2003 (also designated under Executive
guided artillery shells to Iran.
Order 12938), removed May 21, 2010
13 entities sanctioned including companies from Russia, China,
April 7, 2004
Belarus, Macedonia, North Korea, UAE, and Taiwan.
14 entities from China, North Korea, Belarus, India (two nuclear
September 29, 2004
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 missile
December 2004 and January 2005
program. Many, such as North Korea’s Changgwang Sinyong and
China’s Norinco and Great Wal 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), India (two
December 26, 2005
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 and Prachi
August 4, 2006 (see below for Rosobornexport removal)
Poly Products); two Russian firms (Rosobornexport and aircraft
manufacturer Sukhoi); two North Korean entities (Korean Mining and
Industrial Development, and Korea Pugang Trading); and one Cuban
entity (Center for Genetic Engineering and Biotechnology).
9 entities. Rosobornexport, Tula Design, and Komna Design Office of January 2007 (see below for Tula and Rosoboronexport
Machine Building, and Alexei Safonov (Russia); Zibo Chemical, China
removal)
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 penalized for
April 23, 2007
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 Offshore
October 23, 2008. Rosoboronexport removed May 21,
International Corp.; Huazhong CNC (China); IRGC; Korea Mining
2010.
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);
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Iran Sanctions
Entities Designated as Threats to Iraqi Stability under Executive Order 13438
Ahmad Forouzandeh. Commander of the Qods Force Ramazan
January 9, 2008
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 funnels
January 9, 2008
Iranian arms to Shiite militias in Iraq.
Isma’il al-Lami (Abu Dura). Shiite militia leader, breakaway from Sadr
January 9, 2008
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 pro-
January 9, 2008
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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