Iran Sanctions
Kenneth Katzman
Specialist in Middle Eastern Affairs
December 13, 2010
Congressional Research Service
7-5700
www.crs.gov
RS20871
CRS Report for Congress
P
repared for Members and Committees of Congress
Iran Sanctions
Summary
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 since mid-2010 by the United Nations Security Council, the European Union,
and several 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—shared by major allies—is that sanctions should target the
development of Iran’s energy sector that provides about 80% of government revenues, and try to
isolate Iran, particularly its Revolutionary Guard Corps, from the international financial system.
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 mandates U.S. penalties against foreign companies that
conduct certain business with 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. and other developed markets. In the 111th Congress, the Comprehensive Iran Sanctions,
Accountability, and Divestment Act of 2010 (CISADA, P.L. 111-195) expanded ISA significantly
to try to restrict Iran’s ability to make or import gasoline, for which Iran depends heavily on
imports. CISADA also adds a broad range of other measures further restricting the already limited
amount of U.S. trade with Iran and restricting some high technology trade with countries that
allow WMD-useful technology to reach Iran.
CISADA’s enactment followed 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 trade financing and banking relationships with Iran, among other measures.
National measures announced by Japan and South Korea in early September 2010—both are
large buyers of Iranian energy—impose restrictions similar to those of the EU.
Because so many major economic powers have imposed sanctions on Iran, the sanctions are, by
all accounts, having a growing effect on Iran’s economy. The sanctions are reinforcing the effects
of Iran’s economic mismanagement and key bottlenecks. Among other indicators, 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. Sales to
Iran of gasoline have fallen dramatically since CISADA was enacted. U.S. officials say that the
cumulative effect could harm Iran’s economy to the point where domestic pressure compels
Iranian leaders to accept a nuclear compromise - the key strategic objective of the sanctions.
However, there is a consensus that sanctions have not, to date, caused such an Iranian policy shift.
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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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
September 30, 2010, ISA Sanctions Determinations ........................................................ 7
Application to Energy Pipelines ...................................................................................... 8
Application to Iranian Firms or the Revolutionary Guard .............................................. 10
Application to Liquefied Natural Gas ............................................................................ 10
Enhancements to ISA Under the Comprehensive Iran Sanctions, Accountability, and
Divestment Act of 2010 (CISADA, H.R. 2194/P.L. 111-195)............................................ 10
Rationale and Passage of CISADA—Reducing Gasoline Sales to Iran........................... 11
Effect on Iran’s Gasoline Supplies................................................................................. 12
Ban on U.S. Trade and Investment With Iran............................................................................. 28
Application to Foreign Subsidiaries of U.S. Firms ............................................................... 29
Subsidiaries Exiting Iran ............................................................................................... 30
Foreign Country Civilian Trade With Iran ........................................................................... 31
Foreign Firms Exiting Iran ............................................................................................ 31
Iranian Investment in Foreign Firms.............................................................................. 31
Treasury Department “Targeted Financial Measures” ................................................................ 32
Terrorism List Designation-Related Sanctions ........................................................................... 33
Executive Order 13224 ....................................................................................................... 34
Proliferation-Related Sanctions ................................................................................................. 35
Iran-Iraq Arms Nonproliferation Act ................................................................................... 35
Iran-Syria-North Korea Nonproliferation Act ...................................................................... 35
Executive Order 13382 ....................................................................................................... 36
Foreign Aid Restrictions for Suppliers of Iran...................................................................... 36
Implementation of Proliferation Sanctions........................................................................... 36
U.S. Efforts to Promote Divestment .......................................................................................... 36
U.S. Sanctions and Other Efforts Intended to Support Iran’s Opposition .................................... 37
Expanding Internet and Communications Freedoms ............................................................ 37
Measures to Sanction Human Rights Abuses and Promote the Opposition ........................... 38
Blocked Iranian Property and Assets ......................................................................................... 39
Comparative Analysis: Relationships of U.S. to International and Multilateral Sanctions ........... 39
U.N. Sanctions .................................................................................................................... 39
Other Foreign Country Sanctions ........................................................................................ 41
World Bank Loans ........................................................................................................ 42
Effects of U.S., U.N., and Other Country Sanctions................................................................... 46
Effect on Nuclear Development........................................................................................... 47
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General Politico-Economic Effects...................................................................................... 48
Effect on the Energy Sector ................................................................................................. 49
Gasoline Availability and Importation ........................................................................... 50
Tables
Table 1. Comparison of Major Versions of H.R. 2194/P.L. 111-195............................................ 14
Table 2. Post-1999 Major Investments/Major Development Projects in
Iran’s Energy Sector............................................................................................................... 23
Table 3. Summary of Provisions of U.N. Resolutions on Iran Nuclear Program (1737,
1747, 1803, and 1929)............................................................................................................ 41
Table 4. Points of Comparison Between U.S., U.N., and EU Sanctions Against Iran .................. 43
Table 5. Entities Sanctioned Under U.N. Resolutions and
U.S. Laws and Executive Orders ............................................................................................ 51
Contacts
Author Contact Information ...................................................................................................... 58
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Overview
The Obama Administration’s policy approach toward Iran has contrasted with the Bush
Administration’s by attempting to couple the imposition of sanctions to a consistent, direct U.S.
effort to negotiate with Iran 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, since early 2010 the Administration has
focused on achieving the imposition of additional U.N., U.S., and allied country sanctions whose
cumulative effect would be to compel it to accept a nuclear bargain.
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. U.S. sanctions, on the other hand, have
been a major feature of U.S. Iran policy since Iran’s 1979 Islamic revolution. 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—including in the Comprehensive Iran Sanctions, Accountability,
and Divestment Act of 2010 (CISADA, P.L. 111-195)—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. On September 29, 2010, as provided by CISADA, President Obama
signed an executive order that imposed U.S. sanctions on eight named Iranian officials—mostly
Revolutionary Guard, other security, and judicial officials—determined to have committed
serious human rights abuses in Iran. President Obama renewed for another year the U.S. trade and
investment ban on Iran (Executive Order 12959) in March 2010.
As noted, the 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 10 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 CISADA. An indication that U.S. allies have aligned 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. Japan and South Korea followed suit with similar
sanctions in September 2010.
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 (CISADA, 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 many provisions).
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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 gradually recoup their investments as oil and gas is discovered and then produced. 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.
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 CISADA (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.
CISADA also changes the definition of investment to eliminate the exemption from sanctions for sales of energy-
related equipment to Iran, if such sales are structured as investments or ongoing profit-earning ventures.
2 Under Section 4(d) of the original 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. However, P.L. 111-195 explicit
sets the threshold investment level at $20 million. 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).
3 The definition of energy sector had included oil and natural gas, but now, as a consequence of the enactment of P.L.
111-195, also includes liquefied natural gas (LNG), oil or LNG tankers, and products to make or transport pipelines
that transport oil or LNG.
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to Iran weapons of mass destruction (WMD) technology or “destabilizing numbers and types” of
advanced conventional weapons.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. (Fuel oil, a petroleum by-
product which is reportedly being sold to Iran by exporters in the Kurdish region of Iraq, is not
included in the definition of refined petroleum.)
Activities That Likely 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, unless
such sales are structured as investments, under the definition of that term provided in ISA. 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. On the other hand, because of CISADA, sales of
more advanced equipment, which are sometimes structured to provide ongoing profits or royalties
to fund the equipment, could potentially be sanctionable. In addition, 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. (On September 29, 2010,
Representative Sherman introduced H.R. 6296 which, in Section 202, would amend ISA to make
sanctionable “long term agreements” to buy oil from Iran—agreements that would involve large,
up-front payments to Iran for purchases of oil over a long period of time.)
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.
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. )
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. CISADA 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;
8. prohibition on any credit or payments between the entity and any U.S. financial
institution;
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9. prohibition of the sanctioned entity from acquiring, holding, or trading any U.S.-
based property.
New Mandatory Sanction Imposed by CISADA: Prohibition on Contracts With
the U.S. Government
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.
CISADA requires a revision of the Federal Acquisition Regulation (within 90 days of CISADA
enactment on July 1, 2010) to reflect this requirement. This requirement has been imposed in
regulations, according to observers. (H.R. 6296, introduced September 29, 2010, would authorize
state and local governments to similarly ban such contracts.)
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)). CISADA changed the 9(c) waiver standard
to “necessary” to the national interest. Under the original version of ISA, 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. The Section 4(c) waiver was altered by CISADA 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.
ISA (Section5(f)) also contains several exceptions such that the President is not required to
impose sanctions that prevent procurement of defense articles and services under existing
contracts, in cases where a firm is the sole source supplier of a particular defense article or
service. The President also is not required to prevent procurement or importation of essential
spare parts or component parts.
In the 110th Congress, several bills contained provisions that would have further amended ISA,
but they were not adopted. H.R. 1400, which passed the House on September 25, 2007 (397-16),
would have removed the Administration’s ability to waive ISA sanctions under Section 9(c),
national interest grounds, but it would not have imposed on the Administration a time limit to
determine whether a project is sanctionable.
Special Rule Exempting Firms That Pull Out of Iran
CISADA also provides a means—a so-called “special rule”—for firms to avoid any possibility of
U.S. sanctions by pledging to verifiably end their business with Iran and to forgo any
sanctionable business with Iran in the future. Under the special rule, the Administration is not
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required to make a determination of sanctionability against a firm that makes such pledges. The
special rule was invoked on September 30, 2010 and again on November 17, 2010.
Termination Requirements
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 The
amendments to ISA made by P.L. 111-195 would terminate if the first two of these criteria are
met.
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, when it
was first enacted, 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 9c—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, for its part,
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 this understanding moot because they ban EU investment in and supplies
of equipment and services to Iran’s energy sector.)
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.
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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September 30, 2010, ISA Sanctions Determinations
Since the Total/Petronas/Gazprom project in 1998, no projects were determined as violations of
ISA until a State Department announcement of September 30, 2010.8 Prior to the passage of
CISADA, several members of Congress questioned why no penalties had 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, in an effort to address the congressional criticism, 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.
Possibly in response to the pending CISADA legislation, 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.
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.
Several determinations of sanctionability were made on September 30, 2010. That day, a Swiss-
based oil trading company—Naftiran Intertrade Company (NICO)—was sanctioned under ISA.
The three penalties selected were a ban on Ex-Im Bank credits; a denial of dual use export
licensing to the firm; and a denial of bank loans exceeding $10 million. The mandatory ban on
8 Much of this section is derived from a meeting between the CRS author and officials of the State Department’s
Economics Bureau, which is tasked with the referenced review of investment projects. November 24, 2009.
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receiving U.S. government contracts applies as well. That same day, following a months-long
Administration review discussed later, four major energy sector investing companies were
deemed eligible to avoid sanctions, under the ISA “special rule,” by pledging to end their
business in Iran. They are
• Total of France,
• Statoil of Norway,
• ENI of Italy, and
• Royal Dutch Shell of Britain and the Netherlands.
• Inpex of Japan was exempted from sanctions under the special rule on November
17, 2010, according to a State Department announcement. The firm announced
on October 15, 2010, that it is shedding its stake in the Azadegan development
project shown in the table.
There remains some difference of opinion on the Administration invocation of the special rule, as
arose during a hearing of the House Foreign Affairs Committee on December 1, 2010. At the
hearing, Undersecretary Burns stated that companies exempted under the special rule had pledged
to end their existing investments in Iran “in the very near future.” Some members of Congress
questioned the imprecision of that time frame and others question the process for determining
whether a firm is adhering to its pledge to pursue no future business in Iran’s energy sector.
As shown in Table 2 below, several additional 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. Some of the firms listed as investors
are apparently still under Administration scrutiny, and the Administration states that
determinations will be made within 180 days (by April 1, 2011). However, the Administration did
not say which of the reported investments may still be under investigation.
Application to Energy Pipelines
As noted 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 was 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.
Only a few significant pipelines involving Iran have been constructed in recent years—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 has been made. In May 2009, Iran and Armenia inaugurated a
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natural gas pipeline between the two, built by Gazprom of Russia. No determination of
sanctionability has been announced.
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 reportedly remains under 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 have held 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.9 There are also discussions
reported between Iran and Iraq on constructing pipelines to facilitate oil and gas swaps between
the two, but no firm movement on these projects is evident.
Iran-India Pipeline
Another pending pipeline project would carry Iranian gas, by pipeline, to Pakistan. India had been
a part of the $7 billion project, which would take about three years to complete, but India was
reported in June 2010 to be largely out of the project. 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
“unacceptable,” but no U.S. official in either the Bush or the Obama Administrations has stated
outright that it would be sanctioned. Ambassador Richard Holbrooke, the Administration
representative on Pakistan and Afghanistan, during 2010 trips to Pakistan, has raised the
possibility that the project could be sanctioned if it is undertaken, citing enactment of CISADA.
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
9 http://www.kuwaittimes.net/read_news.php?newsid=NDQ0OTY1NTU4; http://english.farsnews.com/newstext.php?
nn=8901181055.
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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. The firm
that was sanctioned, Naftiran Interrade Company (NICO), is one such entity; it is a subsidiary of
NIOC. However, such entities, including Naftiran, 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
other 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.
Actual construction and work is largely 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 and have been sanctioned under various executive orders,
discussed below. 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.
A provision of H.R. 6296, introduced September 29, 2010, would extend ISA sanctionability to
any energy project conducted with NIOC, anywhere in the world.
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, specifically includes LNG in the definition
of petroleum resources and therefore makes investment in LNG (or supply of LNG tankers or
pipelines) sanctionable.
Enhancements to ISA Under the Comprehensive Iran Sanctions,
Accountability, and Divestment Act of 2010 (CISADA, H.R.
2194/P.L. 111-195)
ISA, as initially constituted, had limited applications to Iran’s gasoline dependency. 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
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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 oil refineries in several 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 have constituted “investment” under ISA.
However, a provision of H.R. 6296, introduced September 29, 2010, would make sanctionable
any joint project with NIOC, anywhere in the world.
Rationale and Passage of CISADA—Reducing Gasoline Sales to Iran
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. Prior to CISADA enactment, Iran was
dependent on gasoline imports to meet about 40% of its gasoline needs. Even before enactment of
CISADA, Iran had been trying to reduce that dependence by announcing plans to build or
expand, possibly with foreign investment, at least eight refineries. 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. The ideas that became the core of
CISADA were introduced as legislation in the 110th and 111th Congresses. 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
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 Ex-Im Bank 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 an 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 Ex-Im
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 Ex-Im Bank, in August 2008, had extended a total of $900
million in financing guarantees to Reliance to help it expand.
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.
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
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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 and Senator
Dodd, 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 passage of until a new
U.N. sanctions resolution was adopted—for fear that some P5+1 countries might refuse to
support the U.N. resolution if there is a chance their firms would be sanctioned by a new U.S.
law. The U.N. Resolution was adopted on June 9, 2010. A conference report on H.R. 2194 was
agreed on June 22, 2010, and was submitted on June 23, 2010. On June 24, 2010, the Senate
passed it 99-0, and the House passed it 408-8, with one voting “present.” President Obama
welcomed the passage and signed it into law on July 1, 2010.
As widely predicted, 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
represented in 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. 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 the “special
rule” exempting from sanctions 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. 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 have
numerous ways to circumvent its effects, including rationing, reducing gasoline subsidies in an
effort to reduce gasoline consumption; or offering premium prices to obscure gasoline suppliers.
Effect on Iran’s Gasoline Supplies
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.10 Others have ceased since the enactment of CISADA and some observers say that gasoline
deliveries to Iran have fallen from about 3.5 million barrels per day before CISADA to about
900,000 barrels per day in November 2010.11 As noted in a New York Times report of March 7,
2010,12 and a Government Accountability Office study released September 3, 2010,13 some firms
that have supplied Iran have received U.S. credit guarantees or contracts. However, it is clear that
most of the major gasoline suppliers have ceased dealing with Iran, as of some point in 2010.
10 Information in this section derived from, Blas, Javier. “Traders Cut Iran Petrol Line.” Financial Times, March 8,
2010.
11 Information provided at Foundation for Defense of Democracies conference on Iran. December 9, 2010.
12 Becker, Jo and Ron Nixon. “U.S. Enriches Companies Defying Its Policy on Iran.” New York Times, March 7, 2010.
13 GAO-10-967R. Exporters of Refined Petroleum Products to Iran. September 3, 2010.
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The main suppliers to Iran over the past few years, and the GAO-reported status of their sales to
Iran are listed below (with the caveat that some reports say that partners or affiliates of these
firms may still sell to Iran in cases where the corporate headquarters have announced a halt):
• Vitol of Switzerland (notified GAO it stopped selling to Iran in early 2010);
• Trafigura of Switzerland (notified GAO it stopped selling to Iran in November
2009);
• Glencore of Switzerland (notified GAO it stopped selling in September 2009);
• Total of France (notified GAO it stopped sales to Iran in May 2010);
• Reliance Industries of India (notified GAO it stopped sales to Iran in May 2009);
• Petronas of Malaysia (said on April 15, 2010, it had stopped sales to Iran);14
• Lukoil of Russia (reportedly to have ended sales to Iran in in April 2010,15
although some reports continue that Lukoil affiliates are supplying Iran);
• Royal Dutch Shell of the Netherlands (notified GAO it stopped sales in October
2009);
• Kuwait’s Independent Petroleum Group was supplying Iran,16 although it told
U.S. officials it is not doing so, as of September 2010;
• Tupras of Turkey (notified GAO it stopped selling to Iran as of enactment of
CISADA on July 1, 2010);
• British Petroleum of United Kingdom and Shell (are no longer selling aviation
fuel to Iran Air, according to U.S. State Department officials on September 30,
2010);
• 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.17
• 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.
According to the State Department, key shipping associations have created
clauses in their contracts that enable ship owners to refuse to deliver gasoline to
Iran;
• In addition to BP, various aviation gasoline suppliers at various airports in
Europe reportedly have suspended some refueling of Iran Air passenger aircraft
after enactment of CISADA. That reportedly has prompted Iran to threaten not to
refuel aircraft in Tehran belonging to some major European carriers. OMV of
Austria says it is continuing to refuel Iran Air in Vienna.
14 http://www.ft.com/cms/s/0/009370f0-486e-11df-9a5d-00144feab49a.html.
15 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
16 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
17 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
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• The State Department reported on September 30, 2010, that Hong Kong company
NYK Line Ltd. had ended shipping business with Iran (on any goods, not just
gasoline).
Firms Believed to Still Be Supplying Iran
• Zhuhai Zhenrong, Unipec, and China Oil of China are said by GAO to still be
selling to Iran and have not denied continuing sales to the GAO;
• Petroleos de Venezuela reportedly reached a September 2009 deal to supply Iran
with gasoline and is said to still be supplying Iran, although some reports say
stopping that activity may be under consideration);
• Emirates National Oil Company of UAE was reported by GAO to still be selling
to Iran. Some observers say two other UAE firms—Golden Crown and Royal
Oyster Group, may still be selling gasoline to Iran. Another UAE firm, Dragon
Oil, has note renewed a deal with Iran, which expired in July 2010, to swap oil
with Iran via Turkmentistan.)
• Hin Leong Trading of Singapore (reported by GAO to still be selling gasoline to
Iran).
Table 1. Comparison of Major Versions of H.R. 2194/P.L. 111-195
Final Law and Implementation
House Version
Senate Version
Status
General Goals and Overview:
Broader goals than House:
General y closer to the Senate
Seeks to expand the authorities of
sanctions sales of gasoline to Iran
version, but adds new provisions
the Iran Sanctions Act (ISA, P.L. 104-
similar to House version of H.R.
(not in either version) sanctioning
172) to deter sales by foreign
2194, but also would affect several
Iranians determined to be involved in
companies of gasoline to Iran.
other U.S. sanctions against Iran
human rights abuses and prohibiting
already in place, including revoking
transactions with foreign banks that
some exemptions to the U.S. ban on
conduct business with Revolutionary
imports from Iran.
Guard and U.N.-sanctioned Iranian
entities.
Statement of U.S. Policy on
Section 108 urges the President to
Section 104 (see below) contains
Sanctioning Iran’s Central Bank
use existing U.S. authorities to
sense of Congress urging U.S.
(Bank Markazi):
impose U.S. sanctions against the
sanctions against Iranian Central
Iranian Central Bank or other Iranian Bank and would prohibit U.S. bank
Section2(c) and 3(a) state that it
banks engaged in proliferation or
dealings with any financial institution
shall be U.S. policy to fully enforce
support of terrorist groups.
that helps the Central Bank facilitate
ISA to encourage foreign
circumvention of U.N. resolutions
governments:
Such authorities could include
on Iran.
Section 311 of the USA Patriot Act
- to cease investing in Iran’s energy
(31 U.S.C. 5318A), which authorizes
sector.
designation of foreign banks as “of
- to sanction Iran’s Central Bank and
primary money laundering concern”
other financial institutions that do
and thereby cut off their relations
business with the Iranian Central
with U.S. banks.
Bank (or any Iranian bank involved in
proliferation or support of terrorist
activities).
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Final Law and Implementation
House Version
Senate Version
Status
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 its
-or, the sale to Iran of refined
liquefied natural gas (LNG) sector.
petroleum products or ships,
Products whose sales is sanctionable
vehicles, or insurance or reinsurance
include LNG tankers and products
to provide such gasoline to Iran
to build pipelines used to transport
(same dollar values as sale of
oil or LNG. Includes aviation fuel in
equipment).
definition of refined petroleum.
Formally reduces investment
threshold to $20 million to trigger
sanctionability.
Expansion of ISA Sanctions:
Similar to House bill (Section
Section 102(b) amends ISA to add
102(a)).
add three sanctions to the existing
Section 3(b) would mandate certain
menu of six sanctions in ISA and
sanctions (not currently authorized
requires the President to impose 3
by ISA) on sel ers of the equipment,
out of the 9 specified sanctions on
gasoline, or services described in
entities determined to be violators.
Section 3(a) to include:
(As it previously existed, ISA
- prohibition of any transactions in
required the imposition of two out
foreign exchange with sanctioned
of six sanctions of the menu.)
entity;
- prohibition of credit or payments
to the sanctioned entity;
- and, prohibition on any
transactions involving U.S.-based
property of the sanctioned entity.
(These sanctions would be imposed
in addition to the required two out
of six sanctions currently specified in
ISA.)
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Final Law and Implementation
House Version
Senate Version
Status
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, within 90 days of
Section 3(b) also requires the heads
contract with a person who meets
enactment (by October 1, 2010) new
of U.S. Government agencies to
criteria of sanctionability in the act.
Federal Acquisition Regulations that
ensure that their agencies contract
Would not require the
mandate that firms to certify that
with firms that certify to the U.S.
bidding/contracting firm to certify its
they are not in violating of ISA as a
agency that they are not selling any
own compliance, thereby placing the
condition of receiving a U.S.
of the equipment, products, or
burden of verifying such compliance
government contract, and providing
services to Iran (gasoline and related on the U.S. executive agency.
for penalties for any falsification.
equipment and services) specified in
Section 3(a).
The Civilian Agency Acquisition
Council issued the needed
The section contains certain
regulations (interim ruling) on
penalties, such as prohibition on
September 29, 2010. Paperwork that
future bids for U.S. government
firms must sign making that
contracts, to be imposed on any firm
certification now included as part of
that makes a false certification about
their contract signature package.
such activity.
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
several proliferation-related
nuclear materials, facilities, or
Weapons 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.
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Final Law and Implementation
House Version
Senate Version
Status
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.
(Previously, 180 day period was 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.)
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.
“Special rule” invoked twice, as
discussed above.
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Final Law and Implementation
House Version
Senate Version
Status
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 an
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 above.)
provision is widely considered
controversial because export credit
Does include LNG as petroleum
agencies are arms of their
resources.
governments, and therefore
sanctioning such agencies is
considered a sanction against a
government.)
Congressional Research Service
18
Iran Sanctions
Final Law and Implementation
House Version
Senate Version
Status
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:
Section 103(b)(1) would ban al
Same as Senate version. However,
No provision
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,
Implementation: In July 2010,
informational material, articles used
Treasury Office of Foreign Assets
for humanitarian assistance to Iran,
Control issued a statement that,
or goods needed to ensure safe
effective September 29, 2010, the
operation of civilian aircraft.
general license for imports of Iranian
luxury goods will be eliminated (no
such imports allowed). This went
into effect that day.
Congressional Research Service
19
Iran Sanctions
Final Law and Implementation
House Version
Senate Version
Status
Freezing of Assets/Travel
Section 103(b)(3) mandates the
Similar to Senate version
Restriction on Revolutionary
President to freeze the assets of
Guard and Related Entities and
Iranian diplomats, IRGC, or other
Persons:
Iranian official personnel deemed a
threat to U.S. national security under
No provision
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
Section 104 would apply the
No provision
to 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
No provision
Contains new section (104) that
Financial Institutions that Help
requires the Treasury Department
Iran’s Sanctioned Entities:
to develop regulations (within 90
days of enactment) to prohibit U.S.
No provision
financial transactions with any foreign
financial institution that:
- facilitates efforts by the
Revolutionary Guard to acquire
WMD or fund terrorism
- facilitate the activities of any person
sanctioned under U.N. resolutions
on Iran.
- facilitates the efforts by Iran’s
Central Bank to support the Guard’s
WMD acquisition efforts or support
any U.N.- sanctioned entity
Implementation: Treasury Dept.
regulations implementing the
provision issued August 16, 2010.
Congressional Research Service
20
Iran Sanctions
Final Law and Implementation
House Version
Senate Version
Status
Sanctions on Iranian Human
No provision
Section 105 requires, within 90 days,
Rights 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.
On September 29, 2010, President
Obama issued Executive Order
13553 providing for these sanctions.
Eight Iranians sanctioned.
Sanctioning Certain
Section 105 prohibits U.S. executive
Section 106 of the conference report
Information Technology Sales
agencies from contracting with firms
is similar to Senate version.
to Iran:
that export sensitive technology to
Iran. “Sensitive technology” is
The contracting restriction is to be
No provision
defined as hardware, software,
imposed “pursuant to such
telecommunications equipment, or
regulations as the President may
other technology that restricts the
prescribe.”
free flow of information in Iran or
The contracting regulations issued
which monitor or restrict “speech”
September 29, 2010, “partial y”
of the people of Iran.
implement this requirement, with
further regulations to be issued.
Treasury Department
Section 106(b) authorizes $64.611
Section 109 authorizes $102 million
Authorization to prevent
million for FY2010 (and “such sums
for FY2011 and “sums as may be
misuse of the U.S. financial
as may be necessary” for FY2011 and necessary” for FY2012 and 2013 to
system by Iran or other
2012) for the Treasury Department’s the Treasury Department Office of
countries:
Office of Terrorism and Financial
Terrorism and Financial Intelligence.
Intelligence. The funds are
Another $100 million is authorized
No provision
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).
Congressional Research Service
21
Iran Sanctions
Final Law and Implementation
House Version
Senate Version
Status
Divestment:
Title II of the Senate bill (Section
Similar to Senate version
203) prevents criminal, civil, or
No provisions
administrative action against any
investment firm or officer or adviser
based on its decision to divest from
securities that:
- have investments or operations in
Sudan described in the Sudan
Accountability and Divestment Act
of 2007
- or, engage in investments in Iran
that would be considered
sanctionable by the Senate bill.
Prevention of Transshipment,
Section 302 requires a report by the
Similar to Senate version, but does
Reexportation, or Diversion of
Director of National Intelligence that not provide for prior negotiations
Sensitive Items to Iran:
identifies all countries considered a
before designating a country as a
concern to al ow transshipment or
“Destination of Possible Diversion
No provision
diversion of WMD-related
Concern.”
technology to Iran (technically:
“items subject to the provision of
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.
Congressional Research Service
22
Iran Sanctions
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)
Total (France)/ENI (Italy)
$1 billion 205,000
bpd
1999
(Energy Information Agency, Department of Energy, August 2006.)
Total and ENI exempted from sanctions on September 30 because of pledge to exit Iran
market
April
Balal (oil)
Total/ 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.)
Royal Dutch exempted from sanctions on 9/30 because of pledge to exit Iran market
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
ENI exempted 9/30 based on pledge to exit Iran market
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.
ENI exempted from sanctions on 9/30, as discussed above
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
CRS-23
Iran Sanctions
Company(ies)/Status
Date Field/Project
(If Known)
Value Output/Goal
(“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
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
(Exempted from sanctions on 9/30 because Statoil pledged to exit Iran market
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
October 15, 2010: Inpex announced it would exit the project by selling its stake; “special rule” 2009
billion
exempting it from ISA investigation invoked November 17, 2010.
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
CRS-24
Iran Sanctions
Company(ies)/Status
Date Field/Project
(If Known)
Value Output/Goal
(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.
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/
CRS-25
Iran Sanctions
Company(ies)/Status
Date Field/Project
(If Known)
Value Output/Goal
bizchina/2009-01/16/content_7403699.htm.)
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.)
State Dept. said on September 30, 2010, that Royal Dutch Shel and Repsol have ended negotiations with
Iran and will not pursue this project any further
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-26
Iran Sanctions
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-27
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 12959.18 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). As noted above, in accordance with CISADA, the strict ban on imports from Iran was
restored on September 29, 2010; the ban on exports to Iran was altered only slightly by CISADA.
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 (Section 560.528 of Title 31, C.F.R.). 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). (A provision of H.R. 6296 would prevent these sales to Iran.)
• 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 Iranian Transactions Regulations (ITR’s), the ban does not
apply to personal communications (phone calls, e-mails), or to humanitarian
donations. U.S. non-government organizations (NGOs) require a specific license
to operate in Iran, and 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,
18 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
28
Iran Sanctions
plant and animal conservation, and medical training in Iran. Private letters of
credit can be used to finance approved transactions, but no U.S. government
credit guarantees are available, and U.S. exporters are not permitted to deal
directly with Iranian banks. The FY2001 agriculture appropriations law (P.L.
106-387) contained a provision banning the use of official credit guarantees for
food and medical sales to Iran and other countries on the U.S. terrorism list,
except Cuba, although allowing for a presidential waiver to permit such credit
guarantees. No U.S. Administration has authorized credit guarantees, to date.
• In April 2000, the trade ban was further eased to allow U.S. importation of
Iranian nuts, dried fruits, carpets, and caviar. 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.
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:
• U.S. energy equipment firms. Some subsidiaries of such firms may still be in the
Iranian market, according to their “10-K” filings with the Securities and
Exchange Commission. These include Natco Group,19 Overseas Shipholding
Group,20 UOP (United Oil Products, a Honeywell subsidiary based in Britain),21
Itron22, Fluor,23 Flowserve,24 Parker Drilling, Vantage Energy Services,25
Weatherford,26and a few others. UOP reportedly sells refinery equipment to Iran;
19 Form 10-K Filed for fiscal year ended December 31, 2008.
20 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.
21 New York Times, March 7, 2010, cited previously.
22 Subsidiaries of the Registrant at December 31, 2009. http://www.sec.gov/Archives/edgar/data/780571/
000078057110000007/ex_21-1.htm.
23 “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.
24 Form 10-K for Fiscal year ended December 31, 2009.
25 Form 10-K for Fiscal year ended December 31, 2007.
26 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
new such sales are now potentially sanctionable under ISA, as modified by
CISADA.
• 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.
• Transammonia Corp., via a Swiss-based subsidiary, is said to be conducting
business with Iran to help it export ammonia, a growth export for Iran.
Subsidiaries Exiting Iran
• Chemical manufacturer Huntsman announced in January 2010 its subsidiaries
would halt sales to Iran.
• 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)27—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.
• Oilfield services firm Smith International said on March 1, 2010, it would stop
sales to Iran by its subsidiaries.
• 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.28 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.29
• 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.30
27 “Iran Says Halliburton Won Drilling Contract.” Washington Times, January 11, 2005.
28 Nixon, Ron. “2 Corporations Say Business With Tehran Will Be Curbed.” New York Times, March 11, 2010.
29 “Caterpillar Says Tightens ‘No-Iran’ Business Policy.” Reuters, March 1, 2010.
30 Baker, Peter. “U.S. and Foreign Companies Feeling Pressure to Sever Ties With Iran.” New York Times, April 24,
2010.
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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. (A provision of
H.R. 6296 would apply this sanction.)
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 all civilian goods. A very wide range of foreign firms still
conduct 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 that apparently continue to do business in/with Iran 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; 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.
Foreign Firms Exiting Iran
In August 2010, Japan and South Korea announced that their automakers Toyota and Hyundai,
respectively would conduct no new business with Iran. ABB made a similar announcement
regarding its products in January 2010. Thyssen-Krupp, a German steelmaker, said on September
23, 2010, it would end all business with Iran. Germany’s Daimler (Mercedes-Benz maker) said in
April 2010 it would freeze planned exports to Iran of cars and trucks. 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 press articles and in the December 1, 2010 House Foreign Affairs Committee hearing
discussed above, the large oil services firm Schlumberger, which in incorporated in the
Netherlands Antilles, has said it will wind down its business with Iran. However, press reports
citing company documents say all contracts with Iran might not be terminated until at least
2013.31
Iranian Investment in Foreign Firms
Other questions have arisen over how U.S. sanctions might apply to business with foreign firms
that Iran might acquire a full or partial interest in. Such firms include Daewoo Electronics of
South Korea, where an Iranian firm—Entekhab Industrial Corp.—is a leading bidder to take over
that firm. Another example is Adabank of Turkey, which reportedly might be sold to Iran.
31 Stockman, Farah. “Oil Firm Says It Will Withdraw From Iran.” Boston Globe, November 12, 2010.
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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. Under
Secretary Levey said on September 20, 2010, that “Today, Iran is effectively unable to access
financial services from reputable banks and is increasingly unable to conduct major transactions
in dollars or Euros.”33 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.”
Treasury’s designations of affiliates and ships belong to Islamic Republic of Iran Shipping Lines
(IRISL) have harmed Iran’s ability to ship goods and raised the prices of goods to Iranian import-
export dealers. Some ships have been impounded by various countries for non-payment of debts
due on them.
In other accomplishments, Treasury and State Departments officials said in early 2010 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,34
and some banks in Asia (primarily South Korea and Japan) and the rest of the Middle East have
done the same. The pullout by major banks predated CISADA which, as noted in the legislation
table above, contains a provision sanctioning foreign banks that deal with Iran’s Revolutionary
Guard, its affiliates, or entities sanctioned by the United Nations. This continued a U.S. trend of
attempting to target the Guard and its corporate arms and suppliers. The EU sanctions imposed
July 27, 2010, appear to align the EU with the United States by designating numerous Guard
entities as subject to asset freezes. The list of Guard entities sanctioned is in the table at the end of
this report.
The July 27, 2010, EU sanctions, as well as sanctions imposed by Japan and South Korea, impose
restrictions on banking relationships with Iran and generally prohibit the opening of any new
branches of Iranian banks in these countries.
Prior to CISADA, some of these results have came about through U.S. pressure. In 2004, the
Treasury Department fined UBS $100 million for the unauthorized movement of U.S. dollars to
32 Hearing of the Financial Services and General Government Subcommittee of the House Appropriations Committee,
Federal News Service, May 21, 2009.
33 Speech by Stuart Levey before the Center for Strategic and International Studies. September 20, 2010.
34 Mufson, Steven and Robin Wright. “Iran Adapts to Economic Pressure.” Washington Post, October 29, 2007.
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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 earlier action intended to cut Iran off from the U.S. banking system, on September 6, 2006, the
Treasury Department barred U.S. banks from handling any indirect transactions (“U-turn
transactions, meaning transactions with non-Iranian foreign banks that are handling transactions
on behalf of an Iranian bank) with Iran’s Bank Saderat (see above), which the Administration
accuses of providing funds to Hezbollah.35 Bank Sepah is subject to asset freezes and transactions
limitations as a result of Resolutions 1737 and 1747. The Treasury Department extended that U-
Turn restriction to all Iranian banks on November 6, 2008.
Thus far, the Treasury Department has not designated any bank as a “money laundering entity”
for Iran-related transactions (under Section 311 of the USA Patriot Act). 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 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.
Terrorism List Designation-Related Sanctions
Several U.S. sanctions are in effect as a result of Iran’s presence on the U.S. “terrorism list.” The
list was established by Section 6(j) of the Export Administration Act of 1979 (P.L. 96-72, as
amended), sanctioning countries determined to have provided repeated support for acts of
international terrorism. Iran was added to the list in January 1984, following the October 1983
bombing of the U.S. Marine barracks in Lebanon (believed perpetrated by Hezbollah). Sanctions
imposed as a consequence include a ban on U.S. foreign aid to Iran; restrictions on U.S. exports
to Iran of dual use items; and requires the United States to vote against international loans to Iran.
35 Kessler, Glenn. “U.S. Moves to Isolate Iranian Banks.” Washington Post, September 9, 2006.
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Iran Sanctions
• The terrorism list designation restricts sales of U.S. dual use items (Export
Administration Act, as continued through presidential authorities under the
International Emergency Economic Powers Act, IEEPA, as implemented by
executive orders), and, under other laws, bans direct U.S. financial assistance
(Section 620A of the Foreign Assistance Act, FAA, P.L. 87-195) and arms sales
(Section 40 of the Arms Export Control Act, P.L. 95-92, as amended), and
requires the United States to vote to oppose multilateral lending to the designated
countries (Section 327 of the Anti-Terrorism and Effective Death Penalty Act of
1996, P.L. 104-132). Waivers are provided under these laws, but successive
foreign aid appropriations laws since the late 1980s ban direct assistance to Iran
(loans, credits, insurance, Ex-Im Bank 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, which also contains the names
of Iranian entities sanctioned under other orders and under United Nations resolutions pertaining
to Iran’s nuclear program.
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Proliferation-Related Sanctions
Iran is prevented from receiving advanced technology from the United States under relevant and
Iran-specific anti-proliferation laws36 and by Executive Order 13382 (June 28, 2005). Some of
these laws and executive measures seek to penalize foreign firms and countries that provide
equipment to Iran’s WMD programs.
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.37 (A Continuing Resolution for FY2009, which funded the U.S. government through
March 2009, waived this law to allow NASA to continue to use Russian vehicles to access the
International Space Station.)
36 Such laws include the Atomic Energy Act of 1954 and the Energy Policy Act of 2005 (P.L. 109-58).
37 The provision contains certain exceptions to ensure the safety of astronauts, but it nonetheless threatened to limit
U.S. access to the international space station after April 2006, when Russia started charging the United States for
transportation on its Soyuz spacecraft. Legislation in the 109th Congress (S. 1713, P.L. 109-112) amended the provision
in order to facilitate continued U.S. access and extended INA sanctions provisions to Syria.
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Executive Order 13382
Executive Order 13382 (June 28, 2005) 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 report lists Iran-related entities sanctioned under the Order.
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 of Proliferation Sanctions
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 U.S. and U.N. sanctions, Iran has used loopholes and other devices, such as front
companies, to elude U.S. and international sanctions. Some of these efforts focus on countries
perceived as having lax enforcement of export control laws, such as UAE and Malaysia. In some
cases, Iran has been able, according to some reports, to obtain sophisticated technology even from
U.S. firms.38 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).39 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
38 Warrick, Joby. “Iran Using Fronts to Get Bomb Parts From U.S.” Washington Post, January 11, 2009; Institute for
Science and International Security. “Iranian Entities’ Illicit Military Procurement Networks.” David Albright, Paul
Brannan, and Andrea Scheel. January 12, 2009.
39 For information on the steps taken by individual states, see National Conference of State Legislatures. State
Divestment Legislation.
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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).
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.
In the 111th Congress, 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
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2008.40 Perhaps to avoid further embarrassment, Siemens announced on January 27, 2010, that it
would stop signing new business deals in Iran as of mid-2010.41
Also in line with this trend, on March 8, 2010, OFAC amended the Iran Transactions Regulations
that implement the U.S.-Iran trade ban to provide for a general license for providing to Iranians
free mass market software in order to facilitate internet communications. The ruling appears to
incorporate the major features of a legislative proposal, H.R. 4301, the “Iran Digital
Empowerment Act.” The OFAC determination required a waiver of the provision of the Iran-Iraq
Arms Nonproliferation Act (Section 1606 waiver provision) discussed above.
Measures to Sanction Human Rights Abuses and Promote
the Opposition
Another 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.
On September 29, 2010, the Administration implemented the CISADA provision when President
Obama signed an executive order providing for the CISADA sanctions against Iranians
determined to be responsible for or complicit in post-2009 Iran election human rights abuses.
Along with the Order, an initial group of eight Iranian officials were penalized, including
Mohammad Ali Jafari, the commander-in-chief of the IRGC, and several other officials who were
in key security or judicial positions at the time of the June 2009 election and aftermath.
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.
It is possible that measures such as this might be revisited in the 112th Congress. Some members
who supported legislation such as this in the past have been named to committee chairmanships
and other prominent positions. One example is incoming House Foreign Affairs Committee
Chairwoman Ileana Ros-Lehtinen who has, in statements in December 2010, said the
Administration and Congress should do more to openly support the Iranian opposition Green
movement.
40 Rhoads, Christopher. “Iran’s Web Spying Aided by Western Technology.” Wall Street Journal, June 22, 2009.
41 End, Aurelia. “Siemens Quits Iran Amid Mounting Diplomatic Tensions.” Agence France Press, January 27, 2010.
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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.42
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.
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:43
42 See CRS Report RL31258, Suits Against Terrorist States by Victims of Terrorism, by Jennifer K. Elsea.
43 Text of the resolution is at http://www.isis-online.org/uploads/isis-reports/documents/
Draft_resolution_on_Iran_annexes.pdf.
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• It adds several firms affiliated with the Revolutionary Guard firms to the list of
sanctioned entities.
• 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 authorizes the establishment of a “panel of experts,” which the
Obama Administration says will be chaired by arms control official Robert
Einhorn, to assess the effect of the resolution and previous Iran resolutions and
suggest ways of more effective implementation.
• The resolution did not make mandatory some measures discussed in press reports
on the negotiations, including barring any foreign investment in Iranian bond
offerings; banning insurance for transport contracts for shipments involving Iran;
banning international investment in Iran’s energy sector; banning the provision of
trade credits to Iran, or banning all financial dealings with Iranian banks.
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Table 3. Summary of Provisions of U.N. Resolutions on Iran Nuclear Program
(1737, 1747, 1803, and 1929)
Require Iran to suspend uranium enrichment, and to refrain from any development of ballistic missiles that are
nuclear capable (1929)
Prohibit transfer to Iran of nuclear, missile, and dual use items to Iran, except for use in light-water reactors
Prohibit Iran from exporting arms or WMD-useful technology
Prohibit Iran from investing abroad in uranium mining, related nuclear technologies or nuclear capable ballistic missile
technology
Freeze the assets of over 80 named Iranian persons and entities, including Bank Sepah, and several corporate affiliates
of the Revolutionary Guard.
Require that countries ban the travel of over 40 named Iranians
Mandates that countries not export major combat systems to Iran
Calls for “vigilance” (a non-binding call to cut off business) with respect to all Iranian banks, particularly Bank Melli and
Bank Saderat.
Calls for vigilance (voluntary restraint) with respect to providing international lending to Iran and providing trade
credits and other financing and financial interactions.
Calls on countries to inspect cargoes carried by Iran Air Cargo and Islamic Republic of Iran Shipping Lines—or by any
ships in national or international waters—if there are indications they carry cargo banned for carriage to Iran.
Searches in international waters would require concurrence of the country where the ship is registered.
A Sanctions Committee, composed of the fifteen members of the Security Council, monitors Implementation of all
Iran sanctions and collects and disseminates information on Iranian violations and other entities involved in banned
activities. A “panel of experts” is empowered by 1929 to make recommendations for improved enforcement.
Source: Text of U.N. Security Council resolutions 1737, 1747, 1803, and 1929. http://www.un.org. More
information on specific provisions of each of these resolutions is in CRS Report. CRS Report RL32048, Iran: U.S.
Concerns and Policy Responses, by Kenneth Katzman.
Other Foreign Country Sanctions
U.S. allies have supported the Obama Administration’s sanctions 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 gradually
converging since 2002, when the nuclear issue came to the fore, but as of 2010, an unprecedented
degree of global consensus appears to be emerging on how to deal with Iran.
In its July 27, 2010, sanctions measures, the product of consensus among the EU states, the EU
countries imposed sanctions on Iran that exceed those mandated in Security Council resolutions.
Norway is not an EU member but has announced it will adopt the EU sanctions package. 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. 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. The EU
clarified in late October 2010, that its sanctions against Iran do not ban importation of Iranian oil
and gas, nor do they ban exports of gasoline to Iran. However, as discussed, EU companies that
do sell gasoline to Iran might open themselves to U.S. penalties under ISA, as amended by
CISADA. There is also the potential for the EU sanctions to force the closure of a BP-NIOC joint
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Iran Sanctions
venture in the Rhum gas field, 200 miles off the coast of Scotland. Doing so would likely be up to
BP to decide, judging whether continuing the venture could open BP to ISA sanctions, although
ISA is generally viewed as applying to oil and gas fields in Iranian territory.
Concurrent with the EU announcement of major sanctions on July 27, not only Norway but also
Canada and Australia announced similar, although less sweeping, Iran sanctions. This was
followed by a series of high-level U.S. visits to numerous countries to try to persuade them to
align their policies with those of the United States and the EU. Countries visited included China,
which is to be a particular focus because of its energy relations with Iran, UAE, Japan, South
Korea, Lebanon, Bahrain, Brazil, and Ecuador. In early September 2010, Japan and then South
Korea announced Iran sanctions similar to those of the EU—in particular limiting trade financing
for Iran, limiting new banking relations with Iran, sanctioning numerous named Iranian entities,
and restricting new projects in Iran’s energy sector.
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. (A provision of H.R. 6296 would make sanctionable under ISA the purchase of Iranian
sovereign debt).
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
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
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. (A provision of H.R.
6296—Title VII—would cut off U.S. contributions to the World Bank, International Finance
Corp., and the Multilateral Investment Guarantee Corp. if the World Bank approves a new
Country Assistance Strategy for Iran or makes a loan to Iran. A Senate companion, S. 4008, does
not have this provision.)
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
Implementation by EU (July 27,
2010) and Some Allied
U.S. Sanctions
U.N. Sanctions
Countries
General Observation: Most
Increasingly sweeping, but still
EU abides by all U.N. sanctions on
sweeping sanctions on Iran of
intended to primarily target Iran’s
Iran, but new package of Iran
virtually any 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.
Japan and South Korean sanctions
(September 2010) similar to EU.
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, Japan, and South Korea
measures ban “medium and long
There is an exemption for sales to
term” trade financing and financing
Iran of food and medical products,
guarantees. Short term financing is
but no trade financing or financing
permitted, but there is a cal for EU
guarantees are permitted.
states to “exercise restraint” on
that.
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Iran Sanctions
Implementation by EU (July 27,
2010) and Some Allied
U.S. Sanctions
U.N. Sanctions
Countries
Sanctions on Foreign Firms that
No U.N. equivalent exists. However,
July 27, 2010, EU sanctions prohibit
Do Business With Iran’s Energy
preambular language in Resolution
EU companies from financing energy
Sector:
1929 “not[es] the potential
sector projects in Iran (a de-facto
connection between Iran’s revenues
ban on energy sector investment)
The Iran Sanctions Act, P.L. 104-172
derived from its energy sector and
and ban sales to Iran of equipment
(as amended most recently by the
the funding of Iran’s proliferation-
or services for its energy sector,
Comprehensive Iran Sanctions,
sensitive nuclear activities.” This
including projects outside Iran. No
Accountability, and Divestment Act
wording is interpreted by most
ban on buying oil or gas from Iran
of 2010, P.L. 111-195) mandates
observers as providing U.N. support
or selling gasoline to Iran.
specified sanctions on foreign firms
for countries who want to ban their
that invest threshold amounts in
companies from investing in Iran’s
Japan and South Korean measures
Iran’s Energy Sector or that sell
energy sector.
ban new energy projects in Iran and
certain threshold amounts of refined
call for restraint on ongoing
petroleum or refinery related
projects.
equipment or services to Iran.
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
Japan and South Korea measures
the U.S. list of “state sponsors of
did not specifically ban aid or
terrorism.” Iran has been on this
lending to Iran.
“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,
No similar Japan and South Korean
(AECA, P.L. 95-92). The International or related spare parts or advisory
measures announced, but neither
Trafficking in Arms Regulations
services for such weapons systems.
has exported arms to Iran.
(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-
Japan announced ful adherence to
72) and Section 38 of the Arms
strict export control regimes when
Export Control Act, there is a denial
evaluating sales to Iran.
of license applications to sell Iran
goods that could have military
applications.
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Iran Sanctions
Implementation by EU (July 27,
2010) and Some Allied
U.S. Sanctions
U.N. Sanctions
Countries
Sanctions Against International
Resolution 1747 (oper. paragraph 7)
The July 27, 2010, measures
Lending to Iran:
requests, but does not mandate, that
prohibit EU members from
countries and international financial
providing grants, aid, and
Under Section 1621 of the
institutions refrain from making
concessional loans to Iran, including
International Financial Institutions
grants or loans to Iran, except for
through international financial
Act (P.L. 95-118), U.S.
development and humanitarian
institutions.
representatives to international
purposes.
financial institutions, such as the
No specific similar Japan or South
World Bank, are required to vote
Korea measures announced.
against loans to Iran by those
institutions.
Sanctions Against Foreign Firms Resolution 1737 (oper. paragraph 12) The EU measures imposed July 27,
that Sell Weapons of Mass
imposes a worldwide freeze on the
2010, commit the EU to freezing
Destruction-Related Technology assets and property of Iranian entities the assets of entities named in the
to Iran:
named in an Annex to the
U.N. resolutions, as well as
Resolution. Each subsequent
numerous other named Iranian
Several laws and regulations,
Resolution has expanded the list of
entities.
including the Iran-Syria North Korea
Iranian entities subject to these
Nonproliferation Act (P.L. 106-178),
sanctions.
Japan and South Korea froze assets
the Iran-Iraq Arms Nonproliferation
of U.N.-sanctioned entities.
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
No direct equivalent
No direct equivalent, but EU
Terrorism 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 1747 assets.
supporting international terrorism.
(oper. paragraph 5) bans Iran from
Numerous entities, including some of exporting any arms—a provision
Iranian origin, have been so
widely interpreted as trying to
designated.
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
Japan and South Korea announced
blocking of U.S.-based property, and
subject to the ban. However, the
bans on named Iranians.
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.
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Iran Sanctions
Implementation by EU (July 27,
2010) and Some Allied
U.S. Sanctions
U.N. Sanctions
Countries
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.
Japan and South Korean measures
take similar actions against IRISL and
Iran Air.
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
Japan and South Korea measures
with U.S. banks for any foreign bank
similar to the above, with South
that conducts transactions with Iran’s
Korea adhering to the same 40,000
Revolutionary Guard or with Iranian
Euro authorization requirement.
entities sanctioned under the various
Japan and S. Korea froze the assets
U.N. resolutions.
of 15 Iranian banks; South Korea
targeted Bank Mellat for freeze.
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.
Effects of U.S., U.N., and Other Country Sanctions
The effectiveness of U.S. and international sanctions on Iran is often difficult to measure, but
U.S. officials appear increasingly convinced that the sanctions are compounding the
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mismanagement and other structural inadequacies of Iran’s economy. The economic difficulties
are widening splits in Iran’s leadership and could cause its leaders to reconsider major foreign
policy decisions. This is evident not only from anecdotal and measurable indicators, but also from
some statements from Iranian officials. For example, in September 2010, a senior leader, Ali
Akbar Hashemi-Rafsanjani, criticized Ahmadinejad for dismissing the effect of the burgeoning
sanctions on Iran’s economy. In late September, the value of Iran’s currency, the rial, fell by about
15% when the UAE, a major financial hub for Iran, began restricting transactions with Iranian
banks sanctioned by U.N. resolutions and by the United States. On December 13, 2010, President
Mahmoud Ahmadinejad fired Foreign Minister Manuchehr Mottaki apparently for failing to
prevent the imposition of the various sets of sanctions during summer 2010.
Some of the effects of sanctions on Iran’s economy were discussed in the speech by Treasury
Under Secretary Levey on September 20, 2010, referenced above. He also, in that speech, noted
the effect of Iranian mismanagement on Iran’s economic difficulty, separate from sanctions. For
example, Iran’s banks have a high percentage (20%) of loans that are non-performing because of
practices of lending to well connected Iranians rather than judging them on their creditworthiness.
U.S. officials stress, in late 2010, that the sanctions are only beginning to apply pressure on Iran’s
economy. At various conferences, some Administration officials have urged to allow time for the
existing sanctions to work, rather than to turn immediately to additional sanctions. Some
legislative proposals for additional sanctions are discussed above, for example as contained in
H.R. 6296. In addition, at an Iran-related conference on December 10, 2010, White House
proliferation adviser Gary Samore said that new sanctions might be considered by the United
States and partner countries.45 Most experts believe that the most effective sanction would be an
embargo on the purchase of Iranian crude oil, although he did not indicate that such a step would
be proposed or achieve consensus. With the United States and Europe seeking to boost economic
growth, a further increase in oil prices—the likely result of such a move—would appear unlikely
to attract broad support.
Effect on Nuclear Development
There is a consensus that U.S. and U.N. sanctions have not, to date, accomplished their core
strategic objective of causing a demonstrable shift in Iran’s commitment to its nuclear program.
However, some observers see signs of movement. At a conference in Australia on November 8,
2010, Secretary of Defense Gates, referring to ways to prevent Iran from becoming a nuclear
power, said that the “political, economic approach that we are taking is in fact having an impact
in Iran.”
In September 2010, during Ahmadinejad’s visit to the U.N. General Assembly in New York, he
and other Iranian officials said that Iran did want to restart talks on its nuclear program and on
other issues of concern to Iran. On November 9, 2010, Iran’s Foreign Minister offered to resume
talks but requesting they take place in Turkey, which is considered somewhat sympathetic to
Iran’s arguments about its nuclear program. In late November 2010, Iran accepted a December 6,
2010 date to conduct new talks, and it accepted the U.S. and partner request that they take place
in Geneva. However, during two days of talks (December 6 and 7), Iran did not agree to curbs on
45 Sanger, David. “Harder Push to Stop Iran From Making Nuclear Fuel.” New York Times, December 11, 2010.
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its enrichment of uranium, the core U.S. demand. However, there was an agreement to have new
talks, in Turkey, in the near future (no firm date set as of this time).
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. In October 2010, Iran said it had arrested several “nuclear spies,” suggesting that some
Iranians involved in the nuclear program may not be loyal to the government. A November 16,
2010 report by the International Atomic Energy Agency (IAEA) said that Iran’s program has
encountered technical difficulties but that Iran continued to expand its stockpile of low-enriched
uranium.46 This could indicate that sanctions are preventing Iran from obtaining some of the
materials or technology it needs to maintain its development of its nuclear program.
General Politico-Economic Effects
What appears to be clear to observers is that numerous major international firms have become
unwilling to risk their position in the U.S. market to do business with an increasingly isolated
Iran. Several examples of major firms leaving Iran have been noted throughout this paper. Many
experts believe that, over time, the efficiency and output of Iran’s economy will decline as foreign
expertise departs and Iran invites in or makes purchases from less capable foreign companies.
However, precise estimates on how Iran’s Gross Domestic Product might be affected by sanctions
is not available.
There has been no broad uprising against the regime in 2010 triggered by the economic effects of
sanctions on Iran. However, anecdotal reports suggest that many Iranians, particularly in the
middle class, which has expanded under the Islamic regime, are blaming the regime for economic
difficulties. There has been unrest among small and large merchants who are having trouble
obtaining trade financing, insurance, and shipping availability, which is driving up their costs.
The difficulties felt by the merchant community could have contributed to a 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. An
agreement was eventually reached under which taxation only went up 15%.
To prevent broader unrest, the government is attempting to mollify the much larger lower class
and lower middle class (about 60 million of Iran’s 75 million population) with a new cash
subsidies program. Under the program, which was expected to take effect early in December
2010, subsidies on staple goods will be phased out, but the lower and lower middle class will be
compensated with direct cash payments of about $40 per month.47 These same reports indicate
that the regime has deployed security forces around Tehran to deter protests by those in the
middle class who might feel deprived by this new program.
46 The text of the report is at: http://www.isis-online.org/uploads/isis-reports/documents/Iran_report-nov23.pdf.
47 Erdbink, Thomas. “Leaving Iran’s Middle Class Behind.” Washington Post, November 7, 2010.
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Effect on the Energy Sector
As noted throughout, the U.S. objective has been to target sanctions against Iran’s energy sector,
considered the engine of Iran’s economy and source of most of its revenue. Depriving the regime
of revenue, it is believed, will reduce its ability to enlist and maintain the loyalty of security
personnel or to buy off key interest groups. There are clear indications that the sanctions—
coupled with the overall sense that Iran is isolated from the international community—are
causing substantial injury to this sector. Assistant Secretary Einhorn testified on July 29, 2010,
that about $50 billion in investment in Iran’s energy sector had been deterred by sanctions and
other forms of pressure. As noted above, several major European firms have either announced
pullouts from some of their Iran projects, declined to make further investments, or resold their
investments to other companies. The actions to deny Iran financing have, according to the
International Monetary Fund, partly dried up financing for energy industry and other projects in
Iran. Observers at key energy fields in Iran say there is little evidence of foreign investment
activity and little new development activity sighted, including at the large South Pars gas field
that Iran has focused on for at least 10 years.
There has been a concern that some of the investment void might be “backfilled,” at least partly,
by Asian firms such as those from China, Malaysia, Vietnam, and countries in Eastern Europe.
Russian firms are said to be in talks with Iran on new energy projects. However, many such deals
are said to be in preliminary stages, and clear examples of “backfilling” are few, to date. most of
these companies are perceived as not being as technically capable as those that have withdrawn
from Iran. 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.48 Khatem ol-Anbiya took
over that project in 2006 when Norway’s Kvaerner pulled out of it. It is likely that the IRGC
perceived its involvement as likely to scare away foreign participation in the work because U.S.
and U.N. sanctions are targeting the IRGC 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, and is projected to fall to about 3.3 mbd by
2015.49 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 2015.50
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 successive administrations had imposed
sanctions available in U.S. law, and have expressed frustration that the executive branch has not
imposed ISA sanctions.
48 “Iran Revolutionary Guards Pull Out of Gas Deal Over Sanctions.” Platts, July 19, 2010.
49 http://online.wsj.com/article/SB10001424052748704569204575328851816763476.html.
50 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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Gasoline Availability and Importation
Sanctions have clearly reduced the amount of gasoline Iran is importing. Earlier in this report was
discussion of announcements by many major gasoline suppliers and insurers that they had ended
supplying or ensuring shipments to Iran. However, as of late September 2010, Iranian officials
have said they have largely coped with the reduction in gasoline imports. According to these
officials, there have not been gasoline shortages or gasoline rationing, although some Iranian
oppositionists have reported otherwise. Iran has coped by converting at least two petrochemical
plants to gasoline production, through a generally inferior process that initially produces benzene.
The gasoline produced reportedly has led to a large increase in air pollution in Tehran, which was
expected. Iran also says it has accelerated renovations and other improvements to existing
gasoline refineries, allocating $2.2 billion for that purpose.
Some expect Iran could also cut gasoline subsidies (gasoline is now about 40 cents per gallon
because it is subsidized), thus allowing the price to rise, or even begin systematic rationing.
Building new refining capacity appears to be Iran’s long term effort to reduce this vulnerability.
Iran’s deputy oil minister said in July 2010 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.
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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)
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
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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
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
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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
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
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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
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
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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
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)
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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 on November 30, 2010 under E.O. 13382
- Pearl Energy Company (formed by First East Export Bank , a subsidiary of Bank Mel at
- Pearl Energy Services, SA
- Ali Afzali (high official of First East Export Bank)
- IRISL front companies: Ashtead Shipping, Byfleet Shipping, Cobham Shipping, Dorking Shipping, Effingham Shipping, Farnham
Shipping, Gomshal Shipping, and Horsham Shipping (al located in the Isle of Man).
- IRISL and affiliate officials: Mohammad Hosein Dajmar, Gholamhossein Golpavar, Hassan Jalil Zadeh, and Mohammad Haji Pajand.
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
Entities Sanctioned Under the Iran North Korea Syria Non-Proliferation Act and other U.S. Proliferation Laws
(Executive Order 12938)
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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);
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
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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
Iranians Sanctioned Under September 29, 2010, Executive Order 13553 on Human Rights Abusers
1. IRGC Commander Mohammad Ali Jafari
Al sanctioned on September 29, 2010
2. Minister of Interior at time of June 2009 elections Sadeq Mahsouli
3. Minister of Intelligence at time of elections Qolam Hossein
Mohseni-Ejei
4. Tehran Prosecutor General at time of elections Saeed Mortazavi
5. Minister of Intelligence Heydar Moslehi
6. Former Defense Minister Mostafa Mohammad Naj ar
7. Deputy National Police Chief Ahmad Reza Radan
8. Basij (security militia) Commander at time of elections Hossein
Taeb
Author Contact Information
Kenneth Katzman
Specialist in Middle Eastern Affairs
kkatzman@crs.loc.gov, 7-7612
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