Iran Sanctions
Kenneth Katzman
Specialist in Middle Eastern Affairs
July 16, 2012
Congressional Research Service
7-5700
www.crs.gov
RS20871
CRS Report for Congress
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Iran Sanctions
Summary
The current principal objective of international sanctions—to compel Iran to verifiably
demonstrate that its nuclear program is for purely peaceful uses—may be on its way to
achievement but has not been accomplished to date. The international coalition that is imposing
progressively strict economic sanctions on Iran has broadened and deepened, producing
significant effects on Iran’s economy. U.S. officials believe that these sanctions—which are now
harming Iran’s oil export lifeline—caused Iran to return to the nuclear bargaining table in 2012
with greater apparent intent toward resolution. Many judge that Iran needs an easing of sanctions
because the energy sector provides nearly 70% of Iran’s government revenues. Iran’s worsening
economic situation is caused by:
• A decision by the European Union on January 23, 2012, to wind down purchases
of Iranian crude oil by July 1, 2012. EU countries buy about 20% of Iran’s oil
exports. This embargo is coupled with decisions by several other Iranian oil
customers to substantially reduce purchases of Iranian oil in order to comply with
a provision of the FY2012 National Defense Authorization Act (P.L. 112-81,
signed December 31, 2011).
• Together, these sanctions have reduced Iranian oil exports to about 1.2 million to
1.8 million barrels per day, down from an average of 2.5 million barrels per day
for all of 2011, according to the Energy Information Administration in June 2012.
This loss of sales is causing Iran to store oil aboard tankers and to reduce
production somewhat. Once the EU embargo is fully implemented, Iran’s oil
sales might fall further, and Iran is widely assessed as unable to indefinitely
sustain that level of lost oil sales. The Iran oil purchase reductions also symbolize
burgeoning international cooperation with U.S. and allied attempts to pressure
Iran significantly.
• The willingness of other oil producers with spare capacity, particularly Saudi
Arabia, a strategic rival, to sell additional oil to countries cutting Iranian oil buys.
The signs of economic pressure on Iran are multiplying. The value of Iran’s rial has dropped by
about 50% since September 2011. Iran is virtually cut off from the international banking system
and is increasingly forced to trade through barter arrangements rather than hard currency
exchange. Many major international firms have left the Iran market, many Iranian firms are
reported to be closing and laying off workers, and the effect on the energy sector has been further
deterioration of its oil and gas production. Still, Iran has small amounts of natural gas exports; it
had none at all before Iran opened its fields to foreign investment in 1996.
Department of Defense and other assessments indicate that sanctions have not stopped Iran from
building up its conventional military and missile capabilities. Iran is also judged not complying
with U.N. requirements that it halt any weapons shipments outside its borders.
Despite the imposition of what many now consider to be “crippling” sanctions, some in Congress
believe that economic pressure on Iran needs to increase further and faster. In the 112th Congress,
legislation such as H.R. 1905 has passed the House and the Senate. Both versions, which contain
some similar provisions, would enhance both the economic sanctions and human rights-related
provisions of previous Iran sanctions laws, although the effects on Iran might not be dramatic.
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 and Objectives................................................................................................................. 1
Sanctions Targeting Foreign Energy Involvement in Iran: The Iran Sanctions Act (ISA),
CISADA, and a November 2011 Executive Order....................................................................... 1
The Iran Sanctions Act (and CISADA Amendments) ............................................................... 1
Key “Triggers” .................................................................................................................... 2
Mandate and Time Frame to Investigate Violations............................................................ 5
Available Sanctions Under ISA........................................................................................... 5
Waivers, Exemptions, and Termination Authority .............................................................. 6
Termination Requirements and Sunset Provisions.............................................................. 7
Interpretations of ISA and CISADA.......................................................................................... 7
Non-Application to Crude Oil or Natural Gas Purchases from Iran ................................... 7
Application to Financing but Not Official Credit Guarantee Agencies............................... 8
Application to Energy Pipelines.......................................................................................... 8
Application to Iranian Firms or the Revolutionary Guard ................................................ 10
Application to Liquefied Natural Gas ............................................................................... 10
Implementation of ISA and CISADA...................................................................................... 11
ISA Sanctions Determinations: September 2010 to the Present........................................ 11
Ban on U.S. Trade and Investment With Iran ................................................................................ 14
Implementation........................................................................................................................ 16
Non-Application to Foreign Refined Oil With Iranian Content........................................ 16
Non-Application to Foreign Subsidiaries of U.S. Firms ................................................... 17
Financial Sanctions: CISADA and Sanctions on Dealings with Iran’s Central Bank.................... 19
Early Efforts: Targeted Financial Measures ............................................................................ 19
Banking Provisions of CISADA ............................................................................................. 20
Sanctions Imposed?........................................................................................................... 20
Section 311 of the Patriot Act.................................................................................................. 20
Sanctioning Dealings With Iran’s Central Bank/Section 1245 of the FY2012 National
Defense Authorization Act (P.L. 112-81) ............................................................................. 21
Implementation/Exemptions Issued .................................................................................. 22
February 5, 2012, Executive Order on Impounding Iranian Assets .................................. 23
Terrorism-Related Sanctions: Ban on U.S. Aid, Arms Sales, and Other Programs for Iran .......... 23
Executive Order 13224: Sanctioning Terrorism Supporting Entities ...................................... 24
Proliferation-Related U.S. Sanctions ............................................................................................. 25
Iran-Iraq Arms Nonproliferation Act....................................................................................... 25
Iran-North Korea-Syria Nonproliferation Act ......................................................................... 25
Executive Order 13382............................................................................................................ 26
Foreign Aid Restrictions for Suppliers of Iran ........................................................................ 26
U.S. Efforts to Promote Divestment .............................................................................................. 26
U.S. Sanctions Intended to Support Democratic Change in Iran or Alter Iran’s Foreign
Policy.......................................................................................................................................... 26
Expanding Internet and Communications Freedoms............................................................... 27
Implementation and Further Administration Action ......................................................... 27
Measures to Sanction Human Rights Abuses and Promote the Opposition: ........................... 28
Executive Order 13553...................................................................................................... 29
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Executive Order 13438 and 13572: Sanctioning Iranian Involvement
in the Region .................................................................................................................. 29
Separate Visa Ban.............................................................................................................. 29
Blocked Iranian Property and Assets ............................................................................................. 30
U.N. Sanctions ............................................................................................................................... 30
International Implementation and Compliance.............................................................................. 32
European Union....................................................................................................................... 33
EU Oil Embargo and Central Bank of Iran Cutoff............................................................ 33
SWIFT Cutoff.................................................................................................................... 34
Japan and South Korea ............................................................................................................ 35
India......................................................................................................................................... 36
China and Russia ..................................................................................................................... 37
China ................................................................................................................................. 37
Turkey...................................................................................................................................... 38
Persian Gulf and Other Middle Eastern States ........................................................................ 38
Latin America .......................................................................................................................... 38
Africa....................................................................................................................................... 39
Contrast With Previous Periods............................................................................................... 39
World Bank Loans ................................................................................................................... 40
Effectiveness of Sanctions on Iran................................................................................................. 44
Effect on Nuclear Negotiations ............................................................................................... 45
Counter-Proliferation Effects................................................................................................... 45
Other Strategic Effects............................................................................................................. 45
General Political Effects.......................................................................................................... 46
Economic Effects..................................................................................................................... 46
Foreign Companies Exiting the Iran Market..................................................................... 48
Foreign Firms Reportedly Remaining in the Iran Market ................................................. 50
Subsidy Phase-Out Issue ................................................................................................... 50
Effect on Energy Sector Infrastructure and Development....................................................... 50
Concerns About “Backfill”................................................................................................ 51
Effect on Gasoline Availability and Importation............................................................... 57
Humanitarian Effects/Air Safety ............................................................................................. 59
Additional Sanctions: Possible Legislative, Administrative, and Multilateral Action................... 59
Major Bills Pending: H.R. 1905 .............................................................................................. 60
H.R. 2105/S. 1048: The Iran, North Korea, and Syria Nonproliferation Reform
and Modernization Act/Iran, North Korea, and Syria Sanctions Consolidation
Act of 2011..................................................................................................................... 62
Other Proposals in the 112th Congress..................................................................................... 62
Possible Additional Multilateral Sanctions.............................................................................. 63
Comprehensive Oil Embargo ............................................................................................ 63
Iran “Oil-Free Zone” ......................................................................................................... 63
Other Possibilities ............................................................................................................. 64
Sanctions Easing/Incentives .................................................................................................... 65
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Tables
Table 1. Summary of Provisions of U.N. Resolutions on Iran Nuclear Program (1737,
1747, 1803, and 1929) ................................................................................................................ 32
Table 2. Top Energy Buyers From Iran and Agreed Reductions ................................................... 35
Table 3. Comparison Between U.S., U.N., and EU and Allied Country Sanctions ....................... 41
Table 4. Post-1999 Major Investments/Major Development Projects
in Iran’s Energy Sector ............................................................................................................... 52
Table 5.Comparison of Major Provisions of H.R. 1905 ................................................................ 60
Table 6. Provisions and Implementation of CISADA (P.L. 111-195)............................................ 66
Table 7. Entities Sanctioned Under U.N. Resolutions and
U.S. Laws and Executive Orders................................................................................................ 70
Contacts
Author Contact Information........................................................................................................... 81
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Overview and Objectives
U.N. and worldwide bilateral 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 U.N. sanctions now in place, and
national measures undertaken by European and some Asian countries. Some U.S. sanctions,
particularly the 1996 Iran Sanctions Act (ISA), 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 U.S. sanctions do not hamper cooperation
with key international partners whose support is needed to isolate Iran.
The objectives of U.S. sanctions have evolved over time. In the mid-1980s, U.S. sanctions were
intended to try to compel Iran to cease supporting acts of terrorism and to limit Iran’s strategic
power in the Middle East more generally. Since the mid-1990s, U.S. sanctions have focused
increasingly on persuading or compelling Iran to limit the scope of its nuclear program to
purposes that can only be civilian. As Iran’s nuclear program has been increasingly identified as a
threat to stability in the Middle East and global energy supplies, the international community has
set requirements to limit Iran’s nuclear program, and other countries have joined U.S. sanctions to
try to force Iran to comply with those requirements.
Sanctions Targeting Foreign Energy Involvement in
Iran: The Iran Sanctions Act (ISA), CISADA, and a
November 2011 Executive Order
Since 1996, Congress and successive Administrations have put in place steps to try to force
foreign energy firms to choose between participating in the U.S. market, or continuing to operate
in or conduct various energy-related transactions with Iran.
The Iran Sanctions Act (and CISADA Amendments)
The Iran Sanctions Act (ISA) is the core of those U.S. sanctions intended to force foreign firms
out of the Iran market. It took advantage of the opportunity for the United States to try to harm
Iran’s energy sector when Iran, in November 1995, 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).
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ISA has attracted substantial attention because it is an “extra-territorial sanction”—it authorizes
U.S. penalties against foreign firms, many of which are incorporated in countries that are U.S.
allies. When it was first enacted in 1996, 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 separately restricted from trading with or investing in Iran under
separate U.S. executive orders, as discussed below. Its application has been further expanded by
the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2012 (CISADA, P.L.
111-195 enacted July 1, 2010) as well as by Executive Order 13590, issued November 21, 2011.
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 (which is about $870 billion), 80% of its exports, and 60%-70% of its government
revenue. Iran’s oil sector is as old as the petroleum industry itself (early 20th century), 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. With the exception of
relatively small swap and barter arrangements with neighboring countries, virtually all of Iran’s
oil exports flow through the Strait of Hormuz, which carries about one-third of all internationally
traded oil exported by Iran and other countries on the Persian Gulf.
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 act against one of its firms.
Original Triggers
ISA primarily targets foreign firms, because American firms are already prohibited from investing
in Iran under the 1995 trade and investment ban discussed below. The original 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 The definition of “investment” in ISA
(§14 (9)) includes not only equity and royalty arrangements (including additions to existing
1 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 §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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investment, as added by P.L. 107-24) but any contract that includes “responsibility for the
development of petroleum resources” of Iran.
CISADA did not alter this trigger but it did amend the definition of investment to include
pipelines to or through Iran and contracts to lead the construction, upgrading, or expansions of
energy projects. CISADA also eliminated the wording in the original version of ISA that
specifically exempts from sanctions sales of energy-related equipment to Iran. However, to be
sanctionable, such sales would need to be structured as investments or ongoing profit-earning
ventures rather than simple sales transactions.
The Iran Freedom Support Act (P.L. 109-293) amended ISA to add a trigger: that sanctions should
be imposed on entities that sell to Iran weapons of mass destruction (WMD) technology or
“destabilizing numbers and types” of advanced conventional weapons.
CISADA: Amended ISA by Adding a Trigger—Sales to Iran of Gasoline and
Related Equipment and Services
ISA, as initially constituted, did not address Iran’s gasoline dependency because sales to Iran of
gasoline were not sanctionable under ISA. Nor did the original version sanction the selling to Iran
of equipment with which it can build or expand its refineries using its own construction
capabilities.4 And, it did not clearly apply to Iranian investments in oil refineries in several other
countries, such as Iranian investment to help build oil refineries in Asia or elsewhere.
Many in Congress argued that ISA should be applied to gasoline sales to Iran because Iran is
dependent on gasoline imports to meet about 40% of its gasoline needs and there were a limited
group of major gasoline suppliers to Iran. 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.
An effort to sanction such sales failed 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 to
sanction sales of gasoline to Iran were adopted prior to CISADA. Using U.S. funds to fill the
Strategic Petroleum Reserve with products from firms that sell over $1 million worth of gasoline
to Iran was prevented by the FY2010 Energy and Water Appropriation (P.L. 111-85, signed
October 28, 2009). A provision of the FY2010 consolidated appropriation (P.L. 111-117) denied
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. These
initiatives did deter some gasoline sales to Iran, including a decision in December 2008 by
Reliance Industries Ltd. of India to at least temporarily cease new sales of refined gasoline to Iran
(December 31, 2008). That decision 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.
4 Taking responsibility for constructing oil refineries or petrochemical plants in Iran did constitute sanctionable projects
under the original version of ISA because ISA’s definition of investment includes “responsibility for the development
of petroleum resources located in Iran.” Table 4 provides some information on openly announced contracts to upgrade
or refurbish Iranian oil refineries.
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Later in the 111th Congress, a House bill (Iran Refined Petroleum Sanctions Act) containing the
provisions above sanctioning gasoline related sales to Iran, H.R. 2194, was passed by 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 added to the
House bill provisions affecting U.S.-Iran trade and other issues. As shown in Table 1, 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 President signed the final version on
July 1, 2010 (P.L. 111-195). It should be noted that CISADA had many provisions beyond
amending ISA, and Table 6 contains a summary of all its provisions.
Main CISADA Provision Sanctioning Gasoline and Related Sales to Iran. CISADA’s main
provision was to amend ISA by making sanctionable:
• Sales to Iran of over $1 million worth (or $5 million in a one year period) of
gasoline and related aviation and other fuels. (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.)
• Sales to Iran of equipment or services (same dollar threshold as above) which
would help Iran make or import gasoline. Such sales would include equipment
and services that Iran can use to construct or maintain its oil refineries.
Triggers Added by Executive Order 13590 (November 21, 2011): Application of
ISA to Sales of Energy Sector (Including Petrochemical) Equipment and Services
In the wake of a November 8, 2011, IAEA report indicating Iran might have worked on nuclear
explosive technology, the Administration issued an executive order, under the International
Emergency Economic Powers Act (IEEPA), expanding the authorities of the Iran Sanctions Act to
direct the Secretary of State to impose at least one (1) of the available ISA sanctions on foreign
firms that
• Provide to Iran $1 million or more (or $5 million in a one year period) worth of
goods or services that Iran could use to maintain or enhance its oil and gas sector.
This would appear to make sanctionable the activity of global oil services firms
in Iran, or the provision to Iran of gear typically used in the oil industry such as
drills, pumps, vacuums, oil rigs, and the like.
• Provide to Iran $250,000 (or $1 million in a one year period) worth of goods or
services that Iran could use to maintain or expand its production of petrochemical
products.
• Because these provisions were imposed by Executive Order—and not through an
actual amendment to ISA - the other legislative provisions of ISA, such as the
time frame to begin and complete investigations of suspected violations, do not
necessarily apply to the transactions covered by this Executive Order.
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Mandate and Time Frame to Investigate Violations
In the original version of ISA, there was no firm requirement, and no time limit, for the
Administration to investigate potential violations and determine that a firm has violated ISA’s
provisions. CISADA, Section 102(g)(5), alters that by making mandatory that the Administration
begin an investigation of potential ISA violations when there is “credible information” about a
potential violation. The same section makes mandatory the 180-day time limit for a determination
of violation (with the exception that the mandatory investigations and time limit go into effect
one year after enactment (as of July 1, 2011), with respect to gasoline related sales to Iran). Under
Section 102(h)(5), the mandate to investigate gasoline related sales can be delayed an additional
180 days if an Administration report, submitted to Congress by June 1, 2011, asserts that its
policies have produced a significant result in sales of gasoline to Iran. No such report was
submitted. However, there is still lack of precision over what constitutes “credible information”
that an investment or sanctionable sale has been undertaken.
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).5 Early versions of that legislation (H.R. 282, S. 333) contained ISA
amendment proposals that were viewed by the Bush Administration as too 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. Executive Order 13590,
discussed above, provides for exactly the same penalties as those in ISA. The nine available
sanctions against the sanctioned entity that the Secretary of State or the Treasury can select from
(§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. prohibitions in transactions in foreign exchange by the entity;
5 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.
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7. prohibition on any credit or payments between the entity and any U.S. financial
institution;
8. prohibition of the sanctioned entity from acquiring, holding, using, or trading any
U.S.-based property which the sanctioned entity has a (financial) interest in; and
9. restriction on imports from the sanctioned entity, in accordance with the
International Emergency Economic Powers Act (IEEPA, 50 U.S.C. 1701).
Mandatory ISA Sanction Imposed by CISADA: Prohibition on Contracts
With the U.S. Government
CISADA (§102(b)) added a provision to further compel foreign companies to comply. 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—and any companies it owns or controls—are not violating
ISA. A contract may be terminated—and further penalties imposed—if it is determined that the
company’s certification of compliance was false. CISADA required 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, as per an interim rule issued on
September 29, 2010. (H.R. 6296, introduced September 29, 2010, in the 111th Congress, would
have authorized state and local governments to ban such contracts.)
This sanction does not apply to any firm sanctioned under Executive Order 13590 (see above).
Waivers, Exemptions, 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 (§9(c)). CISADA (§102(c)) changed the 9(c) ISA waiver
standard to “necessary” to the national interest. Under the original version of ISA, there was also
waiver authority (§4(c)) if the parent country of the violating firm joined a sanctions regime
against Iran, but this waiver provision was changed by the Iran Freedom Support Act (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 WMD 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. It could be argued that using a Section 4 waiver,
rather than a Section 9 waiver, would support U.S. diplomacy with the parent country of the
offending entity.
ISA (§5(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, 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).
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“Special Rule” Exempting Firms That End Their Business With Iran
CISADA (§102(g)(5)) amended ISA to provide 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 required to make a determination of sanctionability against a firm that
makes such pledges. The special rule has been invoked on several occasions, as discussed below.
Termination Requirements and Sunset Provisions
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.6 The
amendments to ISA made by P.L. 111-195 would terminate if the first two criteria are met.
Even without such determinations, ISA was to sunset on August 5, 2001, in a climate of lessening
tensions with Iran (and Libya) during the presidency in Iran of relative moderate 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 CISADA.
Interpretations of ISA and CISADA
Some provisions of ISA have been subject to differing interpretations which have, over time, been
clarified through real world examples and cases presented to successive U.S. administrations.
Non-Application to Crude Oil or Natural Gas Purchases from Iran
Purchases of oil or natural gas from Iran are generally considered not to constitute violations of
ISA, because ISA sanctions investment in Iran’s energy sector and 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. However, as discussed later, several countries
are banning purchases of oil and natural gas as a means of pressuring Iran’s economy.
ISA does not 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 to provide ongoing profits or royalties (and
therefore meet the definition of investments as provided in ISA).7 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 under ISA, unless the sale is structured to provide the seller ongoing profits or
6 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.
7 Prior to CISADA, the definition of investment in ISA specifically exempted sales of equipment or services under that
definition. CISADA omitted that exclusion.
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royalties. However, this exception was voided by Executive Order 13590 (November 21, 2011),
which does provide for sanctions against sales of such equipment and services.
Application to Financing but Not Official Credit Guarantee Agencies
The definitions of investment and other provisions of ISA make clear that financing for
investment in Iran’s energy sector, or for sales of gasoline and refinery-related equipment and
services, constitute sanctionable activity. Therefore, banks and other financial institutions that
assist energy investment and refining and gasoline procurement activities could be sanctioned
under ISA.
However, these definitions have not been interpreted to apply to official credit guarantee
agencies—such as France’s COFACE and Germany’s Hermes. These credit guarantee agencies
are arms of their parent governments, and ISA does not provide for sanctioning governments or
their agencies.
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 made such export credit guarantee agencies sanctionable, as well as financial
institutions and insurers generally. Early versions of CISADA would have made these entities
sanctionable but this was not included in the final law out of concern for alienating U.S. allies.
Application to Energy Pipelines
ISA’s definition of sanctionable “investment” has been interpreted by successive administrations
to include construction of energy pipelines to or through Iran. Such pipelines are deemed to help
Iran develop its petroleum (oil and natural gas) sector. This interpretation was reinforced by
amendments to ISA in CISADA, which specifically included in the definition of petroleum
resources “products used to construct or maintain pipelines used to transport oil or liquefied
natural gas.” As made clear by Secretary of State Clinton in March 2012, in discussing an Iran-
Pakistan pipeline (see below), the Obama Administration interprets the provision to be applicable
from the beginning of pipeline construction, and not from the start of oil or gas flow through a
finished project.8
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.
Iran Using Pipelines as Main Gas Export Mechanism
Only a few significant pipelines involving Iran have been constructed in recent years. However,
these pipelines serve as the main vehicle through which Iran exports natural gas. In part because
many of the patents are U.S.-held and therefore cannot be sold to Iran (see below), Iran has not
developed a liquefied natural gas (LNG) export capability.
8 http://dawn.com/2012/03/01/tough-us-warning-on-iran-gas-pipeline/.
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One pipeline, built in 1997, carries 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 the energy security of
Turkey, a key U.S. ally. Even though direct Iranian gas exports to Turkey through the line began
in 2001, no determination of sanctionability has been made.
In May 2009, Iran and Armenia inaugurated a natural gas pipeline between the two, built by
Gazprom of Russia. Armenia is Iran’s other main gas customer, aside from Turkey. No
determination of sanctionability has been announced.
Other Prospective Pipelines From Iran: Pakistan, Persian Gulf, and Europe
A 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 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. During the Bush Administration, Secretary of State Rice on several occasions “expressed
U.S. concern” about the pipeline deal or called it “unacceptable.” Possibly contributing to India’s
hesitancy to move forward, the late Ambassador Richard Holbrooke, the Administration Special
Representative on Pakistan and Afghanistan, during 2010 trips to Pakistan, raised the possibility
that the project could be sanctioned if it is undertaken, citing enactment of CISADA. Secretary of
State Clinton reiterated that position in March 2012.
Nonetheless, energy experts9 say Iran has largely completed the pipeline extension from its
network to the Pakistan border. Pakistan, whose relations with the United States have been
severely strained since mid-2011, reportedly is moving forward with construction on its side of
the border, but the extent of work completed, if any, is unclear. The two countries say it is to
become operational by mid-2014. Potentially complicating the project is that Chinese banks
reportedly have withdrawn commitments to provide about $1 billion in financing for the Pakistan
construction.
If Iran resolves its disputes with the international community, 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.
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.10 There are also discussions
9 For example, Bijan Kajehpour of Atieh Consulting. Presentation at CSIS, October 4, 2011.
10 http://www.kuwaittimes.net/read_news.php?newsid=NDQ0OTY1NTU4; http://english.farsnews.com/newstext.php?
nn=8901181055.
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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 also is attempting to position itself as a gas exporter to Europe. The Obama Administration,
like its predecessors, takes the view that Iran be excluded from gas pipeline projects to Europe,
even though the projects might make Europe less dependent on Russian gas supplies. As shown in
Table 4, in July 2007, a preliminary agreement was reached to build a second Iran-Turkey
pipeline, through which Iranian gas would flow to Europe. That agreement was not finalized, but
reportedly remains under discussion.
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 Intertrade 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 Islamic Revolutionary Guard Corps (IRGC) 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. Some believe the
August 2011 confirmation of Khatam ol-Anbia’s chief, Rostam Ghasemi, as Oil Minister, will,
over time, bolster the role of the IRGC in Iran’s oil sector. Ghasemi has also taken over the chair
of the Organization of Petroleum Exporting Countries (OPEC) because it is Iran’s turn to hold
that rotating post. Ghasemi has been subjected to asset freezes by the United States and an asset
freeze and travel ban by the European Union. However, under an agreement between OPEC and
Austria, Ghasemi is allowed to travel to Vienna (OPEC’s headquarters) to attend OPEC meetings
and perform his duties as rotating head of the organization.
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, as noted below, CISADA specifically includes LNG in
the definition of petroleum resources and therefore makes investment in LNG (or supply of LNG
tankers or pipelines) sanctionable.
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Implementation of ISA and CISADA
The Obama Administration has stepped up U.S. efforts to use ISA authorities to discourage
investment in Iran and to impose sanctions on companies that insist on continuing their business
with Iran. This is a contrast from the first 14 years after ISA’s passage, in which successive
Administrations hesitated to confront partner countries over its implementation.
The European Union opposed ISA, when it was first enacted, as an extraterritorial application of
U.S. law. It threatened to file 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 promise by the EU not
to file any complaint with the WTO over this issue, in exchange for the eventual May 18, 1998,
announcement by the Clinton Administration to waive ISA sanctions (“national interest”—§9c—
waiver) on the first project determined to be in violation. That project was a $2 billion11 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 nonproliferation and
counterterrorism. Then-Secretary of State Albright, in the May 18, 1998, waiver announcement,
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.12 (The EU sanctions
against Iran, announced July 27, 2010, might render this understanding moot because the EU
sanctions ban EU investment in and supplies of equipment and services to Iran’s energy sector.)
Despite investments made in Iran’s energy sector, as shown in Table 4, the Administration made
no violations determinations from 1998 until September 2010.
ISA Sanctions Determinations: September 2010 to the Present13
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, as required by Section 5e of
ISA. 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 4) was under review for ISA sanctions. Statoil is incorporated in
Norway, which is not an EU member, and it 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 Table 4, Assistant Secretary of State for Near Eastern
Affairs Jeffrey Feltman testified before the House Foreign Affairs Committee on October 28,
11 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.
12 Text of announcement of waiver decision by then Secretary of State Madeleine Albright, containing expectation of
similar waivers in the future, at http://www.parstimes.com/law/albright_southpars.html.
13 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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2009, that the Obama Administration would review investments in Iran for violations of ISA, and
complete that preliminary review by December 11, 2009. He 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 was conducted, in part, through State Department officials’
contacts with their counterpart officials abroad and corporation officials, but the additional
investigations of problematic investments would involve the intelligence community, according
to Secretary Clinton. State Department officials told CRS in November 2009 that they intended to
complete the additional investigation and determine violations within 180 days of the completion
of the preliminary review, or by early August 2010. (The 180-day time frame was, according to
the department officials, consistent with the Iran Freedom Support Act amendments to ISA
discussed above, even though the 180-day time frame was not a mandatory deadline before
CISADA was adopted.) On June 22, 2010, then Assistant Secretary of State William Burns
testified before the Senate Foreign Relations Committee that there were “less than 10” cases of
possible ISA violations.
In public statements and letters to the Administration, some Members of Congress have expressed
concern that Chinese firms have not been sanctioned for investing in Iran’s energy sector,
indicating that the Administration might be emphasizing some policy goals with respect to China
at the expense of implementing sanctions against Iran.
September 30, 2010, Sanctions Determinations
Several determinations of sanctionability were made on September 30, 2010:
• A Swiss-based Iranian-owned oil trading company—Naftiran Intertrade
Company (NICO)—became the first firm to be 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 receiving U.S. government contracts applies as well.
Exemptions Issued: 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.
There remained some difference of opinion on the Administration invocation of the special rule,
as evident at a hearing of the House Foreign Affairs Committee on December 1, 2010. At the
hearing, then Under Secretary 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 formulation, asserting that some firms
would be working in Iran for several more years under their pledges. The energy firms insisted
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they needed time to wind down their investments in Iran—under the buy-back program used for
investments in Iran, the energy firms are paid back their investment over time, making it highly
costly for them to suddenly end operations in Iran.
November 17, 2010, Special Rule Application
• 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.
March 29, 2011, Sanctions Determination Against Belarusneft
As shown in Table 4, several additional foreign investment agreements have been agreed with
Iran not covered in the September 2010 determination. Some of these firms remained under
Administration scrutiny, and the Administration stated that determinations will be made within
180 days (by April 1, 2011).
• On March 29, 2011, with that deadline approaching, the State Department
announced that one additional firm would be sanctioned under ISA—Belarusneft,
a subsidiary of the Belarus government owned Belneftekhim—for a $500 million
contract with Naftiran (the company sanctioned in September 2010) to develop
the Jofeir oil field discussed in Table 4. The three sanctions imposed were denial
of Ex-Im Bank financing, denial of U.S. export licenses, and denial of U.S. loans
above $10 million. Other subsidiaries of Belneftekhim were sanctioned in 2007
under Executive Order 13405 related to U.S. policy on Belarus.
The Administration announcement did not indicate that some of the other investments in Table 4
or other investments, for which no ISA determinations have been made to date, are still under
investigation.
May 24, 2011: ISA Sanctions Imposed on Gasoline-Related Shippers
On May 24, 2011, the Administration issued its first sanctions determinations under the CISADA-
amended “trigger” that requires sanctions against sales of gasoline and related equipment and
services. The reasons for the sanctions, including size of gasoline shipments to Iran, as well as the
ISA-related sanctions selected, can be found at http://www.state.gov/r/pa/prs/ps/2011/05/
164132.htm. The seven firms sanctioned were:
• Petrochemical Commercial Company International (PCCI) of Bailiwick of
Jersey and Iran
• Royal Oyster Group (UAE)
• Tanker Pacific (Singapore)
• Allvale Maritime (subsidiary of Ofer Brothers Group, Israel)
• Societie Anonyme Monegasque Et Aerienne (SAMAMA, Monaco)
• Speedy Ship (UAE/Iran)
• Associated Shipbroking (Monaco)
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• Petroleos de Venezuela (PDVSA) of Venezuela
The determinations of sanctionability of Allvale and SAMAMA were issued on September 13,
2011, as a “clarification” of the May 24 determinations, which named Ofer Brothers Group (and
not Allvale or SAMAMA) as sanctioned entities at that time. Those two entities, as well as
Tanker Pacific are, according to an author conversation with an attorney for the Ofer Brothers
Group, affiliated with a Europe-based trust linked to deceased Ofer brother Sami Ofer, and not
Ofer Brothers Group based in Israel. Ofer Brothers Group, based in Israel, is not therefore under
sanction. The firms named were subjected primarily to the financial-related sanctions provided in
ISA. With respect to PDVSA, the Administration made clear in its announcement that U.S.-based
subsidiaries were not included in the determination and that U.S. purchases of Venezuelan oil
would not be affected.
The day prior to the May 2011 sanctions announcement, President Obama issued an executive
order clarifying that it is the responsibility of the Treasury Department to implement those ISA
sanctions that involve the financial sector, including bans on loans, credits, and foreign exchange
for, or imports from the sanctioned entity, as well as blockage of property of the sanctioned entity
(if these sanctions are selected by the Secretary of State, who makes the decision which penalties
to impose on sanctioned entities).
January 12, 2012, Determinations on Gasoline Sellers
On January 12, 2012, the Administration determined that three firms had sold more than the
threshold amounts of gasoline to Iran and imposed sanctions (ban on U.S. export licenses for
sales to the firms; a ban on Export Import Bank financing for them; and denial of loans of over
$10 million to them). The three firms are
• Zhuhai Zhenrong Company (China), for allegedly brokering sales of $500
million worth of gasoline to Iran between July 2010 and January 2011.
• Kuo Oil Pte. Ltd. (Singapore), an energy trading firm that allegedly sold $25
million worth of gasoline to Iran between late 2010 and early 2011.
• FAL Oil Company Ltd. (UAE), an independent energy trader that sold Iran over
$70 million worth of gasoline in late 2010.
Ban on U.S. Trade and Investment With Iran
A ban on U.S. trade with and investment in Iran was imposed on May 6, 1995, by President
Clinton, through Executive Order 12959, under the authority primarily of the International
Emergency Economic Powers Act (IEEPA, 50 U.S.C. 1701 et seq.). 14 IEEPA gives the President
wide powers to regulate commerce with a foreign country when a state of emergency is declared
in relations with that country. Executive Order 12859 followed an earlier March 1995 executive
order barring U.S. investment in Iran’s energy sector, which was imposed when President Clinton
that month declared that a state of emergency exists with respect to Iran. A subsequent Executive
14 The executive order was issued not only under the authority of IEEPA but also: the National Emergencies Act (50
U.S.C. 1601 et seq.; §505 of the International Security and Development Cooperation Act of 1985 (22 U.S.C. 2349aa-
9) and §301 of Title 3, United States Code.
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Order, 13059 (August 19, 1997) prevents U.S. companies from knowingly exporting goods to a
third country for incorporation into products destined for Iran. The trade 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, the U.S. Administration has renewed a declaration of a
state of emergency that triggers the President’s trade regulation authority under IEEPA. The
operation of the trade regulations is stipulated in Section 560 of the Code of Federal Regulations
(Iranian Transactions Regulations, ITR’s).
Some relaxations to the trade ban during 1999-2010 account for the fact that there is some trade
between the United States and Iran, although it is minimal. CISADA, signed in July 2012,
restored the strict ban on imports from Iran as of September 29, 2010; the ban on exports to Iran
was altered only slightly by CISADA. The restoration of a full import ban largely accounts for the
fact that imports from Iran are negligible, primarily licensing of imports such as artwork for
exhibits.
The following conditions and modifications, as administered by the Office of Foreign Assets
Control (OFAC) of the Treasury Department, apply to the operation of the trade ban (“Iran
Transaction Regulations,” ITRs):
• Goods related to the safe operation of civilian aircraft may be licensed for export
to Iran (§560.528 of Title 31, C.F.R.). In 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). An Obama
Administration intent to sell Iran data to repair certain GE engines for its legacy
American-made aircraft, in order to ensure safe operation, was notified to
Congress on March 16, 2011. On June 23, 2011, the Administration sanctioned
Iran Air as a proliferation entity under Executive Order 13382, rendering any
future licensing of parts or repairs for Iran Air unclear.
• 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, and no
known applications were submitted subsequent to that first attempt.
• The ban does not apply to personal communications (phone calls, e-mails), or to
humanitarian donations.
• U.S. non-governmental organizations (NGOs) require a specific license to
operate in Iran, but some of these NGOs say the licensing requirements are too
onerous to make work in Iran practical. For example, there are restrictions on
how a U.S. NGO may expend funds in Iran, for example to hire Iranian nationals.
• 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, licenses for exports of medicines to treat HIV and leukemia are
routinely expedited for sale to Iran, and license applications are viewed favorably
for business school exchanges, earthquake safety seminars, plant and animal
conservation, and medical training in Iran.
• As far as financing of approved U.S. sales to 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
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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 December 2004, the
trade ban was further modified to allow Americans to freely engage in ordinary
publishing activities with entities in Iran (and Cuba and Sudan).
• In April 2000, the trade ban was further eased to allow U.S. importation of
Iranian nuts, fruit products (such as pomegranate juice), carpets, and caviar.
Trade 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 imports
of many Iranian products. As discussed above, CISADA ended approval of such
imports as of October 1, 2010.
Implementation
OFAC generally declines to discuss export licenses approved, and a press account on December
24, 2010,15 discussed broad export approvals to Iran of such condiments as ice cream sprinkles,
chewing gum, food additives, hot sauces, body-building supplements, and other goods that appear
to have uses other than those that are purely humanitarian or nutritive. U.S. exporters widely
mentioned include Mars Co. (candy manufacturer); Kraft Foods; Wrigley’s (gum); and
McCormick and Co. (spices). Some goods are sold through a Revolutionary Guard-owned chain
of stores in Iran called Qods; as well as a government-owned Shahrvand store and a chain called
Refah. OFAC officials indicated in the press accounts that such licenses were not in contradiction
with U.S. law or policy, although there might have been less than full scrutiny of some Iranian
end users and that such scrutiny would be increased in future licensing decisions.
Non-Application to Foreign Refined Oil With Iranian Content
The ban on trade with Iran operates largely on items produced in and originating from Iran itself.
In the case of crude oil, the United States, as noted, cannot import or trade overseas any Iranian
crude oil.
Existing regulations do not ban the importation, from foreign refiners, of gasoline or other energy
products in which Iranian oil is contained and mixed with oil from other producers. The rationale
for the regulation is that the product of a specific refinery is considered a product of the country
where that refinery is located, and not a product of Iran, even if the product has some Iran-origin
content. Some experts say that it is feasible to exclude Iranian content from any refinery, if there
were a decision to ban U.S. imports of products with any Iranian content at all.
Much of the Iranian oil that is mixed and imported into the United States is imported from EU
countries, such as the Netherlands, which has major refineries in Rotterdam, in particular.
However, the EU ban on purchases of Iranian oil imposed on January 23, 2012, may moot this
15 The information in this bullet is taken from: Becker, Jo. “With U.S. Leave, Companies Skirt Iran Sanctions.” New
York Times, December 24, 2010.
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issue, since only a few other refineries both receive Iranian oil and export gasoline to the United
States—and U.S. gasoline imports from those refineries are minor.
Non-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. For legal and policy purposes,
foreign subsidiaries are considered foreign persons, not U.S. persons, and are subject to the laws
of the country in which the subsidiaries are incorporated. 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 also 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:
• 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.
• Press reports in early October 2011 indicated that subsidiaries of Kansas-based
Koch Industries may have sold equipment to Iran to be used in petrochemical
plants (making methanol) and possibly oil refineries, among other equipment.
However, the reports say the sales ended as of 2007, a time at which foreign firm
sales of refinery equipment to Iran were not clearly sanctionable under ISA.16
Energy Related Subsidiaries. Some U.S. energy equipment and energy-related shipping firms
have been and may still be in the Iranian market, according to their recent “10-K” filings with the
Securities and Exchange Commission. These include Natco Group,17 Overseas Shipholding
Group,18 UOP (United Oil Products, a Honeywell subsidiary based in Britain),19 Itron,20 Fluor,21
Parker Drilling, Vantage Energy Services,22 PMFG, Ceradyne, Colfax, Fuel Systems Solutions,
General Maritime Company, Ameron International Corporation, and World Fuel Services Corp.
UOP reportedly sells refinery gear to Iran. However, such sales to Iran, depending on the dollar
value, is now likely sanctionable under ISA, as amended by CISADA, and Executive Order
16 Asjylyn Loder and David Evans. “Koch Brothers Flout Law Getting Richer With Iran Sales.” Bloomberg News,
October 3, 2011.
17 Form 10-K Filed for fiscal year ended December 31, 2008.
18 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.
19 New York Times, March 7, 2010, cited previously.
20 Subsidiaries of the Registrant at December 31, 2009. http://www.sec.gov/Archives/edgar/data/780571/
000078057110000007/ex_21-1.htm.
21 “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.
22 Form 10-K for Fiscal year ended December 31, 2007.
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13590. It is therefore likely that many of these companies will be exiting the Iranian market soon,
if they have not already.
Subsidiaries of U.S. Firms Exiting Iran
As international sanctions against Iran have increased in recent years, many foreign subsidiaries
have decided that the risks of continuing to do business with Iran outweigh the benefits. These
decisions to leave the Iran market might have been reached in discussions with their U.S. parent
corporations.
• 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),23 because the deals involved a subsidiary of
Halliburton (Cayman Islands-registered Halliburton Products and Service, Ltd.,
based in Dubai). On April 10, 2007, Halliburton announced that its subsidiaries
were no longer operating in Iran, as promised in January 2005.
• 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. Another oil services firm, Flowserve, said its
subsidiaries have voluntarily ceased new business with Iran as of 2006.24 FMC
Technologies took similar action in 2009, as did Weatherford25 in 2008.
• 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.26 Ingersoll Rand, maker of air compressors and
cooling systems, followed suit.27
• 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
23 “Iran Says Halliburton Won Drilling Contract.” Washington Times, January 11, 2005.
24 In September 2011, the Commerce Department fined Flowserve $2.5 million to settle 288 charges of unlicensed
exports and re-exports of oil industry equipment to Iran, Syria, and other countries.
25 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.
26 “Caterpillar Says Tightens ‘No-Iran’ Business Policy.” Reuters, March 1, 2010.
27 Nixon, Ron. “2 Corporations Say Business With Tehran Will Be Curbed.” New York Times, March 11, 2010.
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the Netherlands, and local affiliates of U.S. firms PricewaterhouseCoopers and
Ernst and Young.28
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. A provision of H.R.
6296, another bill introduced in the 111th Congress, would apply this sanction. The Senate version
of CISADA contained a similar provision, but it was taken out in conference action. Similar
provisions in the 112th Congress are discussed in the section below on pending legislation.
Financial Sanctions: CISADA and Sanctions on
Dealings with Iran’s Central Bank
U.S. efforts to shut Iran out of the international banking system have gained strength as other
countries have joined the effort. These efforts have been implemented by the Treasury
Department through progressively strong actions discussed below, culminating with legislation in
late 2011 to cut off Iran’s Central Bank from the international financial system.
Early Efforts: Targeted Financial Measures
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, which the
Administration accused of providing funds to Hezbollah.29 The Treasury Department extended
that U-Turn restriction to all Iranian banks on November 6, 2008.
During 2006-2010, strengthened by leverage provided in five U.N. Security Council Resolutions,
then Under Secretary of the Treasury Stuart Levey and his aides presented information on Iran’s
efforts to use foreign banks to fund WMD programs and funnel money to terrorist groups. The
program convinced at least 80 foreign banks to cease handling financial transactions with Iranian
banks. Levey left office in April 2011 and was replaced by David Cohen.
The Treasury Department also used punishments to pressure firms to cease doing business with
Iran. In 2004, the Treasury Department fined UBS $100 million for the unauthorized movement
of U.S. dollars to Iran and other sanctioned countries, and in December 2005, the Treasury
Department fined Dutch bank ABN Amro $80 million for failing to fully report the processing of
financial transactions involving Iran’s Bank Melli (and another bank partially owned by Libya).
In the biggest such instance, on December 16, 2009, the Treasury Department announced that
Credit Suisse would pay a $536 million settlement to the United States for illicitly processing
Iranian transactions with U.S. banks. In June 2012, Dutch bank IMG agreed to pay a $619 million
penalty for moving billions of dollars through the U.S. financial system, using falsified records,
on behalf of Iranian and Cuban clients.
28 Baker, Peter. “U.S. and Foreign Companies Feeling Pressure to Sever Ties With Iran.” New York Times, April 24,
2010.
29 Kessler, Glenn. “U.S. Moves to Isolate Iranian Banks.” Washington Post, September 9, 2006.
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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.
Banking Provisions of CISADA
The Treasury Department efforts have been enhanced substantially by the authorities of Section
104 of CISADA and U.N. and EU sanctions. Section 104 of CISADA excludes foreign banks
from operating in the United States if these banks conduct transactions with the Revolutionary
Guard or its affiliates, or with Iranian entities that are subject to international or U.S. sanctions
(under various Executive Orders issued under IEEPA, such as 13224 and 13382 discussed below).
The premise of the provision is that cutting off Iran’s access to the international financial system
harms Iran’s economy.
The binding provisions of Section 104 of CISADA require the Secretary of the Treasury to
prescribe several sets of regulations to forbid U.S. banks from opening new “correspondent
accounts” or “payable through accounts”—or force the cancellation of existing such accounts—
with foreign banks that process “significant transactions” with the entities discussed above.
Foreign banks that do not have operations in the United States typically establish such accounts
with U.S. banks as a means of accessing the U.S. financial system and financial industry. The law
leaves it to the Treasury Department to determine what constitutes a “significant” financial
tranaction. The entities with which significant transactions would trigger the sanctions are
• The Islamic Revolutionary Guard Corps (IRGC) or any of its agents or affiliates
that are sanctioned under U.S. executive orders. The two executive orders that
have served as the principal source of U.S. sanctions against Iranian firms and
organizations are Executive Order 13224 (September 23, 2001) and 13382 (June
28, 2005), discussed elsewhere in this report.
• Any entity that is sanctioned by U.S. executive orders such as the two mentioned
above. To date, over 125 entities (including individuals), almost all of them Iran-
based or of Iranian origin, have been designated for Iran-related proliferation or
terrorism activities under these orders. A full list is at the end of this report.
• Any entity designated under the various U.N. Security Council resolutions
adopted to impose sanctions on Iran.
• Any entity that assists Iran’s Central Bank in efforts to help the IRGC acquire
weapons of mass destruction or support international terrorism.
Sanctions Imposed?
The United States has not announced any sanctions against any bank under this provision of
CISADA.
Section 311 of the Patriot Act
On November 21, 2011, the Administration took further steps to isolate Iran’s banking system and
to dissuade foreign banks and countries from dealing with any Iranian bank. Secretary of the
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Treasury Geithner announced that day that the Administration had acted under Section 311 of the
USA Patriot Act (31 U.S.C. 5318A) to identify Iran as a “jurisdiction of primary money
laundering concern”30—that its financial system, including the Central Bank, constitutes a threat
to governments or financial institutions that do business with these banks. Banks that do business
with the Iranian financial system were declared at risk of supporting Iran’s pursuit of nuclear
weapons, its support for terrorism, and its efforts to deceive financial institutions and evade
sanctions. The designation carried no immediate penalty, per se, but it imposes additional
requirements on U.S. banks to ensure against improper Iranian access to the U.S. financial
system. It was also intended to cause foreign banks to cease doing business with Iranian banks.
Sanctioning Dealings With Iran’s Central Bank/Section 1245 of the
FY2012 National Defense Authorization Act (P.L. 112-81)
Some in Congress believed that additional action was needed to cut off Iran’s Central Bank. That
view was based on information that it was helping other Iranian banks circumvent the U.S. and
U.N. banking pressure, and because it is the prime conduit to pay Iran for oil shipments. Some
argued the Treasury Department should designate the Central Bank as a proliferation entity under
Executive Order 13382 or a terrorism supporting entity under Executive Order 13224, but the
Administration did not do so.
In November 2011, provisions to sanction foreign banks that deal with Iran’s Central Bank were
incorporated into a several pieces of legislations, including H.R. 1905 and a FY2012 national
defense authorization bill (H.R. 1540). The provision was modified slightly in conference action
on the latter bill, enacted and signed on December 31, 2011 (P.L. 112-81). Section 1245 of P.L.
112-81, provides for the following:
• Requires the President to prevent a foreign bank from opening an account in the
United States—or impose strict limitations on existing U.S. accounts—if that
bank processes payments through Iran’s Central Bank.
• The provision applies to non-oil related transactions with the Central Bank of
Iran 60 days after enactment (by February 29, 2012).
• The provision applies to a foreign central bank only if the transaction with Iran’s
Central Bank is for oil purchases.
• Provides for a renewable waiver of 120 days duration if the President determines
that doing so is in the national security interest.
• The provision applied to transactions with the Central Bank for oil purchases
only after 180 days (as of June 28, 2012).
• Sanctions on transactions for oil apply only if the President certifies to
Congress—90 days after enactment (by March 30, 2012), based on a report by
the Energy Information Administration to be completed 60 days after enactment
(by February 29, 2012)—that the oil market is adequately supplied. The EIA
report and Administration certification are required every 90 days thereafter.
Foreign banks can be granted an exemption from sanctions (for any transactions
30 http://www.treasury.gov/press-center/press-releases/Pages/tg1367.aspx.
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with the Central Bank, not just for oil) if the President certifies that the parent
country of the bank has significantly reduced its purchases of oil from Iran. That
determination is to be reviewed every 180 days.
The Administration had initially opposed the provision. In testimony, Under Secretary David
Cohen told the Senate Foreign Relations Committee on December 2, 2011, that the provision
could lead to a rise in oil prices that would benefit Iran. Yet, the Administration later saw value in
using the provision to pressure Iran. In the signing statement on the overall bill, President Obama
indicated he would implement the provision so as not to damage U.S. relations with partner
countries, such as Japan and South Korea.
Implementation/Exemptions Issued
On February 27, 2012, the Department of the Treasury announced regulations to implement this
law. The first required EIA report was issued on February 29, 2012, saying “EIA estimates that
the world oil market has become increasingly tight over the first two months of this year.” On
March 30, 2012, President Obama issued an initial determination that there is a sufficient supply
of oil from countries other than Iran to permit countries to reduce their oil purchases from Iran. A
subsequent EIA report of April 27, 2012, and Administration determination of June 11, 2012,
made similar findings and certifications, triggering potential sanctions on banks incorporated in
countries not deemed exempt as of June 28, 2012.
Implementation of the provision has been complicated by the absence in the legislation of a
definition of “significant reduction” in oil purchases that would qualify a country for this
exemption. However, the lack of definition has given the Administration substantial flexibility in
dealing with foreign governments. On January 19, 2012, the Senators who drafted the provision
wrote to Treasury Secretary Geithner agreeing with outside experts that the Treasury Department
should define “significant reduction” as an 18% purchase reduction based on total price paid (not
just volumes).31
The EU embargo on purchases of Iranian oil, announced January 23, 2012, and which took full
effect by July 1, 2012, implied that virtually all EU countries would obtain exemptions for having
“significantly reduced” oil buys from Iran. As noted in the section and table below, several
countries have reduced purchases from Iran and achieved sanctions exemptions for at least the
first 180 day implementation period.
Exemptions Issued
• On March 20, 2012, the Secretary of State announced the first group of 11
countries that had achieved an exemption for significantly reducing oil purchases
from Iran: Belgium; the Czech Republic; France; Germany; Greece; Italy; Japan;
the Netherlands; Poland; Spain; and Britain.
• On June 11, 2012, the Administration granted seven more exemptions based on
reductions of oil purchases from Iran of about 20% in each case: India, Korea,
Turkey, Malaysia, South Africa, Sri Lanka, and Taiwan.
31 Text of letter from Senators Mark Kirk and Robert Menendez to Secretary Geithner. January 19, 2012.
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• On June 28, 2012, the Administration granted exemptions to China and
Singapore, two remaining major Iran oil customers, with China perhaps the
single largest buyer (about 550,000 barrels per day in 2011).
A total of 20 countries are therefore exempt from sanctions for at least a 180-day period (from the
time of their exemption). Countries must continue to reduce their oil buys from Iran—relative to
the previous 180-day period—to retain the exemption. Some believe China earned the exemption
mainly because of the many interlocking aspects of its relations with the United States, with any
cuts in oil buys from Iran as yet unclear. However, even had China not been exempted, its trade
with Iran is largely in barter arrangements that would not risk sanctions under the provision.
Singapore only gets about 1% of its oil from Iran.
Seventeen EU countries have not been granted exemptions. Some of them were not customers for
Iran’s oil and cannot therefore “significantly reduce” their buys from Iran any further. Under the
sanctions provision, the banks of these countries could potentially be sanctioned for any
transactions with Iran’s Central Bank. Some of these countries say that the sanctions provision
amounts to a de facto U.S. effort to enforce a total ban on EU trade with Iran.
Other early opposition from EU and other countries to the concept of sanctioning Iran’s Central
Bank was based on humanitarian grounds. One of the Central Bank’s roles is to keep Iran’s
currency, the rial, stable. It does so by using hard currency to buy rials to raise the currency value,
or to sell rials to bring the value down. An unstable currency could harm Iran’s ability to import
some needed foodstuffs and medical products, according to those opposing that sanction.
February 5, 2012, Executive Order on Impounding Iranian Assets
Possibly in part to address congressional sentiment for extensive sanctions on the Central Bank,
on February 6, 2012, the President issued an Executive Order (13599) imposing further sanctions
on the Central Bank and on other entities determined to be owned or controlled by the Iranian
government. The order requires that any U.S.-based assets of the Central Bank of Iran, or of any
Iranian government-controlled entity, be blocked (impounded) by U.S. financial institutions. U.S.
persons are prohibited from any dealings with such entities. U.S. financial institutions previously
were required to merely refuse such transactions with the Central Bank, or return funds to it, but
the order requires them to henceforth impound such assets. Several designations were made under
E.O. 13599 on July 12, 2012, as shown in the table at the end of the paper.
Terrorism-Related Sanctions: Ban on U.S. Aid, Arms
Sales, and Other Programs for Iran
Several U.S. sanctions are in effect as a result of the U.S. naming of Iran as a “state sponsor of
terrorism,” commonly referred to as Iran’s placement 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 perpetrated by elements that later became Hezbollah.
• The terrorism list designation restricts sales of U.S. dual use items (Export
Administration Act, as continued through presidential authorities under the
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International Emergency Economic Powers Act, IEEPA, as implemented by
Executive Orders). Under other laws, the designation bans direct U.S. financial
assistance to Iran (§620A of the Foreign Assistance Act, FAA, P.L. 87-195) and
arms sales to Iran (§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 (§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 have banned direct assistance
to Iran (loans, credits, insurance, Ex-Im Bank credits) without providing for a
waiver.
• The Anti-Terrorism and Effective Death Penalty Act (§§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. Section 321 of that Act also makes it a criminal offense for U.S.
persons to conduct financial transactions with terrorism list governments.
Aside from the terrorism list designation, 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. For example, if an international organization spends 3% of
its budget for programs in Iran, then the United States is required to withhold 3% of its
contribution to that international organization. No waiver is provided for.
The terrorism list designation, and other 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); $350,000 worth of aid to the victims of a June 22, 2002, earthquake;
and $5.7 million in assistance (out of total governmental pledges of about $32 million) for the
victims of the December 2003 earthquake in Bam, Iran, which killed as many as 40,000 people.
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.
Executive Order 13224: Sanctioning Terrorism Supporting Entities
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, 2001, attacks on the United States, 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 7, which also contains the names of Iranian entities sanctioned under
other orders and under United Nations resolutions.
Among recent Iran-related designations under this order, on July 28, 2011, the Treasury
Department designated six Iran-based members of Al Qaeda under this order for allegedly serving
as financiers for Al Qaeda. On October 12, 2011, the Treasury Department designated Mahan Air,
an airline operating in Iran and the Persian Gulf region, under this order, for allegedly helping the
Qods Force (the arm of Iran’s Revolutionary Guard that supports pro-Iranian movements abroad)
ship weapons and other gear. On March 27, 2012, the Treasury Department designated five
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Iranian entities and one Nigerian entity for allegedly attempting to ship Iranian weapons to
Gambia and to Syria.
Proliferation-Related U.S. Sanctions
The state sponsor of terrorism designation, discussed above, bars Iran from U.S. exports of
technology that can be used for weapons of mass destruction programs (WMD). Iran-specific
anti-proliferation laws discussed below,32 and Executive Order 13382 (June 28, 2005), also seek
to prevent Iran from receiving advanced technology from the United States. 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 sanction to ban imports to the United States from the 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 (§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-North Korea-Syria Nonproliferation Act
The Iran Nonproliferation Act (P.L. 106-178), now called the Iran-North Korea-Syria Non-
Proliferation Act (INKSNA), 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.33 (A Continuing Resolution for FY2009, which funded the U.S.
32 Such laws include the Atomic Energy Act of 1954 and the Energy Policy Act of 2005 (P.L. 109-58).
33 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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government through March 2009, waived this law to allow NASA to continue to use Russian
vehicles to access the International Space Station.) Table 7 at the end of the report lists entities
sanctioned under this law. Pending legislation in the 112th Congress, discussed later, would amend
INKSNA.
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. As is
the case with Executive Order 13224, this order has been used extensively to sanction Iran-related
entities; Table 7 lists Iran-related entities sanctioned under the order. As an example, the IRGC is
named as a proliferation entity 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.
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).34 The concept of these sanctions is to
express the view of Western and other democracies that Iran is an outcast internationally. A
divestment provisions was contained in CISADA (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.
In the 110th and 111th Congresses, several bills, including H.R. 1400, H.R. 2347 (passed by the
House on July 31, 2007), H.R. 1327, H.R. 1357, S. 1430, and others had divestment provisions.
U.S. Sanctions Intended to Support Democratic
Change in Iran or Alter Iran’s Foreign Policy
A trend since the June 2009 Iran election dispute has been to promote the prospects for the
domestic opposition in Iran. Proposals to target the Revolutionary Guard for sanctions, discussed
throughout, represent one facet of that trend. The IRGC is not only involved in Iran’s WMD
programs but it is also the key instrument through which the regime has suppressed the pro-
democracy movement. Several measures to support the opposition’s ability to communicate, to
34 For information on the steps taken by individual states, see National Conference of State Legislatures. State
Divestment Legislation.
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reduce the regime’s ability to monitor or censor Internet communications and to identify and
sanction Iranian human rights abusers, were included in CISADA.
Earlier legislation, the Iran Freedom Support Act (IFSA, P.L. 109-293), represented a
congressional effort to promote the prospects for opponents of the regime. That law authorized
“sums as may be necessary” to assist Iranians who are “dedicated” to “democratic values … and
the adoption of a democratic form of government in Iran”; and “advocates the adherence by Iran
to nonproliferation regimes.”
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
contained 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 act authorized
funds to document Iranian human rights abuses since the June 12, 2009, presidential election.
Another provision (§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, the “Reduce Iranian Cyber-Suppression Act,” (S. 1475 and H.R. 3284)
was incorporated into CISADA. It authorizes 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. Another provision of CISADA (§103(b)(2)) exempts from the U.S. export ban on
Iran equipment to help Iranians communicate and use the Internet. The provisions were directed,
in part, against firms, including a joint venture between Nokia (Finland) and Siemens (Germany),
reportedly sold Internet monitoring and censorship technology to Iran in 2008.35 Perhaps to avoid
further embarrassment, Siemens announced on January 27, 2010, that it would stop signing new
business deals in Iran as of mid-2010.36 There was concern that a large Chinese firm, Huawei,
might have sold Iran Internet monitoring or censorship gear as part of its work in Iran’s
communications industry although there is no clear information that it has done so. In December
2011, Huawei announced it was no longer seeking new business in Iran and withdrawing its sales
staff there. Still, several major telecommunications firms are said to still be active in iran
including Deutsche Telekom; Emirates Telecom, Eutelsat; LG Group; NEC Corporation, and
Asiasat.
Implementation and Further Administration Action
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 appeared to
incorporate the major features of a proposal in the 111th Congress, H.R. 4301, the “Iran Digital
Empowerment Act.” The OFAC determination required a waiver of the provision of the Iran-Iraq
Arms Nonproliferation Act (§1606 waiver provision) discussed above.
35 Rhoads, Christopher. “Iran’s Web Spying Aided by Western Technology.” Wall Street Journal, June 22, 2009.
36 End, Aurelia. “Siemens Quits Iran Amid Mounting Diplomatic Tensions.” Agence France Press, January 27, 2010.
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The Administration took a further step on March 20, 2012, announcing a new licensing policy to
promote Internet freedom in Iran. The announcement seemed to reflect President Obama’s
Nowruz message that same day, saying the United States is committed to promoting Internet
freedom in Iran against counter-efforts by the regime. The Treasury Department announced that
several additional types of software and information technology products would be able to be
exported to Iran under general license, including personal communications, personal data storage,
browsers, plug-ins, document readers, and free mobile applications related to personal
communications. The exports are provided the products are available at no cost to the user.37
Executive Order 13606
On April 23, 2012, President Obama issued an Executive Order (13606) directly addressing the
issue by sanctioning persons with respect to “Grave Human Rights Abuses by the Governments
of Iran and Syria Via Information Technology, GHRAVITY).” The order blocks the U.S.-based
property and essentially bars U.S. entry and bans any U.S. trade with persons and entities listed in
an Annex and persons or entities subsequently determined to be:
• Operating any technology that allows the Iranian (or Syrian) government to
disrupt, monitor, or track computer usage by citizens of those countries.
• Selling to Iran or Syria any technology that enables those governments to carry
out such disruptions or monitoring.
• Assisting the two governments in such disruptions or monitoring.
Among Iranian entities, the order named and imposed sanctions on Iran’s Ministry of Intelligence
and Security (MOIS); the Islamic Revolutionary Guard Corps (IRGC); the Law Enforcement
Forces (LEF); and Iranian Internet service provider Datak Telecom.38 Of these entities, similar
sanctions have been imposed through other executive orders (relating to facilitating proliferation,
terrorism, and human rights abuses) on the MOIS, the IRGC, and the LEF.
Measures to Sanction Human Rights Abuses and
Promote the Opposition:
Another part of the effort 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. The provisions were similar to
those of Senator McCain’s earlier stand alone bill, S. 3022, the “Iran Human Rights Sanctions
Act.”
37 Fact Sheet: Treasury Issues Interpretive Guidance and Statement of Licensing Policy on Internet Freedom in Iran,.
March 20, 2012.
38 Department of Treasury Documents. Fact Sheet: New Executive Order Targeting Human Rights Abuses Via
Information Technology. April 23, 2012.
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Executive Order 13553
On September 29, 2010, the Administration implemented the CISADA provision when President
Obama signed an Executive Order (13553) 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 was 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. Several
additional officials and security force entities have been sanctioned since, as shown in Table 7 at
the end of this report. Under State Department interpretations of the executive order, if an entity is
designated, all members of that entity are ineligible for visas to enter the United States.39 Similar
sanctions against many of these same officials—as well as several others—have been imposed by
the European Union.
Executive Order 13438 and 13572: Sanctioning Iranian Involvement
in the Region
Some sanctions have been imposed to try to punish Iran’s attempts to exert influence in the
region. On July 7, 2007, President Bush issued Executive Order 13438. The order sanctions
Iranian persons who are posing a threat to Iraqi stability, presumably by providing arms or funds
to Shiite militias there. Some persons sanctioned have been Qods Force officers, some have been
Iraqi Shiite militia-linked figures, and some entities have been sanctioned as well.
Executive Order 13572, issued on April 29, 2011, targets those responsible for human rights
abuses and repression of the Syrian people. The Qods Force and a number of Iranian Qods Force
officers, including its overall commander Qasem Soleimani, have been sanctioned under this
Order (and under other executive orders, as shown in the table at the end). The Iranians
sanctioned allegedly helped Syria commit abuses against protesters and repress its domestic
opposition movement that has conducted nationwide demonstration since March 2011. In
September 2011, the European Union similarly sanctioned the Qods Force for its purported
assistance to Syria’s repression.
Separate Visa Ban
On July 8, 2011, in conjunction with Britain, the United States imposed visa restrictions on more
than 50 Iranian officials for participating in political repression in Iran. The State Department
announcement stated that the names of those subject to the ban would not be released because
visa records are confidential. The action was taken under the authorities of Section 212(a)(3)(C)
of the Immigration and Nationality Act, which renders inadmissible to the United States a foreign
person whose activities could have serious consequences for the United States.
39 U.S. Department of the Treasury, Office of Public Affairs. Treasury Sanctions Iranian Security Forces for Human
Rights Abuses, June 9, 2011.
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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. A
reported $400 million in proceeds from the resale of that equipment was placed in a DOD FMS
account and may remain in this escrow account, although DoD has not provided CRS with a
precise balance. Additionally, according to the Treasury Department “Terrorist Assets report” for
2010, about $48 million in Iranian diplomatic property and accounts remains blocked—this
amount includes proceeds from rents received on the former Iranian embassy in Washington, DC,
and 10 other properties in several states, along with 6 related bank accounts.40
Other past 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 nonwage earner) for the 248 Iranians killed. The United States did not compensate Iran for the
airplane itself.
In another case, there are reportedly about $2 billion in securities-related assets held by Citigroup,
deposited there by Luxembourg-based Clearstream Banking SA, a payments-clearing
organization. The assets reputedly belong to Iran and have been frozen and held against terrorism
judgments against Iran, although it is not clear whether such assets fall under existing authorities
to impound Iranian assets to pay terrorism or other judgments against Iran. Iran’s Central Bank
reportedly plans to file a motion in U.S. court to unfreeze the assets. Pending legislation in the
112th Congress, discussed below, would consider those assets to be Iranian assets subject to
seizure and use to pay judgments against Iran in various terrorism-related cases. In a recent
judgement, on July 6, 2012, a U.S. federal judge ordered Iran to pay $813 million to the families
of the 241 U.S. soldiers killed in the October 23, 1983, bombing of the U.S. Marine barracks in
Beirut. That brings to $8.8 billion the total amount awarded, in eight judgments against Iran, for
that bombing, which was perpetrated by Islamist elements that ultimately became Lebanese
Hezbollah.
U.N. Sanctions
U.N. sanctions apply to all U.N. member states, and therefore have tended, in other cases, to be
more effective than unilateral sanctions. There is increasing convergence among all these varying
sets of 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. In addition, Resolution 1747 imposed a ban on Iran’s
exportation of weaponry outside Iran’s borders.
40 http://www.treasury.gov/resource-center/sanctions/Documents/tar2010.pdf.
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After failed negotiations with Iran during 2009, 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 in Table 7.)
Resolution 1929:41
• added several firms affiliated with the Revolutionary Guard firms to the list of
sanctioned entities.
• made mandatory a ban on travel for Iranian persons named in it and in previous
resolutions—including those Iranians for whom there was a nonbinding travel
ban in previous resolutions.
• gave 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.
• prohibited countries from allowing Iran to invest in uranium mining and related
nuclear technologies, or nuclear-capable ballistic missile technology.
• banned 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.”
• required 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.
• requested, but did 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.
• authorized the establishment of a “panel of experts” to assist the U.N. sanctions
committee in implementing the Resolution and previous Iran resolutions, and to
suggest ways of more effective implementation.
• did not mandate a ban on shipping insurance for shipments to Iran; international
investment in Iran’s energy sector; the provision of trade credits to Iran; or all
financial dealings with Iranian banks.
41 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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Table 1. Summary of Provisions of U.N. Resolutions on Iran Nuclear Program
(1737, 1747, 1803, and 1929)
Freeze the assets of over 80 named Iranian persons and entities, including Bank Sepah, and several corporate affiliates
of the Revolutionary Guard. (Entities named in annexes to each of the resolutions.)
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 (1929)
Require Iran to suspend uranium enrichment, and to refrain from any development of ballistic missiles that are
nuclear capable (1929)
Require that countries ban the travel of over 40 named Iranians
Mandates that countries not export major combat systems to Iran (1929)
Calls for “vigilance” (a nonbinding 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.
Cal s 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. (1929)
A Sanctions Committee, composed of the 15 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 and the nuclear negotiations with Iran is in CRS
Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman.
International Implementation and Compliance42
U.S. and European/allied approaches had been gradually converging since 2002, when the
nuclear issue came to the fore. Previously, European and other countries had appeared less
concerned than is the United States about Iran’s support for militant movements in the Middle
East or Iran’s strategic power in the Persian Gulf—and had been reluctant to sanction Iran to
address those issues.
With the increasing international focus on the nuclear program, since 2010 there has been an
unprecedented degree of global cooperation in pressuring Iran. Many U.S. allies—including
several neighbors of Iran, such as UAE and Saudi Arabia—have joined a U.S.-led informal
coalition called the “like minded countries” to pressure Iran. And, increasingly, even Iran’s
42 Note: CRS has no mandate or capability to “judge” compliance or cooperation of any country with U.S., multilateral,
or international sanctions against Iran. This section is intended to analyze some of the major themes discussed by
experts in assessing the degree to which other countries are helping U.S. policy toward Iran, and bearing in mind there
are many other issues and considerations in U.S. relations with the countries discussed here.
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neighbors are joining the effort—a result caused by the growing concerns about Iran’s nuclear
intentions. Some countries have joined the burgeoning sanctions regime not necessarily out of
conviction of the efficacy of sanctions but rather as a means of perhaps heading off unwanted
military action by the United States or Israel against Iran’s nuclear facilities. A comparison
between U.S., U.N., and EU sanctions against Iran is contained in Table 3 below, although noting
that there are differing legal bases and authorities for these sanctions.
To increase international compliance with all applicable sanctions, on May 1, 2012, President
Obama issued an Executive Order (13608) giving the Treasury Department the ability to identify
and sanction (cutting them off from the U.S. market) foreign persons who help Iran or Syria
evade U.S. and multilateral sanctions.
European Union
The European Union and other Western allies of the United States have closely aligned their
sanctions with those of the United States. On November 21, 2011, in a concerted action with
those taken by the U.S. Treasury Department (see above under §311 of the Patriot Act), Britain
and Canada announced they would no longer do business with Iran’s financial institutions,
including Iran’s Central Bank. Iran’s parliament subsequently voted to downgrade relations with
Britain, a move that, on November 29, 2011, contributed to the overrunning of the British
Embassy in Tehran by pro-government students, with at least the partial apparent complicity of
regime security forces. That attack prompted Britain to give all Iranian diplomats 48 hours to
leave Britain, and precipitated a European Union meeting on December 1, 2011 that designated
an additional 180 Iranian entities, mostly those linked to the Revolutionary Guard, as subject to
assets freezes and travel bans. One of the entities is the Islamic Republic of Iran Shipping Lines
(IRISL).
EU Oil Embargo and Central Bank of Iran Cutoff
In joining U.S. efforts to cut Iran’s oil export lifeline, on January 23, 2012, the EU decided to:
• Refrain from new contracts to purchase Iranian oil and to wind down existing
contracts by July 1, 2012, after which all EU purchases of Iranian oil were to
cease. A planned review on May 1, 2012, was not held because of an EU
consensus to proceed with the embargo, despite the effect of the move on the
EU’s vulnerable economies, such as Spain, Italy, and Greece. Those three
countries each bought more than 10% of their imported oil from Iran. Britain and
Germany only got about 1% of their oil from Iran, and France about 4%.
Collectively, the EU bought about 600,000 barrels per day of Iranian oil in 2011,
about a quarter of Iran’s total oil exports. Saudi Arabia and other suppliers such
as Libya, Iraq, and UAE, are reportedly stepping in as alternative suppliers.
• Ban insurance for shipping oil or petrochemicals from Iran. Even before this took
full effect on July 1, 2012, some EU-based insurers reportedly closed their
offices in Iran. It should be noted that this step is under EU review because of the
dominance of EU firms in international shipping insurance and the effect on
countries, such as Japan, that still will be buying Iranian oil after July 1.
• Stop all trade with Iran in gold, precious metals, diamonds, and petrochemical
products.
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• Freeze the assets of Iran’s Central Bank, although transactions would still be
permitted for approved legitimate trade.
• Freeze the assets of several Iranian firms involved in shipping arms to Syria or
which support shipping by IRISL, and cease doing business with port operator
Tidewater (see above).
As discussed above, partly as a consequence of the EU decision, on March 20, 2012, 10 EU
countries were granted exemptions from any U.S. sanctions imposed under the P.L. 112-81
provision to sanction banks that transact business with Iran’s Central Bank. In the context of
nuclear talks with the P5+1, Iran has demanded the EU embargo be cancelled if Iran makes
certain commitments to limit its nuclear program.
Even though the EU countries have adopted the oil embargo, some EU countries criticize aspects
of the U.S. sanctions against Iran’s Central Bank as a de-facto ban on even civilian trade with
Iran, such as in automobiles. This is because financing is often needed to facilitate trade, and the
blocking of financing and payments mechanisms limits the capability to trade with Iran.
SWIFT Cutoff
The Belgium-based SWIFT organization (Society for Worldwide International Financial
Transfers) announced in February 2012 that it would abide by any EU decision to expel Iranian
banks blacklisted by the EU (about 18 Iranian banks that meet that criteria are members of the
network) from its membership. Such a move was requested and, as of March 17, 2012, SWIFT
ended transactions with these Iranian banks.
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Table 2. Top Energy Buyers From Iran and Agreed Reductions
(amounts in barrels per day, bpd)
Country/Bloc
2011
2012 (after cut pledges)
European Union (particularly Italy,
600,000
Negligible as of July 1)
Spain, and Greece)
No Iranian oil has entered
key Rotterdam refinery
since February 2012.
China 550,000
450,000
(18% cut pledged)
Japan
327,000
261,000 (20% cut from
2011)
India
310,000
276,000 (11% cut from
2011)
South Korea
228,000
194,000 (15% cut)
Turkey
196,000
157,000 (20% cut)
South Africa
80,000
64,000 (20% cut)
Malaysia 55,000
44,000
(20%
cut)
Sri Lanka
36,000
29,000 (20% cut)
Taiwan 35,000
28,000
(20%
cut)
Singapore
20,000
15,000 (18% cut)
Other 60,000
Cuts
unclear
Total 2.50
mbd
1.5 mbd
(40% lower than 2011)
Source: International Energy Agency, CRS calculations. June 2012
Japan and South Korea
Japan and South Korea have joined the international coalition that is pressuring Iran, in part to
maintain their close relations with the United States, but also out of concern about Iran’s nuclear
program. In September 2010, Japan and South Korea announced Iran sanctions similar to those of
the EU, including 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.
On December 16, 2011, South Korea announced new sanctions to align policy with the
November 2011 U.S. decision to sanction sales to Iran of energy sector equipment.
Both countries are cooperating with the United States and the EU targeting of Iran’s oil exports,
as shown in table above, and both were issued sanctions exemptions for at least 180 days under
P.L. 112-81. Japan has agreed to cut its oil purchases from Iran by about 20% from 2011 levels,
and South Korea slightly less so (about 15%), according to press reports and regional diplomats.
In July 2012, both countries separately indicated they might buy no oil at all from Iran in July
2012 because of the EU ban on insuring ships carrying Iranian oil. However, both Japan and
South Korea are said to be trying to work around that insurance ban, perhaps by allowing Iranian
tankers (self-insured) to bring them their oil purchases, and their buys from Iran might return to
June 2012 levels once new arrangements are worked out.
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The cooperation of Japan and South Korea was considered by U.S. officials essential to overall
U.S. strategy of cutting Iran’s exports of oil substantially because each got about 10% of its oil
from Iran. Both countries have been concerned that the U.S. sanctions against dealings with Iran’s
Central Bank would result in a sudden end to their ability to pay for Iranian oil and that this
would lead to a spike in world oil prices or a cutoff of their supplies. Japan hopes its exemption
will benefit its banks, such as Mitsubishi UFJ Financial Group, Mizuho, and Sumitomo Mitsui,
that process transactions with Iran’s Central Bank.43
India
India is implementing U.N. sanctions against Iran but its cultural, economic, and historic ties have
made India hesitant to back all aspects of U.S. and EU sanctions on Iran. India appeared to be an
enthusiastic supporter of multilateral sanctions when its central bank, in late December 2010,
announced that it would no longer use a regional body, the Asian Clearing Union, to handle
transactions with Iran. The Asian Clearing Union, based in Tehran, was set up in the 1970s by the
United Nations to ease commerce among Asian nations but there have been allegations that Iran
was using the Clearing Union to avoid limitations imposed by European and other banks. India’s
move followed President Obama’s visit there in November 2010. With India’s purchases of about
310,000 barrels per day of Iranian oil (2011 average) made difficult by the move, in February
2011, India and Iran agreed to use an Iranian bank, Europaisch-Iranische Handelsbank (EIH) to
clear the payments. When the EU named EIH and about 100 other entities as Iran proliferation-
related activities in May 2011, India and Iran again searched for an alternative payments
mechanism, eventually identifying Turkey’s Halkbank as an acceptable processor.
The U.S. law sanctioning dealings with Iran’s Central Bank (P.L. 112-81, see above) led
Halkbank in January 2012 to withdraw from that arrangement. India took advantage of that new
difficulty to force concessions from Iran, including an Iranian agreement in March 2012 to accept
payment for about 45% of the oil sales in rupees, India’s local currency, which is not convertible.
Rupee payments will facilitate the settlement of payments for oil in the form of barter trade, and
India does not have to use hard currency to pay Iran for the oil it buys.
The payments difficulties did not, in and of itself, automatically mean that India would further cut
oil imports from Iran—a key to earning an exemption from the sanctions provisions of P.L. 112-
81. Since 2008, India has reduced its imports of Iranian oil by volume and as a percentage of
India’s total oil imports, to the point where Iran (as of May 2012) only supplies about 10% of
India’s oil imports, down from over 16% in 2008. Asserting that additional reductions would
require significant investment to switch over refineries that handle Iranian crude, and would take
time, Indian leaders did not, in early 2012, pledge further significant reductions. However,
following an early May 2012 visit by Secretary of State Hillary Clinton, Deputy Oil Minister
R.P.N. Singh told India’s parliament on May 15, 2012, that India would cut Iranian imports by
another 11% from May 2012 until the end of India’s fiscal year in March 2013. The Obama
Administration welcomed the pledge, and India received an exemption in the second tranche of
exemptions issued on June 11, 2012.
The increased barter trade might lead to an expansion of India-Iran trade in purely civilian goods.
India sent a large trade delegation to Iran (March 10-14, 2012) to discuss increased exports to
43 “Japan May Cut Iran Oil Imports by Over 20 Percent” Reuters, February 23, 2012.
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Iran of staple goods such as sugar and wheat—commodities not subject to international sanctions.
An Iranian trade delegation visited India in May 2012. Indian officials say some of their major
companies, including the Tata conglomerate, have ended or reduced their business with Iran.
Some Members of Congress wrote to India’s Ambassador in Washington, DC, on March 1, 2012,
urging India to join U.S. and EU-led efforts to curb Iran’s oil exports.
China and Russia
The position of Russia, China, and several other countries—that they will impose only those
sanctions specifically required by U.N. Security Council resolutions—has been of concern to
several Members of Congress. Members and outside experts have expressed concern that Chinese
firms, in particular, might move to fill the void in Iran’s energy industry left by vacating European
firms (“backfill”), but Administration officials say they have not seen evidence of such a trend.
Some Members have also criticized successive Administrations for refusing to sanction Chinese
companies for what appear to be clear violations of ISA and other U.S. sanctions provisions.
Russia is an oil exporter itself and a need to preserve oil imports from Iran is therefore not a
factor in its Iran policy calculations. However, Russia has earned hard currency from large
projects in Iran, such as the Bushehr nuclear reactor, and it also seeks not to provoke Iran into
supporting Islamist movements in the Muslim regions of Russia and the Central Asian states that
remain politically close to Moscow.
China
Like India, China appears to be seeking to take advantage of the sanctions for its own purposes,
and in so doing signaling to Iran that it disapproves of its behavior. China had said in early 2012
that it would not reduce its oil purchases from their 2011 average level of about 550,000 barrels
per day, despite the threat of the U.S. sanctions under P.L. 112-81. Administration officials said
on June 11, 2012, that there is an ongoing dialogue with China intended to persuade it to cut its
oil buys from Iran, and China did receive a P.L. 112-81 sanctions exemption on June 28, 2012,
presumably signaling that it has pledged to reduce Iranian oil purchases by about 18%. However,
China has not commented officially on the degree of its reduction.
A sustained, continual reduction of China’s oil buys from Iran (China bought about 20% of Iran’s
total oil exports with a value of about $16 billion in 2011) is considered crucial to U.S. strategy of
reducing Iranian oil exports. China is Iran’s largest single customer. That amount has been
sufficient to offset the approximately $12 billion in goods Iran buys from China, meaning that
China has to settle only this $4 billion owed to Iran. Treasury Department officials say China
does not make extensive use of payments through Iran’s Central Bank, and press and other reports
say that the $4 billion is being largely settled in local currency or with additional Chinese exports
of goods. In late April 2012, press reports said some of the payments due to Iran might be settled
in gold.
An even more significant concern is that China may be refusing or failing to prevent Iran from
acquiring weapons and WMD technology. Secretary of State Clinton singled out China on
January 19, 2011, as not enforcing all aspects of international sanctions that bar sales of most
nuclear-related equipment to Iran; the comment came of the eve of the state visit to the United
States by President Hu Jintao. On March 9, 2011, State Department Special Adviser for Non-
Proliferation and Arms Control, Robert Einhorn, said Iran may be working with Chinese firms to
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obtain sensitive technology useful for nuclear weapons development. In some cases, Iran has
been able, according to some reports, to obtain sophisticated technology from U.S. firms.44
Turkey
Turkey is a large buyer of Iranian oil; in 2011, it averaged 196,000 bpd. Turkey also buys natural
gas from Iran through their mutual pipeline. Turkey, which has sometimes sought to mediate
between Iran and the Western countries, initially did not pledge to reduce its oil buys from Iran in
response to U.S. sanctions on Iran’s Central Bank. However, Turkish officials and press reports in
late March 2012, indicated that Turkey would cut its buys from Iran by 10%-20%. As an apparent
result, Turkey got a P.L. 112-81 sanctions exemption on June 11, 2012.
Turkey has, on several occasions, blocked or impounded Iranian arms and other contraband
shipments bound for Syria or Lebanese Hezbollah. This was discussed in the report on sanctions
implementation by the U.N. panel of experts chartered by Resolution 1929, issued on June 12,
2012.
Persian Gulf and Other Middle Eastern States
The Persian Gulf countries are, themselves, oil exporters, and their role is evaluated for their
potential to compensate for reduction in other country purchases of oil from Iran. Those Gulf
states with spare capacity, particularly Saudi Arabia, have been willing to fully supply the market,
and their cooperation with other U.S. sanctions against Iran, such as on preventing the
reexportation to Iran of U.S. technology, and halting banking relationships with and gasoline sales
to Iran, is improving. This is a departure from the recent past, in which the Gulf states appeared
hesitant to provoke Iran’s wrath by siding with U.S.-led sanctions. These considerations are
discussed in detail in CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by
Kenneth Katzman. That report discusses the relations between Iran and other Middle Eastern
states such as Syria.
Still, the UAE is very closely watched by U.S. officials because of its historic extensive business
dealings with Iran. U.S. officials offered substantial praise for the decision announced March 1,
2012, by Dubai-based Noor Islamic Bank to end transactions with Iran. Iran reportedly used the
bank to process a substantial portion of its oil payments. UAE representatives say that Iranian
banks still operating in UAE conduct transactions only in cash, leaving them virtually inactive,
but that ordering them closed outright would provoke Iran unnecessarily.
Latin America
Iran is looking to several Latin American countries, including Venezuela, Cuba, Ecuador,
Nicaragua, and Bolivia, to try to reduce the effects of international sanctions. Iran believes that
these and other Latin American countries might be willing, in part because of their own
differences with the United States, to conduct certain transactions with Iran that might be
44 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.
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sanctionable. Venezuela appears willing to help Iran and, as noted earlier in this report, its state
oil company has been sanctioned under the ISA. For the most part, however, Iran’s trade and
other business dealings with Latin America remain modest and likely to reduce the effect of
sanctions on Iran marginally at most.
Africa
As noted above, countries in Africa are not major customers for Iranian oil, with the exception of
South Africa. However, U.S. officials are concerned that Iran might increasingly look to countries
in Africa to help it circumvent international sanctions.
In June 2012, Kenya contracted to buy about 30 million barrels of Iranian oil, but cancelled the
contract the following month after the United States warned that going ahead with the purchase
could hurt U.S.-Kenya relations. In late June 2012, Rep. Howard Berman sent a letter to
Tanzania’s president warning that Tanzania could face aid cuts or other punishments if it
continued to “re-flag” Iranian oil tankers.45 Tanzania has re-flagged about 6-10 Iranian tankers.
Contrast With Previous Periods
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.46
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
45 “Tanzania Must Stop Re-Flagging Iran Tankers: U.S. Lawmaker.” Reuters, June 29, 2012.
46 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
banks. (A provision of H.R. 6296 would make sanctionable under ISA the purchase of Iranian
sovereign debt.)
World Bank Loans
The July 27, 2010, EU measures narrowed substantially the prior differences between the EU and
the United States over international lending to Iran. As noted above, the United States
representative to international financial institutions is required to vote against international
lending, but that vote, although weighted, is not sufficient to block international lending. In 1993
the United States voted its 16.5% share of the World Bank against loans to Iran of $460 million
for electricity, health, and irrigation projects, but the loans were approved. To block that lending,
the FY1994-FY1996 foreign aid appropriations (P.L. 103-87, P.L. 103-306, and P.L. 104-107) cut
the amount appropriated for the U.S. contribution to the bank by the amount of those loans. The
legislation contributed to a temporary halt in new bank lending to Iran. (In the 111th Congress, a
provision of H.R. 6296—Title VII—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.)
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.
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Table 3. Comparison Between U.S., U.N., and EU and Allied Country Sanctions
Implementation by EU and
U.S. Sanctions
U.N. Sanctions
Some Allied Countries
General Observation: Most
Increasingly sweeping, but still
EU abides by al U.N. sanctions on
sweeping sanctions on Iran of
intended to primarily target Iran’s
Iran, and new sanctions imposed by
virtually any country in the world
nuclear and other WMD programs.
EU countries since July 27, 2010,
No mandatory sanctions on Iran’s
closely aligns EU sanctions with
energy sector.
those of the U.S.
Japan and South Korean sanctions
also increasingly extensive.
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 but, as a
sector investment in Iran. Nor do
consequence of the January 23,
Executive Order 12959 bans (with
U.N. sanctions mandate restrictions
2012, EU move to ban purchases of
limited exceptions) U.S. firms from
on provision of trade financing or
oil from Iran and freeze assets of its
exporting to Iran, importing from
financing guarantees by national
Central Bank, EU sanctions are now
Iran, or investing in Iran.
export credit guarantee agencies.
nearly as extensive as the United
There is an exemption for sales to
States. EU trade with Iran restricted
Iran of food and medical products,
by Jan. 23, 2012, EU freeze on
but no trade financing or financing
Tidewater port operator assets,
guarantees are permitted.
complicating offloading of many
goods at Iranian ports.
As discussed, Japan and South
Korea in the process of reducing oil
purchases from Iran, but not ending
them outright. Japan and South
Korea also have banned medium-
and long-term trade financing and
financing guarantees.
Sanctions on Foreign Firms that
No U.N. equivalent exists. However,
As of July 1, 2012, EU to ban oil
Do Business With Iran’s Energy
preambular language in Resolution
purchases from Iran, financing for
Sector:
1929 “not[es] the potential
energy sector projects in Iran,
connection between Iran’s revenues
shipping insurance for tankers trade
The Iran Sanctions Act, P.L. 104-172
derived from its energy sector and
with Iran in petrochemicals and
(as amended most recently by the
the funding of Iran’s proliferation-
other energy sector equipment, and
Comprehensive Iran Sanctions,
sensitive nuclear activities.” This
insurance for shipping of such
Accountability, and Divestment Act
wording is interpreted by most
products (oil, petrochemicals) from
of 2010, P.L. 111-195)—and as
observers as providing U.N. support
Iran.
enhanced by Executive Order
for countries who want to ban their
13590—mandates specified sanctions companies from investing in Iran’s
Japanese and South Korean
on foreign firms that invest threshold energy sector.
measures ban new energy projects
amounts in Iran’s energy Sector or
in Iran and call for restraint on
that sell certain threshold amounts of
ongoing projects. South Korea in
refined petroleum, or equipment or
December 2011 cautioned its firms
services for oil and gas development,
not to sel energy or petrochemical
refinery or petrochemical plant
equipment to Iran.
expansion or maintenance, or
production or importation of
gasoline.
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Implementation by EU and
U.S. Sanctions
U.N. Sanctions
Some Allied Countries
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 §620A of the
sector.
Foreign Assistance Act. That section
bans U.S. assistance to countries on
Japan and South Korea measures do
the U.S. list of “state sponsors of
not specifically ban aid or lending to
terrorism.” Iran has been on this
Iran, but no such lending by these
“terrorism list” since January 1984.
countries is under way.
Iran is also routinely denied direct
U.S. foreign aid under the annual
foreign operations appropriations
acts (most recently in §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 all 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 §40 of the Arms
armored vehicles, combat aircraft,
Export Control Act (AECA, P.L. 95-
warships, and most missile systems,
No similar Japan and South Korean
92). The International Trafficking in
or related spare parts or advisory
measures announced, but neither
Arms Regulations (ITAR, 22 CFR
services for such weapons systems.
has exported arms to Iran.
Part 126.1) also cite the President’s
authority to control arms exports a
and to comply with U.N. Security
Council Resolutions.
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 §6(j) of the Export
Administration Act (P.L. 96-72) and
Japan announced ful adherence to
§38 of the Arms Export Control Act,
strict export control regimes when
there is a denial of license
evaluating sales to Iran. South Korea
applications to sell Iran goods that
has adopted similar policies.
could have military applications.
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 §1621 of the International
institutions refrain from making
concessional loans to Iran, including
Financial Institutions Act (P.L. 95-
grants or loans to Iran, except for
through international financial
118), U.S. representatives to
development and humanitarian
institutions.
international financial institutions,
purposes.
such as the World Bank, are
No specific similar Japan or South
required to vote against loans to Iran
Korea measures announced.
by those institutions.
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Implementation by EU and
U.S. Sanctions
U.N. Sanctions
Some Allied Countries
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. 102-484) 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, but Resolution
No direct equivalent, but many of
Terrorism Supporting Entities:
1747 (oper. paragraph 5) bans Iran
the Iranian entities named as
from exporting any arms—a
blocked by the EU, Japan, and South
Executive Order 13224 bans
provision widely interpreted as trying
Korea overlap or complement
transactions with entities determined to reduce Iran’s material support to
Iranian entities named as terrorism
by the Administration to be
groups such as Lebanese Hizbol ah,
supporting by the United States.
supporting international terrorism.
Hamas, Shiite militias in Iraq, and
Numerous entities, including some of insurgents in Afghanistan.
Iranian origin, have been so
designated.
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. An
of 2010 (P.L. 111-195) provides for a
extended that ban to additional
additional 60+ Iranians involved in
prohibition on travel to the U.S.,
Iranians, and forty Iranians are now
human rights abuses were subjected
blocking of U.S.-based property, and
subject to the ban. However, the
to EU sanctions since.
ban on transactions with Iranians
Iranians subject to the travel ban are
determined to be involved in serious
so subjected because of their
Japan and South Korea have
human rights abuses against Iranians
involvement in Iran’s WMD
announced bans on named Iranians.
since the June 12, 2009, presidential
programs, not because of
election there.
involvement in human rights abuses.
Restrictions on Iranian Shipping: Resolution 1803 and 1929 authorize
The EU measures announced July
countries to inspect cargoes carried
27, 2010, bans Iran Air Cargo from
Under Executive Order 13382, the
by Iran Air and Islamic Republic of
access to EU airports. The
U.S. Treasury Department has
Iran Shipping Lines (IRISL)—or any
measures also freeze the EU-based
named Islamic Republic of Iran
ships in national or international
assets of IRISL and its affiliates.
Shipping Lines and several affiliated
waters—if there is an indication that
Insurance and re-insurance for
entities as entities whose U.S.-based
the shipments include goods whose
Iranian firms is banned.
property is to be frozen.
export to Iran is banned.
Japan and South Korean measures
took similar actions against IRISL
and Iran Air.
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Implementation by EU and
U.S. Sanctions
U.N. Sanctions
Some Allied Countries
Banking Sanctions:
No direct equivalent
The EU freeze on Iran Central Bank
assets announced January 23, 2012,
During 2006-2011, several Iranian
However, two Iranian banks are
closely align EU sanctions on this
banks have been named as
named as sanctioned entities under
issue with those of the United
proliferation or terrorism supporting
the U.N. Security Council
States. In July 2012, the EU
entities under Executive Orders
resolutions.
prohibited the opening in EU
13382 and 13224, respectively (see
countries of any new branches or
Table 7 at end of report).
offices of Iranian banks. The
CISADA prohibits banking
measures also prohibit EU banks
relationships with U.S. banks for any
from offices or accounts in Iran. In
foreign bank that conducts
addition, the transfer of funds
transactions with Iran’s
exceeding 40,000 Euros (about
Revolutionary Guard or with Iranian
$50,000) between and Iranian bank
entities sanctioned under the various
and an EU bank require prior
U.N. resolutions.
authorization by EU regulators.
November 21, 2011: Treasury
November 21, 2011: Britain and
Department names Iranian financial
Canada bar their banks from any
sector as a jurisdiction of primary
transactions with Iran Central Bank.
money laundering concern.
March 2012: Brussels-based SWIFT
December 31, 2011: President
says expelled sanctioned Iranian
Obama signs Defense Authorization
banks from the electronic payment
(P.L. 112-81) preventing U.S.
transfer system.
accounts with foreign banks that
Japan and South Korea measures
process transactions with Iran’s
similar to the 2010 EU sanctions,
Central Bank.
with South Korea adhering to the
same 40,000 Euro authorization
requirement. Japan and S. Korea
froze the assets of 15 Iranian banks;
South Korea targeted Bank Mel at
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.
Paragraph 9 of Resolution 1929
prohibits Iran from undertaking “any
activity” related to ballistic missiles
capable of delivering a nuclear
weapon.
Effectiveness of Sanctions on Iran
Assessing the effectiveness of U.S. and international sanctions depends upon which goals are
being examined. The following sections examine the effectiveness of sanctions according to a
variety of criteria.
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Effect on Nuclear Negotiations
There is a consensus that U.S. and U.N. sanctions have not, to date, accomplished their core
strategic objective of compelling Iran to limit Iran’s nuclear development to purely peaceful
purposes. By all accounts—the United States, the P5+1, the United Nations, the International
Atomic Energy Agency (IAEA) - Iran has not complied with the applicable provisions of the
U.N. Security Council resolutions on its nuclear program.
However, this assessment might be altered depending on the outcome of the latest process of
nuclear talks with Iran that began in Istanbul during April 13-14, 2012, and continued in Baghdad
on May 23-24, 2012, and in Moscow during June 18-19, 2012. Technical level talks took place on
July 3, 2012, and talks between the EU and Iranian negotiation team will continue on July 24,
2012, to determine if and when high level talks might resume. The talks thus far have discussed
specific proposals that might build confidence for eventual resolution of the nuclear issue, but
Iran has demanded an early lifting of the EU oil embargo set to go into full effect on July 1, 2012.
The Administration argues that Iran’s expressed willingness to bargain seriously indicates that
sanctions are affecting leadership calculations. Others see Iran as using talks to play for time to
further develop its nuclear program.
Counter-Proliferation Effects
A related issue is whether the cumulative sanctions have directly set back Iran’s nuclear efforts by
making it difficult for Iran to import needed materials or skills. In a speech on November 22,
2011, National Security Adviser Tom Donilon said:
The effect of these sanctions has been clear. Coupled with mistakes and difficulties in Iran,
they have slowed Iran’s nuclear efforts. Sanctions and export control efforts have made it
more difficult and costly for Iran to acquire key materials and equipment for its enrichment
program, including items that Iran cannot produce itself.47
Others, however, say that there is not clear evidence that sanctions are slowing Iran’s program.
International Atomic Energy Agency (IAEA) reports have consistently said that Iran’s stockpile
of low-enriched uranium continues to expand, as do its holdings of 20% enriched uranium.48
Other Strategic Effects
Sanctions have not, to date, clearly reduced Iran’s influence in the Middle East or its strategic
capabilities in the Persian Gulf region. Iran continues to financially and militarily support militant
movements in the Middle East, including the exportation of arms to some of these movements in
contravention of U.N. Resolution 1747. Iran’s shipment of arms is discussed in the U.N. Panel of
Experts report of June 12, 2012 (U.N. document S/2012/395), discussed earlier.
A Defense Department report of April 2012, required by P.L. 111-84, discusses Iran’s increasing
capabilities in short range ballistic missiles and other weaponry, as well as acquisition of new
47 Speech by National Security Adviser Tom Donilon at the Brookings Institution. November 22, 2011.
48 http://www.isisnucleariran.org/assets/pdf/IAEA_Iran_Report_24February2012.pdf
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ships and submarines.49 It is not clear if any country violated Resolution 1929 to sell Iran ships or
submarines, or if Iran made them itself. The report also discusses Iran’s continued development of
medium range ballistic missiles. The assessment suggests that Iran is continuing to develop its
advanced conventional military capabilities despite international sanctions. The issues of Iran’s
regional influence and conventional capabilities are discussed in CRS Report RL32048, Iran:
U.S. Concerns and Policy Responses, cited earlier.
General Political Effects
The international community has hoped that international sanctions might strengthen those in Iran
who might argue that Iran’s nuclear program is carrying too high a cost. There are growing
indications of splits in the Iranian leadership—particularly between President Ahmadinejad and
the Supreme Leader. Factions loyal to Ahmadinejad and to the Supreme Leader, although all are
hardline, competed against each other in March 2, 2012, Majles (parliament) elections, and in that
election and subsequent runoff, supporters of the Supreme Leader won about 75% of the 290
seats. However, these splits do not appear to be driven by differences over international sanctions.
One U.S. intelligence official told journalists in January 2012 that the Administration believes
sanctions could also be used to undermine the Iranian regime outright, although that is not the
widely stated goal of U.S. and international sanctions.50 Many Iranians appear to blame the
regime for bringing on sanctions by refusing to compromise on the nuclear program, but many
blame the United States and its partners for imposing sanctions that hurt the population perhaps
more than they do the regime. The regime claimed a 65% turnout in the March 2, 2012, Majles
elections, and asserted the high turnout was an indication Iranians are rallying to the regime
during a time of international threat. Iran’s population, whether opposed to or supportive of the
government now, have lived through deprivation during the 1980-1988 Iran-Iraq War. The
opposition Green movement has remained largely absent from the streets since late 2009.
The regime also closely watches the attitudes and opinions of Iran’s influential merchant class
(“bazaaris”). The bazaaris’ shift against the former Shah of Iran was key to his downfall. The
bazaaris have tended to support the current regime as a provider of economic stability, but they
could shift if the economy declines even more sharply. There are anecdotal indications of bazaari
complaints about the regime’s inability to parry ever-increasing international sanctions, but no
recent organized opposition has emanated from this constituency.
Labor is also a key interest group. Labor strikes, particularly in the oil sector, were also key to the
1979 downfall of the Shah’s rule. There were anecdotal reports of labor unrest in 2011, including
strikes for overdue pay, but these strikes did not appear to have overtly political objectives.
Economic Effects
The accumulation of international, bilateral, and multilateral sanctions is beginning to take a
dramatic toll on Iran’s economy, by the admission of Iranian leaders as well as anecdotal
observations of visitors and contacts with Iranian citizens. Ahmadinejad acknowledged to the
49 Department of Defense. Annual Report of Military Power of Iran. April 2012.
50 Karen DeYoung and Scott Wilson. “Public Ire Is One Goal of Sanctions Against Iran, U.S. Official Says.”
Washington Post, January 11, 2012.
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Majles in late December 2011 that Iran is shut out of the international banking system and he
stated on July 3, 2012, that the sanctions (as of the July 1 EU oil embargo) were the most onerous
in Iran’s history, although he added they would not affect its position on the nuclear issue.
Some leaders, at times, have sought to downplay the economic effects of the sanctions. In mid-
April 2012, Ahmadinejad said Iran had enough reserve funds to hold out for 2-3 years even
without any oil sales. The Central Bank of Iran bolstered that assertion on July 1, 2012, by saying
Iran has $150 billion in foreign exchange reserves. Supreme Leader Ali Khamene’i said on July
11, 2012, that decades of sanctions had “vaccinated” Iran from the effects of current sanctions
(referring to the EU embargo) because Iran had, in that time, developed self-sufficiency.
The specific effects on Iran’s economy include the following:
• The EU oil embargo and the restrictions on transactions with Iran’s Central Bank
have had significant adverse effects on Iran, with the potential to cripple the
country economically. Oil sales account for about 70% of government revenue.
Secretary Clinton said on June 28, 2012, that Iran has already lost 1 million
barrels per day in sales—about 40% of its 2.5 million barrels per day of sales in
2011. Dutch officials say no Iranian oil has been used by the major refinery at
Rotterdam since February 2012. That could result in over $30 billion in revenue
losses in a one year period, if oil prices remain roughly where they were on July
1, 2012 (about $85 per barrel). At that level of revenue loss, Iran will likely be
forced to draw down its reserves to maintain the population’s standard of living,
and Iran would have little ability to maintain those standards once its financial
reserve is depleted. Iran might also be compelled by the losses to trim defense
and WMD program spending.
• Some oil industry professionals see potential for Iran’s oil exports to fall to about
1.2 million barrels per day, or even to 1 million barrels per day. This might
depend on whether U.S. officials are able to persuade China and other customers
to continue to cut their oil buys from Iran. Export levels that low will deplete
Iran’s reserve fund relatively rapidly.
• Iran has been storing some of the unsold oil on tankers in the Persian Gulf, and it
is building new storage tanks on shore. Iran has stored excess oil to try to keep
production levels up—shutting down wells risks harming them and it is costly
and time consuming to resume production at a well that has been shut. However,
as of July 2012, Iran reportedly is being forced to shut down some wells, and
overall oil production might have fallen below 3 million barrels per day from the
level of nearly 4.0 mbd at the end of 2011.51
• Compounding the loss of sales by volume is that many of its oil transactions
reportedly are now conducted on a barter basis—or in exchange for gold, which
is hard currency but less easier to use than cash.
• The deprivation of hard currency is causing a reduction in the value of Iran’s
currency, the rial. The effects of existing sanctions, and the worry about further
sanctions, have reportedly driven the value of the rial down from about 13,000 to
the dollar in late September 2011, to about 24,000 to the dollar after the EU
51 Peg Mackey and Alex Lawler. “Sanctions Squeeze Forces Iran to Cut Oilfield Flow.” Reuters, July 10, 2012.
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embargo took effect on July 1, 2012. The government has been unable to stanch
the decline with measures such as raising official interest rates. On the other
hand, some believe that the regime is not affected by the currency fall because it
still has access to hard currency and can use it to buy rials—or services
denominated in rials—cheaply.
• These difficulties—shipping, currency devaluation, and others—have driven up
the costs to the Iranian trading community by an estimated 40%52 - 60%. The EU
estimates its overall exports to Iran have fallen by 32% from 2011 levels,
meaning Iran is likely being deprived of many needed European-made goods for
its factories and stores. Some Iranian merchants are said to be making increased
used of hawala and other traditional payments mechanisms because of the
inability to conduct normal external banking transactions. Some merchants have
reportedly gone out of business in late 2011 and early 2012 because of the
economic conditions, and have had to lay off workers.
• Overall inflation appears to be causing public dissatisfaction. Some Iranian
homemakers boycotted their bazaar merchants in June 2012 because of an
escalation in the price of baby milk and other staples.
• Suggesting Iran’s operating budget is already struggling, some reports say the
government has fallen behind in its payments to military personnel and other
government workers. Others say the government has begun “means testing” in
order to reduce social spending payments (such as subsidy compensation,
discussed below) to some of the less needy families.
• Other press reports say that many Iranians are buying as much hard currency as
possible, anticipating further economic deterioration. At the same time, some
Iranians are profiting through purchases of assets, such as homes, partly
mitigating the effects of the overall economic deterioration.
• Beyond the issue of the cost of imported goods, the Treasury Department’s
designations of affiliates and ships belong to Islamic Republic of Iran Shipping
Lines (IRISL) reportedly are harming Iran’s ability to ship goods at all, and have
further raised the prices of goods to Iranian import-export dealers. Some ships
have been impounded by various countries for nonpayment of debts due on them.
A substantial portion of the Iranian economy depends on import-export activity,
so the damage to the merchant community from international sanctions has been
considerable. Further effects are likely in light of the EU’s freeze on shipping
insurance as of July 1, 2012, and the assets of Tidewater Middle East Company
in January 2012; the firm operates many of Iran’s ports and ports in neighboring
countries that service ships headed to Iran.
Foreign Companies Exiting the Iran Market
The sanctions have caused Iran to be viewed by international firms as “radioactive,” causing
many international firms to exit the Iranian market even if doing so (for non-U.S. firms) is not
required by any U.N. sanction. Many experts believe that, over time, the efficiency and output of
Iran’s economy will decline as foreign expertise departs and Iran attracts alternative investment
52 “Iran’s Gateway in Dubai Highlights Sanctions Bite.” Associated Press, February 1, 2011.
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from or imports goods from less capable foreign companies. On the other hand, travelers to Iran
say many foreign products, including U.S. products such as Apple I-Phones, are readily available
in Iran, suggesting that such products are being reexported to Iran from neighboring countries.
Examples of major non-U.S. companies discontinuing business with Iran include the following:
• ABB of Switzerland said in January 2010 it would cease doing business with
Iran.
• Siemens of Germany was active in the Iran telecommunications infrastructure
market, but announced in February 2010 that it would cease pursuing business in
Iran. Finemeccanica, a defense and transportation conglomerate of Italy, followed
suit, as did Thyssen-Krupp, a German steelmaker.
• Germany’s Daimler (Mercedes-Benz maker) said in April 2010 it would freeze
planned exports to Iran of cars and trucks and Porsche reportedly has suspended
its sales in Iran as well. Italian carmaker Fiat reportedly has pulled out of the Iran
market.
• Finnish mobile phone maker Nokia reportedly has stopped selling phones in Iran.
• French carmaker Peugeot, which produces cars locally in partnership with Iran’s
Khodro Group, has said it will suspend its operations in Iran from July 1, 2012.
Peugeot is 7% owned by General Motors. GM is not known to have any
involvement in or to supply any GM content to the Peugeot Iran activities, as
such GM involvement would violate the U.S. trade ban in effect for Iran.
• In August-September 2010, Japan and South Korea announced that their
automakers Toyota, Hyundai, and Kia Motors would cease selling automobiles to
Iran. However, it is unclear whether all South Korean car sales to Iran ceased—in
June 2012, South Korean trade officials said exports to Iran, including Samsung
mobile phones and Hyundai cars, would only be approved if their payment
period were 180 days or less. This restriction is to protect against Iranian
payments defaults because of the severe economic pressure Iran is under.
• Attorneys for BNP Paribas of France told the author in July 2011 that, as of 2007,
the firm was pursuing no new business in Iran, although it was fulfilling existing
obligations in that market.
• On June 30, 2011, according to press reports, the Danish shipping giant Maersk
told Iran that it would no longer operate out of Iran’s three largest ports. The
firm’s decision reportedly was based on the U.S. announcement on June 23,
2011, that it was sanctioning the operator of those ports, Tidewater Middle East
Co., as a proliferation entity under Executive Order 13382. The pullout of
Maersk will likely further raise shipping costs.
• The State Department reported on September 30, 2010, that Hong Kong company
NYK Line Ltd. had ended shipping business with Iran (on any goods).
• Persuading oil services firms to exit Iran was the intent of Executive Order 13590
of November 21, 2011, which makes such activity sanctionable. Well before the
order was issued, one large oil services firm Schlumberger, which in incorporated
in the Netherlands Antilles, said it will wind down its business with Iran.
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However, press reports citing company documents say all contracts with Iran
might not be terminated until at least 2013.53
• As discussed above, Indian diplomats told the author in April 2012 that the large
conglomerate Tata is ending its business in Iran.
Foreign Firms Reportedly Remaining in the Iran Market
Some firms continue to run the financial risk of doing business with Iran. Some of the well-
known firms that continue to do so include Alcatel-Lucent of France; Bank of Tokyo-Mitsubishi
UFJ; Bosch of Germany; Canon of Japan; 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, Alstom of France, and Schneider Electric of France, are
discussed in a 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. Other firms that work in Iran’s telecommunications sector
are discussed in the section above on sanctions to hinder Iran’s ability to monitor the Internet.
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.—bid to take over that firm.
Another example is Adabank of Turkey, which reportedly might be sold to Iran.
Subsidy Phase-Out Issue
An issue that Iran hoped would counteract some sanctions effects was a long-delayed plan to
phase out state subsidies on staple goods such staples as gasoline and some foods. International
sanctions might have helped Ahmadinejad convince the Majles (parliament) that passing the
subsidy reduction plan was urgent if Iran was to parry the effects of burgeoning international
sanctions. After several delays, the program started on December 19, 2010, with a reduction in
subsidies of gasoline and bread. Gasoline prices now run on a tiered system in which a small
increment is available at the subsidized price of about $1.60 per gallon, but amounts above that
threshold are available only at a price of about $2.60 per gallon, close to the world price. The
lower and lower middle class is being compensated with direct cash payments of about $40 per
month.54 An IMF report of August 2011, discussed above, said that the phase-out removed about
$60 billion in costs from Iran’s budget. However, some Iranian economists say that 63 million
Iranians qualify for the compensatory cash payments and that this costs the government nearly all
of the savings incurred from the subsidy phase-out.
Effect on Energy Sector Infrastructure and Development
As noted throughout, the U.S. objective has been to focus sanctions against Iran’s energy sector,
considered the engine of Iran’s economy currently and in the future. Beyond the effect of the EU
oil embargo, the Iran Sanctions Act penalties and overall reluctance of major firms to remain in
53 Stockman, Farah. “Oil Firm Says It Will Withdraw From Iran.” Boston Globe, November 12, 2010.
54 Erdbink, Thomas. “Leaving Iran’s Middle Class Behind.” Washington Post, November 7, 2010.
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Iran’s energy sector are causing Iran’s decline as a global energy producer. Even before the
international community began leaving Iran’s energy sector, Iran was having trouble maintaining
production at a level of 4 mbd, let alone increasing production. Without foreign help, Iranian
energy firms are unable to derive maximum yield from existing fields or efficiently and
effectively develop new fields.
U.S. officials in 2011 said that Iran has lost $60 billion in investment as numerous major firms
have either announced pullouts from some of their Iran projects, declined to make further
investments, or resold their investments to other companies. It is therefore highly unlikely that
Iran will attract the $145 billion in new investment by 2018 that Iran’s deputy Oil Minister said in
November 2008 that Iran needs. Similar estimates come from independent Iranian energy experts,
who say that, as of October 2011, the sector needs $130 billion in investment from 2011 until
2020.55 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.
Others maintain that Iran’s gas sector can compensate for declining oil exports, although Iran has
used its gas development primarily to reinject into its oil fields rather than to export. Iran exports
about 3.6 trillion cubic feet of gas, primarily to Turkey, but also to Armenia. On the other hand,
sanctions have rendered Iran unable to develop a liquefied natural gas (LNG) export business,
thereby reducing the benefits Iran gets from its ample gas reserves. Some Members of Congress
believe that ISA would have been even more effective in injuring Iran’s energy sector if
successive administrations had imposed ISA sanctions more aggressively.
A Government Accountability Office (GAO) report of August 3, 2011, contains tables that discuss
those firms that have discontinued commercial activity in Iran’s energy sector, as well as those
still operating and investing.56 Table 3 shows international firms that have invested or remain
invested in Iran’s energy sector. Some of them have not been determined to have violated ISA and
may be under investigation by the State Department. As discussed above, some firms have been
sanctioned, and others have avoided sanctions either through Administration waivers or
invocation of the “special rule.”
The EU sanctions apparently have also derailed a BP-NIOC joint venture in the Rhum gas field,
200 miles off the coast of Scotland. BP announced in November 2010 that it would stop
production there to ensure compliance with the EU sanctions. In addition, partners in the Trans-
Adriatic Pipeline (TAP) said in September 2010 that the pipeline would not be used to transport
Iranian gas to Europe.
Concerns About “Backfill”
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.
However, many such deals are said to be in preliminary stages, and clear examples of
“backfilling” are few, to date. Most of the companies that might backfill abandoned projects are
perceived as not being as technically capable as those that have withdrawn from Iran.
55 Khajehpour presentation at CSIS. Op. cit.
56 GAO. GAO-11-855R. Firms Reported in Open Sources As Having Commercial Activity in Iran’s Oil, Gas, and
Petrochemical Sectors. August 3, 2011.
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To try to mitigate the trend in Iran has been that the “backfill” is being conducted by domestic
companies, particularly those controlled or linked to the Revolutionary Guard (IRGC). Deals with
Polish and Russian firms fell apart in late 2011, and their projects reportedly were taken over by
domestic Iranian firms. Still, backfill by Iranian firms has potential pitfalls because foreign firms
are reluctant to partner with IRGC firms, which are increasingly targeted by international
sanctions. 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.57 Khatem ol-Anbiya took
over that project in 2006 when Norway’s Kvaerner pulled out of it.
Table 4. Post-1999 Major Investments/Major Development Projects
in Iran’s Energy Sector
Company(ies)/Status
Date Field/Project
(If Known)
Value
Output/Goal
Feb.
Doroud (oil)
Total (France)/ENI
$1 billion
205,000 bpd
1999
(Italy)
(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
(“News in Brief: Iran.” Middle East
(Japan)
Economic Digest, (MEED) January 24,
2003.)
Royal Dutch exempted from sanctions on
9/30 because of pledge to exit Iran
market
April
Norsk Hydro and
$105 million
65,000
2000
Anaran bloc (oil)
Statoil (Norway) and
Gazprom and Lukoil
(MEED Special Report, December 16,
(Russia) No production
2005, pp. 48-50.)
to date; Statoil and
Norsk have left project.
July
Phase 4 and 5, South Pars (gas)
ENI
$1.9 billion
2 billion cu.
2000
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—
GVA Consultants
$225 million
NA
2001
construction of submersible drilling rig
(Sweden)
for Iranian partner
(IPR Strategic Business Information
57 “Iran Revolutionary Guards Pull Out of Gas Deal Over Sanctions.” Platts, July 19, 2010.
Congressional Research Service
52
Iran Sanctions
Company(ies)/Status
Date Field/Project
(If Known)
Value
Output/Goal
Database, March 11, 2001.)
June
Darkhovin (oil)
ENI
$1 billion
100,000 bpd
2001
(“Darkhovin Production Doubles.” Gulf
Field in production
Daily News, May 1, 2008.) ENI told CRS
in April 2010 it would close out all Iran
operations by 2013.
ENI exempted from sanctions on 9/30, as
discussed above
May
Sheer Energy
$80 million
25,000 bpd
2002
Masjid-e-Soleyman (oil)
(Canada)/China
National Petroleum
(“CNPC Gains Upstream Foothold.”
Company (CNPC).
MEED, September 3, 2004.)
Local partner is
Naftgaran Engineering
Sept.
LG Engineering and
$1.6 billion
2 billion cfd
2002
Phase 9 + 10, South Pars (gas)
Construction Corp.
(now known as GS
(“OIEC Surpasses South Korean
Engineering and
Company in South Pars.” IPR Strategic
Construction Corp.,
Business Information Database,
South Korea)
November 15, 2004.)
On stream as of early
2009
October
Phase 6, 7, 8, South Pars (gas)
Statoil (Norway)
$750 million
3 billion cfd
2002
(Source: Statoil, May 2011)
Field began producing late 2008;
operational control handed to NIOC in
2009. Statoil exempted from sanctions on
9/30/2010 because Statoil pledged to exit
Iran market.
January
Azadegan (oil)
Inpex (Japan) 10%
$200 million
260,000 bpd
2004
stake. CNPC agreed to
(Inpex stake);
(“Japan Mul s Azadegan Options.” APS
develop “north
China $1.76
Review Oil Market Trends, November
Azadegan” in Jan. 2009
billion
27, 2006.)
October 15, 2010: Inpex announced it
would exit the project by selling its stake;
“special rule” exempting it from ISA
investigation invoked November 17,
2010.
August
Tusan Block
Petrobras (Brazil)
$178 million
No
2004
production
Oil found in block in Feb. 2009, but not in
commercial quantity, according to the
firm. (“Iran-Petrobras Operations.” APS
Review Gas Market Trends, April 6,
2009; “Brazil’s Petrobras Sees Few
Prospects for Iran Oil,”
(http://www.reuters.com/article/
idUSN0317110720090703.)
October
Yadavaran (oil)
Sinopec (China), deal
$2 billion
300,000 bpd
2004
finalized Dec. 9, 2007
Congressional Research Service
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Iran Sanctions
Company(ies)/Status
Date Field/Project
(If Known)
Value
Output/Goal
Formal start of development of the field
still delayed as of September 2011
(“China Curbs Iran Energy Work,”
Reuters, September 2, 2011)
2005
Saveh bloc (oil)
PTT (Thailand)
?
?
GAO report, cited below
June
Garmsar bloc (oil)
Sinopec (China)
$20 million
?
2006
Deal finalized in June 2009
(“China’s Sinopec signs a deal to develop
oil block in Iran—report,” Forbes, 20
June 2009, http://www.forbes.com/feeds/
afx/2006/06/20/afx2829188.html.)
July
Arak Refinery expansion
Sinopec (China); JGC
$959 million
Expansion to
2006
(Japan). Work may have (major initial
produce
(GAO reports; Fimco FZE Machinery
been taken over or
expansion;
250,000 bpd
website; http://www.fimco.org/index.php?
continued by Hyundai
extent of
option=com_content&task=view&id=70&
Heavy Industries (S.
Hyundai work
Itemid=78.)
Korea)
unknown)
Sept.
Khorramabad block (oil)
Norsk Hydro and
$49 million
?
2006
Statoil (Norway).
Seismic data gathered, but no production
is planned. (Statoil factsheet, May 2011)
Dec.
North Pars Gas Field (offshore gas).
China National
$16 billion
3.6 billion cfd
2006
Includes gas purchases
Offshore Oil Co.
Work crews reportedly pulled from the
project in early-mid 2011. (“China Curbs
Iran Energy Work” Reuters, September 2,
2011)
Feb.
LNG Tanks at Tombak Port
Daelim (S. Korea)
$320 million
200,000 ton
2007
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.
Feb.
Phase 13, 14—South Pars (gas)
Royal Dutch Shell,
$4.3 billion
?
2007
Repsol (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 Department said on September 30,
2010, that Royal Dutch Shel and Repsol
have ended negotiations with Iran and will
Congressional Research Service
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Iran Sanctions
Company(ies)/Status
Date Field/Project
(If Known)
Value
Output/Goal
not pursue this project any further
March
Esfahan refinery upgrade
Daelim (S. Korea)
NA
2007
(“Daelim, Others to Upgrade Iran’s
Esfahan Refinery.” Chemical News and
Intelligence, March 19, 2007.)
July
Phase 22, 23, 24—South Pars (gas)
Turkish Petroleum
$12. billion
2 billion cfd
2007
Company (TPAO)
Pipeline to transport Iranian gas to
Turkey, and on to Europe and building
three power plants in Iran. Contract not
finalized to date.
Dec.
Golshan and Ferdows onshore and
SKS Ventures,
$16 billion
3.4 billion cfd
2007
offshore gas fields and LNG plant
Petrofield Subsidiary
(Malaysia)
contract modified but reaffirmed
December 2008
(GAO report; Oil Daily, January 14,
2008.)
2007
Jofeir Field (oil)
Belarusneft (Belarus)
$500 million
40,000 bpd
(unspec.)
under contract to
GAO report cited below. Belarusneft, a
Naftiran.
subsidiary of Belneftekhim, sanctioned
under ISA on March 29, 2011. Naftiran
No production to date
sanctioned on September 29, 2010, for
this and other activities.
2008
Dayyer Bloc (Persian Gulf, offshore,
Edison (Italy)
$44 million
?
oil)
GAO report cited below
Feb.
Lavan field (offshore natural gas)
PGNiG (Polish Oil and
$2 billion
2008
Gas Company, Poland)
GAO report cited below invested.
PGNiG invested, but delays caused Iran
to void PGNiG contract in December
2011. Project to be implemented by
Iranian firms. (Fars News, December 20,
2011)
March
Danan Field (on-shore oil)
Petro Vietnam
? ?
2008
Exploration and
“PVEP Wins Bid to Develop Danan
Production Co.
Field.” Iran Press TV, March 11, 2008
(Vietnam)
April
Iran’s Kish gas field
Oman (co-financing of
$7 billion
1 billion cfd
2008
project)
Includes pipeline from Iran to Oman
(http://www.presstv.ir/detail.aspx?id=
112062§ionid=351020103.)
April
Moghan 2 (onshore oil and gas,
INA (Croatia)
$40-$140
?
2008
Ardebil province)
million
(dispute over
GAO report cited below
size)
-
Kermanshah petrochemical plant
Uhde (Germany)
300,000
(new construction)
metric tons/yr
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Iran Sanctions
Company(ies)/Status
Date Field/Project
(If Known)
Value
Output/Goal
GAO report cited below
January
“North Azadegan”
CNPC (China)
$1.75 billion
75,000 bpd
2009
(Chinadaily.com. “CNPC to Develop
Azadegan Oilfield,”
http://www.chinadaily.com.cn/bizchina/
2009-01/16/content_7403699.htm.)
January
Bushehr Polymer Plants
Sasol (South Africa)
?
Capacity is 1
2009
million tons
Production of polyethelene at two
per year.
polymer plants in Bushehr Province
Products are
exported
(GAO August 2011 report)
from Iran.
March
Phase 12 South Pars (gas)—part 1. Incl.
Taken over by Indian
$8 billion
20 million
2009
LNG terminal construction and Farzad-B
firms (ONGC, Oil India from Indian
tonnes of
natural gas bloc. Project stalled due to
Ltd., Hinduja, Petronet
firms/$1.5
LNG annually
sanctions; ONGC and Hinduja have had
in 2007). Sonanagol
billion
by 2012
difficulty financing the project. Sonangol
(Angola) has 20% stake, Sonangol/$780
reportedly exited project in February 2012
and PDVSA (Venezuela) million
due to inability to finance its stake.
involved as well.
PDVSA
“Noose Tightens Around Iran Oil.”
Washington Post, March 6, 2012.
August
Abadan refinery
Sinopec
up to $6
2009
billion if new
Upgrade and expansion; building a new
refinery is
refinery at Hormuz on the Persian Gulf
built
coast
October
South Pars Gas Field—Phases 6-8,
G and S Engineering
$1.4 billion
2009
Gas Sweetening Plant
and 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
Daelim (S. Korea)—
$4 billion ($2
2009
Part 3
Part 2; Tecnimont
bn each part)
(Italy)—Part 3
(“Italy, South Korea To Develop South
Pars Phase 12.” Press TV (Iran),
November 3, 2009,
http://www.presstv.com/pop/Print/?id=
110308.)
Feb.
South Pars: Phase 11
CNPC (China)
$4.7 billion
2010
Drilling was to begin in March 2010, but
drilling still delayed as of September 2011.
(“China Curbs Iran Energy Work,”
Reuters, September 2, 2011)
2011
Azar Gas Field
Gazprom (Russia)
Gazprom contract voided in late 2011 by
Iran due to Gazprom’s unspecified failure
to fulfill its commitments.
Congressional Research Service
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Iran Sanctions
Company(ies)/Status
Date Field/Project
(If Known)
Value
Output/Goal
Dec.
Zagheh Oil Field
Tatneft (Russia)
$1 billion
55,000 barrels
2011
per day within
Preliminary deal signed December 18, 2011
five years
(Associated Press, December 18, 2011)
Sources: As noted in table, as wel as CRS conversations with officials of the State Department Bureau of
Economics, and officials of embassies of the parent government of some of the listed companies (2005-2009).
Some information comes: 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. That
report was updated on August 3, 2011, in GAO-11-855R. http://www.gao.gov/new.items/d11855r.pdf.
Note: CRS has neither the mandate, 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 virtual y 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.
Effect on Gasoline Availability and Importation
In March 2010, well before the enactment of CISADA on July 1, 2010, several gas suppliers to
Iran, anticipating this legislation, announced that they had stopped or would stop supplying
gasoline to Iran.58 Others have ceased since the enactment of CISADA. Some observers say that
gasoline deliveries to Iran fell from about 120,000 barrels per day before CISADA to about
30,000 barrels per day immediately thereafter,59 although importation recovered to about 80,000
barrels per day by September 2011 and has remained roughly around that level since. Some
gasoline sellers appear to be selling to Iran despite the imposition of sanctions on some firms
selling gasoline to Iran, as discussed below.
The phaseout of gasoline subsidies discussed above has reduced demand for gasoline. Iran has
also increased domestic production by converting at least two petrochemical plants to gasoline
production, through a generally inferior process that initially produces benzene, leading to a large
increase in air pollution in Tehran. Iran also says it has accelerated renovations and other
improvements to existing gasoline refineries, allocating $2.2 billion for that purpose. Even before
the subsidy reduction, there had not been significant gasoline shortages or gasoline rationing.
Building new refining capacity appears to be Iran’s long term effort to reduce its vulnerability to
gasoline supply reductions. 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 for this purpose. Given Iran’s economic difficulties as of mid-2012, it is
doubtful Iran has the resources to invest at that level for this purpose.
58 Information in this section derived from, Blas, Javier. “Traders Cut Iran Petrol Line.” Financial Times, March 8,
2010.
59 Information provided at Foundation for Defense of Democracies conference on Iran. December 9, 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). As
noted in a New York Times report of March 7, 2010,60 and a Government Accountability Office
study released September 3, 2010,61 some firms that have supplied Iran have received U.S. credit
guarantees or contracts:
• 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).
Reliance has also told press outlets on April 1, 2010, that it would not import
Iranian crude oil in 2010;
• Petronas of Malaysia (said on April 15, 2010, it had stopped sales to Iran);62
• Lukoil of Russia (reportedly to have ended sales to Iran in April 2010,63 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 told U.S. officials it is no longer selling
gasoline to Iran, as of September 2010;64
• Tupras of Turkey (according to the State Department on May 24, 2011);
• British Petroleum of United Kingdom, Shell, Q8, Total, and OMV are no longer
selling aviation fuel to Iran Air, according to U.S. State Department officials on
May 24, 2011;
• A UAE firm, Golden Crown Petroleum FZE, told the author in April 2011 that, as
of June 29, 2010, it no longer leases vessels for the purpose of shipping
petroleum products from or through Iran;
• 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;65
• 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
60 Becker, Jo and Ron Nixon. “U.S. Enriches Companies Defying Its Policy on Iran.” New York Times, March 7, 2010.
61 GAO-10-967R. Exporters of Refined Petroleum Products to Iran. September 3, 2010.
62 http://www.ft.com/cms/s/0/009370f0-486e-11df-9a5d-00144feab49a.html.
63 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
64 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
65 http://www.defenddemocracy.org/index.php?option=com_content&task=view&id=11788115&Itemid=105.
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clauses in their contracts that enable ship owners to refuse to deliver gasoline to
Iran;
• According to the State Department on May 24, 2011, Linde of Germany has said
it had stopped supplying gas liquefaction technology to Iran, contributing to
Iran’s decision to suspend its LNG program.
Firms Believed to Still Be Supplying Gasoline or Related Equipment
• The firms sanctioned by the Administration on May 24, 2011 (discussed above):
PCCI (Jersey/Iran); Royal Oyster Group (UAE); Speedy Ship (UAE/Iran);
Tanker Pacific (Singapore); Ofer Brothers Group (Israel); Associated
Shipbroking (Monaco); and Petroleos de Venezuela (Venezuela). These firms
have not announced cessation of deliveries to Iran following the sanctioning.
• 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; (Zhuhai
Zhenrong was sanctioned for this activity on January 12, 2012, as noted above,
but there are no indications it has stopped selling the activity.)
• Emirates National Oil Company of UAE was reported by GAO to still be selling
to Iran, and another UAE energy trader, FAL, was sanctioned on January 12,
2012, as discussed above.
• Hin Leong Trading of Singapore was reported by GAO to still be selling gasoline
to Iran and Kuo Oil of Singapore was sanctioned for selling gasoline to Iran on
January 12, 2012, as discussed above;
• Some refiners in Bahrain reportedly may still be selling gasoline to Iran.
Humanitarian Effects/Air Safety
The effects of sanctions on the population’s living standards was discussed above. Some Iranian
pilots have begun to complain publicly and stridently that U.S. sanctions are causing Iran’s
passenger airline fleet to deteriorate to the point of jeopardizing safety. Since the U.S. trade ban
was imposed in 1995, 1,700 passengers and crew of Iranian aircraft have been killed in air
accidents, although it is not clear how many of the crashes, if any, were due specifically to the
difficultly in providing U.S. spare parts to Iran’s fleet.66
Additional Sanctions: Possible Legislative,
Administrative, and Multilateral Action
As discussed above, the Administration and its international partners have now begun to sanction
what Iran perceives is its vital interest—its oil exports. However, the Administration maintains
that the implementation of the oil-related sanctions be calibrated so as not to cause a sudden spike
66 Thomas Erdbink. “Iran’s Aging Airliner Fleet Seen As Faltering Under U.S. Sanctions.” July 14, 2012.
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in world oil prices or a backlash among key U.S. partners that would fracture international
solidarity against Iran. Some in the 112th Congress believe that the cumulative effects of U.S. and
international sanctions—even after the EU embargo and other steps taken—remain insufficient to
accomplish key U.S. policy goals toward Iran, and are advocating further steps. Still, the
Administration prefers taking its own action—which it can calibrate to take into account the
views of U.S. partner countries—rather than be bound by specific congressional requirements.
Major Bills Pending: H.R. 1905
Several major bills have advanced in both chambers. Two House bills, H.R. 1905, the “Iran
Threat Reduction Act of 2011” and H.R. 2105 (“The Iran, North Korea, and Syria
Nonproliferation Reform and Modernization Act.”) passed the House on December 14, 2011.
H.R. 2105 passed 418-2, and H.R. 1905 passed 410-11. The latter bill is highly similar to S. 1048,
discussed below. On May 21, 2012, the Senate substituted the provisions of S. 2101 (the Iran
Sanctions, Accountability, and Human Rights Act, that combines elements of the House bills and
of S. 1048, along with some managers and other amendments) and passed H.R. 1905 by voice
vote. The Senate vote set up negotiations on the two chambers’ differing versions of H.R. 1905,
during which it is possible that provisions of other pending bills, or even provisions not
introduced to date, might be considered for inclusion. The negotiations are ongoing as of mid-
July 2012, with the apparent goal of completing work before the August 2012 recess.
Table 5.Comparison of Major Provisions of H.R. 1905
House-passed version
Senate-passed version (S. 2101 as amended)
Restates virtual y al provisions of the Iran Sanctions Act
No equivalent
Adds two sanctions to the available ISA menu: a ban on
Similar provision
visas for the principal officers or controlling shareholders
of sanctioned firms (and their subsidiaries, parents, and
affiliates); and application of any other ISA sanction to the
principal officers of a sanctioned firm.
Requires the President to impose at least 6 out of the
expanded ISA menu of 11 available sanctions on any
sanctioned firm.
Extends ISA sanctions (majority of the menu) any firm
Extends ISA sanctions to persons who participate in
that helps Iran issue sovereign debt.
energy related joint ventures with Iran.
Does not extend ISA sanctions to energy joint ventures
Codifes Executive Order 13590 to apply ISA sanctions to
with Iran.
providers of energy and petrochemical equipment to
Iran.
Subjects U.S. persons to penalty if they conduct any
Subjects to ISA sanctions foreign persons who engage in
business with the IRGC or its affiliated entities, or with
“significant” transactions with the IRGC, its agents, or
any foreign firm that conducts such banned transactions
affiliates.
with the IRGC or its affiliates.
Bars foreign aid, arms sales, and U.S. support for loans to
any government providing support to the IRGC.
Bans commerce between Iran and subsidiaries of U.S.
Similar provision
firms, in cases where the subsidiary is controlled or more
than 50% owned by the parent firm.
Bans previously permissible licensing of the sale to Iran of
U.S. equipment to provide for the safe operation of Iran’s
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civilian aircraft fleet.
States that it is U.S. policy to support those in Iran
seeking democracy, and require an Administration
submission to Congress of a comprehensive strategy to
help the Iranian people circumvent regime censorship
and monitoring of their use of the Internet or other
media.
Authorizes aid to groups promoting democracy in Iran.
Requires an Administration report listing al persons who Excludes from the United States Iranian students who
are members of named Iranian government institutions,
study issues related to Iran’s energy sector or nuclear
including high ranking IRGC officers—and ban visas for
program.
the named individuals.
Contains elements similar to H.R. 740 on Securities and
Similar provision
Exchange Commission (SEC) disclosures.
Sanctions Iran’s Central Bank if the President determines
that it helped Iran acquire WMD or facilitated
transactions for the Revolutionary Guard or for entities
sanctioned by the United States. (This sanction may have
been mooted by enactment of P.L. 112-81.)
Sets as U.S. policy to press Iraq not to close Camp
No equivalent
Ashraf. This may have been mooted by the move of the
residents of Ashraf to a former U.S. base near Baghdad.
No equivalent
Bars foreign banks from the U.S. market if they process
transactions with the Iran National Oil Company (NIOC)
and the Iran National Tanker Company (NITC). (This is
similar to a stand-alone bill, H.R. 3843.)
No equivalent
Authorizing sanctions against the inter-bank
communication system SWIFT (Society for Worldwide
Interbank Financial Telecommunication), its directors and
significant shareholders—and similar services—if they
continue to process transactions with Iranian banks.
No provisions on Syria
Strengthens U.S. sanctions against Syria.
No equivalent
Strengthens sanctions against persons aiding censorship
in Iran, or who fail to prevent Iran from jamming or
manipulating broadcast signals, including by satellite
service providers for Iran.
No equivalent
A sense of Congress that “al options are on the table”
with respect to Iran and clarification that no provision is
to be construed as authorization for military force
against Iran (or Syria).
No equivalent
Considers as Iranian “assets” securities owned by Iran
and held by or transferred via clearing corporations—and
therefore subjects such holdings to U.S. impoundment
for the purpose of paying judgments against Iran for past
acts of terrorism.
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H.R. 2105/S. 1048: The Iran, North Korea, and Syria Nonproliferation Reform
and Modernization Act/Iran, North Korea, and Syria Sanctions Consolidation
Act of 2011
A Senate bill that focuses primarily on economic sanctions and proliferation sanctions is S. 1048,
introduced May 23, 2011. H.R. 2105, which has provisions similar to S. 1048 was passed on
December 14, 2011, as noted above. Among other provisions, S. 1048:
• States (§101) that it is the policy of the United States to prevent Iran from
acquiring a nuclear weapons capability.
• Primarily targets affiliates of the IRGC for sanctions, and expands the list of
sanctions (adding a ban on financing, aid, or investment) to be imposed on
violating entities named under the Iran, North Korea, Syria, Non-Proliferation
Act INKSNA), discussed earlier in this report.
• Like H.R. 1905, subjects to ISA sanctions purchases of Iranian oil or gas in
which the IRGC or its affiliates are involved.
• Like H.R. 1905, mandates sanctions (§123, a ban on U.S. government contracts
and ban on imports to the United States) on any entity determined to have
conducted any commercial or financial transaction with the IRGC or its affiliates.
• Sanctions foreign firms that participate in energy-related joint ventures with Iran
outside Iranian territory.
• Prohibits ships to put into port in the United States if the vessel entered a port in
Iran, North Korea, or Syria any time 180 days prior.
• Like H.R. 1905, denies visas to senior officials of Iran, but extends that to North
Korea and Syria, and does not define specific government agencies in Iran whose
members shall be named by the Administration.
• Provides for sanctions against any person determined to be providing or
acquiring militarily useful equipment to/from Iran, North Korea, or Syria.
• Contains Iran human rights-related and SEC disclosure provisions similar to bills
discussed below.
Other Proposals in the 112th Congress
Another apparent trend in the 112th Congress, based on introduced legislation, is to expand the
sanctioning of Iranians named as human rights abusers. This builds on the human rights
provisions of CISADA and the earlier Iran Freedom Support Act. In particular, the Iran Human
Rights and Democracy Promotion Act of 2011 (S. 879 and H.R. 1714) would make mandatory
investigations of Iranian human rights abusers; sanction the sale to Iran of equipment that could
be used to suppress demonstrations; reauthorize the Iran Freedom Support Act (see below); and
create a “Special Representative” position at the Department of State to focus on highlighting
Iran’s human rights abuses and coordinate U.S. and international responses. As noted, portions of
both versions of H.R. 1905 contains measures to further penalize Iranian human rights abusers
and promote democracy in Iran.
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Among other economic sanctions-related measures introduced in the 112th Congress include S.
366 and H.R. 740, which would require firms to declare in their required filings with the
Securities and Exchange Commission whether that firm had undertaken activity that could violate
ISA, CISADA, or executive orders (13224 or 13382) and regulations that bar dealings with
designated Iranian entities. Another bill, H.R. 4317, would require sanctions against any foreign
firm that conducts any transaction with Iran’s energy sector, including oil purchasing, although
with a waiver if the parent country significantly reduces oil buys from Iran. Another bill, H.R.
4070, would seek to freeze Iranian assets held by a clearing corporation (such as the Clearstream
account discussed above) and use the funds to pay judgments against Iran for acts of terrorism.
Possible Additional Multilateral Sanctions
Although there do not appear to be active discussions among the P5+1 on specific new United
Nations actions to pressure Iran, there are a number of other possible sanctions that might receive
consideration—either in a multilateral framework or for U.S. unilateral action targeting foreign
firms and entities.
Comprehensive Oil Embargo
Most experts believe that the most effective sanction would be a mandated, worldwide embargo
on the purchase of Iranian crude oil. Despite the imposition of an embargo on Iranian oil
purchases by the EU, there are no indications that a comprehensive worldwide embargo is to be
proposed at the United Nations in the near term or that doing so would achieve consensus. A U.S.
unilateral move to compel others to cease purchasing Iranian oil does not appear under
consideration, although the sanctions against Iran’s Central Bank approaches that position. Short
of imposing a military quarantine on Iran, the United States does not have the ability, by itself, to
prevent Iran from exporting oil.
In the 111th Congress, 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. A provision of that bill would have extended ISA sanctionability to any energy
project conducted with NIOC, anywhere in the world. An amended version of the bill was
introduced in the 112th Congress (H.R. 1655, introduced April 15, 2011). Other pending
provisions of H.R. 1905 and S. 1048 would sanction oil related transactions with Iran if those
transactions involve the IRGC.
Iran “Oil-Free Zone”
As noted above, a voluntary ban on importing Iranian oil has been imposed by the EU. Prior to
the EU move, there was discussion of forcing a similar result by closing the loophole in the U.S.
trade ban under which Iranian crude oil, when mixed with other countries’ oils at foreign
refineries in Europe and elsewhere, can be imported as refined product. That would likely cause
EU and other major refiners to stop buying Iranian oil. The basis of the proposal is that restricting
Iranian oil to use by only a limited number of refineries would force down the price received by
Iran for its oil, although without raising the world price of oil significantly, if at all. Some argue
this concept has been overtaken by events because of the EU oil embargo, while others say the
step still has value in making sure the EU oil embargo on Iran is not easily lifted or modified.
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Other Possibilities
In recent years, there has been discussion of other possible international steps, although many of
these ideas are now so widely adopted by U.S. partner countries so as to possible moot their
inclusion in any new U.N. Resolution.
• Mandating Reductions in Diplomatic Exchanges with Iran or Prohibiting Travel
by Iranian Officials. Some have suggested a worldwide ban on travel to Iranian
civilian officials, such as those involved in suppressing democracy activists.
Some have called on countries to reduce their diplomatic presence in Iran, or to
expel some Iranian diplomats from Iranian embassies in their territories.
However, the EU came one step closer to this option after the November 29
attack on the British Embassy in Tehran: Britain closed the Iranian embassy in
Britain, and Norway, France, Germany, and the Netherlands withdrew their
ambassadors. The EU, as noted, on December 1, 2011, named numerous Iranian
persons as subject to a visa ban.
• Barring Iran from International Sporting Events. A further option is to limit
sports or cultural exchanges with Iran, such as Iran’s participation in the World
Cup soccer tournament. However, many experts oppose using sporting events to
accomplish political goals.
• Banning Passenger Flights to and from Iran. Bans on flights to and from Libya
were imposed on that country in response to the finding that its agents were
responsible for the December 21, 1988, bombing of Pan Am 103 (now lifted).
There are no indications that a passenger aircraft flight ban is under consideration
among the P5+1.
• A Ban on Exports to Iran of Refined Oil Products and Energy Equipment and
Services. Another possibility is to make compulsory a worldwide ban on sales of
energy equipment or services to Iran. Such a measure would be aimed at firms
not banned or dissuaded from such activity by EU or U.S. sanctions discussed
above. During the 1990s, U.N. sanctions against Libya for the Pan Am 103
bombing banned the sale of energy equipment to Libya.
• Limiting Lending to Iran by International Financial Institutions. Resolution 1747
calls for restraint on but does not outright ban international lending to Iran. An
option is to make a ban on such lending mandatory. Some U.S. groups have
called for the International Monetary Fund (IMF) to withdraw all its holdings in
Iran’s Central Bank and suspend Iran’s membership in the body.
• Banning Trade Financing or Official Insurance for Trade Financing. Another
option is to mandate a ban on official trade credit guarantees. This was not made
mandatory by Resolution 1929, but several countries imposed this sanction (as
far as most trade financing) subsequently. In discussions that led to Resolution
1929, a ban on investment in Iranian bonds reportedly was considered but deleted
to attract China and Russia’s support.
• Banning Worldwide Investment in Iran’s Energy Sector. This option would
represent an “internationalization” of the Iran Sanctions Act. Such a step is
authorized, not mandated, by Resolution 1929, and a growing number of
countries have used that authority to impose these sanctions on Iran.
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• Restricting Operations of and Insurance for Iranian Shipping. One option,
reportedly long under consideration, has been a worldwide ban on provision of
insurance or reinsurance for any shipping to or from Iran. A call for restraint is in
Resolution 1929, but is not mandatory. As of July 1, 2012, the EU is slated to ban
such insurance, and many of the world’s major insurers are in Europe.
• Imposing a Worldwide Ban on Sales of Arms to Iran. Resolution 1929 imposes a
ban on sales of major weapons systems to Iran, but another option is to extend
that ban to all lethal equipment.
Sanctions Easing/Incentives
Some believe that the United States and its international partners need to prepare for possibly
easing sanctions as part of a nuclear agreement with Iran. Although Iran wants the EU oil
embargo voided entirely, during the rounds of talks with Iran in 2012 the P5+1 have offered more
modest steps as “reciprocity” for any agreement with Iran. Steps offered included civilian aircraft
parts, civilian assistance to Iran’s nuclear reactor that is used to produce medical isotopes, safety
upgrades for the civilian reactor at Bushehr, and possibly technical assistance to Iran’s energy
sector. The negotiating group was also said to be considering offering, as part of a nuclear
agreement, to not implement the EU ban on shipping insurance to Iranian oil tankers, a ban
scheduled that went into effect July 1, 2012, in concert with the EU oil purchase embargo.
Other observers say that existing sanctions are purely punitive. Some observers believe that the
international community should offer incentives - such as promises of aid, investment, trade
preferences, and other benefits—if there were to be a new regime formed in Iran. Others say such
incentives should be provided in exchange for full Iranian compliance on a broad range of issues,
and not contingent on a change of regime.
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Table 6. Provisions and Implementation of CISADA (P.L. 111-195)
General Goals and Overview: Expand the authorities of the Iran Sanctions Act (ISA, P.L. 104-172) to deter sales
by foreign companies of gasoline to Iran. Adds new provisions sanctioning Iranians determined to be involved in
human rights abuses and prohibiting transactions with foreign banks that conduct business with Revolutionary Guard
and U.N.-sanctioned Iranian entities.
Statement of U.S. Policy on Sanctioning Iran’s Central Bank (Bank Markazi):
Section 104 (see below) contains sense of Congress urging U.S. sanctions against Iranian Central Bank and would
prohibit U.S. bank dealings with any financial institution that helps the Central Bank facilitate circumvention of U.N.
resolutions on Iran.
Extension of ISA to Sales of Gasoline:
Section 102(a) contains provisions amending ISA to make sanctionable sales of gasoline and provision of services and
equipment that Iran could use to manufacture its own gasoline or import gasoline. Such services include shipping or
shipping insurance, and equipment (such as ships).
Sets dollar value “trigger” for such sales or services at $1 million transaction, or $5 million aggregate value
(equipment or gasoline sales) in a one-year period.
Specifies that what is sanctionable includes helping Iran develop its liquefied natural gas (LNG) sector. Products whose
sales are sanctionable include LNG tankers and products to build pipelines used to transport oil or LNG. Includes
aviation fuel in definition of refined petroleum.
Formally reduces investment threshold to $20 million to trigger sanctionability.
Expansion of ISA Sanctions:
Section 102(b) amends ISA to add three sanctions to the existing menu of six sanctions in ISA and requires the President
to impose 3 out of the 9 specified sanctions on entities determined to be violators.
(As it previously existed, ISA required the imposition of two out of six sanctions of the menu.)
U.S. Government Enforcement Mechanism:
Section 102(b) amends ISA by adding a provision similar to the House version: requiring, within 90 days of enactment
(by October 1, 2010) new Federal Acquisition Regulations that mandate that firms to certify that they are not in
violation of ISA as a condition of receiving a U.S. government contract, and providing for penalties for any falsification.
The Civilian Agency Acquisition Council issued the needed regulations (interim ruling) on September 29, 2010.
Paperwork that firms must sign making that certification now included as part of their contract signature package.
Additional Sanctions Against Suppliers of Nuclear, Missile, or Advanced Conventional Weapons
Technology to Iran:
Section 102(a)(2) amends ISA by adding a prohibition on licensing of nuclear materials, facilities, or technology to any
country which is the parent country of an entity determined to be sanctioned under ISA for providing WMD
technology to Iran.
Waiver is provided on vital national security interest grounds.
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Alterations to Waiver and Implementation Provisions:
Section 102(g) amends ISA to make mandatory the beginning of an investigation of potential y sanctionable activity
upon receipt of credible information of a potential violation. Makes mandatory a decision on sanctionability within 180
days of the beginning of such an investigation. (Previously, 180-day period was nonbinding.)
Mandatory investigation (which goes into effect July 1, 2011) of gasoline sales to Iran can be delayed for 180 days
subject to a report—by June 1, 2011—certifying that there has been a substantial reduction in gasoline sales to Iran as
a result of CISADA.
Section 102(c) sets 9(c) waiver standard as “necessary to the national interest”
Section 102(g) also alters existing 4(c) ISA waiver to delay sanctions on firms of countries that are “closely
cooperating” with U.S. efforts against Iran’s WMD programs. (This is not an automatic “carve out” for cooperating
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.
Required Reports:
Various reporting requirements throughout (separate from those required to trigger or justify the various sanctions
or waivers). These reporting requirements are:
- Amendment of Section 10 of ISA to include a report, within 90 days of enactment, and annual thereafter, on trade
between Iran and the countries of the Group of 20 Finance Ministers and Central Bank Governors. (From House
version)
- Section 110 of the law (not an amendment to ISA) requires a report within 90 days, and every 180 days hence, on
investments made in Iran’s energy sector since January 1, 2006. The report must include significant joint ventures
outside Iran in which Iranian entities are involved.
- The Section 110 report is to include an estimate of the value of ethanol imported by Iran during the reporting
period.
Not clear whether Section 110 reports have been submitted to Congress.
- Section 111 (not an ISA amendment) requires a report within 90 days on the activities of export credit agencies of
foreign countries in guaranteeing financing for trade with Iran).
Not clear whether report was submitted to Congress.
Expansion of ISA Definitions:
Does not include export credit agencies as a sanctionable entity under ISA (as amended). (However, a report is
required on export credit agency activity, as discussed above.)
Does include LNG as petroleum resources.
As discussed in text, eliminates specific exemption of application of ISA sanctions energy sector equipment and
services. This change largely mooted by November 2011 executive order, discussed above, which specifically
sanctions sales to Iran of such equipment.
Termination Provisions:
The amendments to ISA in this law terminate if the President certifies that Iran has ceased WMD development, and
has qualified for removal from the U.S. terrorism list.
However, the pre-existing version of ISA would continue to apply until the President also certifies that Iran poses no
significant threat to U.S. national security, interests, or allies.
ISA Sunset:
Extends ISA sunset to December 31, 2016.
It was previously scheduled to “sunset” on December 31, 2011, as amended by the Iran Freedom Support Act (P.L.
109-293).
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Additional Provisions That Are Not Amendments to ISA
Modification to U.S. Ban on Trade With and Investment in Iran:
Bans all imports of Iranian origin from the United States, with the exception of informational material. Previously,
modifications to the U.S. trade ban with Iran (Executive Order 12959 of May 6, 1995) that became effective in 2000
permit imports of Iranian luxury goods, such as carpets, caviar, nuts, and dried fruits.
- Reiterates/codifies prior provisions of U.S. trade ban related to U.S. exports to Iran, which prohibit exports to Iran
of all goods except food and medical devices, informational material, articles used for humanitarian assistance to Iran,
or goods needed to ensure safe operation of civilian aircraft.
Contains a new section that the existing U.S. ban (by executive order) on most exports to Iran not include the
exportation of services for Internet communications.
Provision also states that the ban on most exports should not include goods or services needed to help non-
governmental organizations support democracy in Iran.
Both provisions designed to support opposition protesters linked to Iran’s “Green movement.”
Implementation: In July 2010, Treasury Department Office of Foreign Assets Control issued a statement that,
effective September 29, 2010, the general license for imports of Iranian luxury goods will be eliminated (no such
imports allowed). This went into effect that day.
Freezing of Assets/Travel Restriction on Revolutionary Guard and Related Entities and Persons:
Mandates the President to freeze the assets of Iranian diplomats, IRGC, or other Iranian official personnel deemed a
threat to U.S. national security under the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.).
Provision requires freezing of assets of families and associates of persons so designated. Also calls for a ban on travel
of IRGC and affiliated persons.
Application of U.S. Trade Ban to Subsidiaries:
No provision
Mandatory Sanctions on Financial Institutions that Help Iran’s Sanctioned Entities:
Section 104(c) requires the Treasury Department to develop regulations (within 90 days of enactment) to prohibit
and specify penalties for any U.S. financial transactions with any foreign financial institution that
- facilitates efforts by the Revolutionary Guard to acquire WMD or fund terrorism
- facilitate the activities of any person sanctioned under U.N. resolutions on Iran.
- facilitates the efforts by Iran’s Central Bank to support the Guard’s WMD acquisition efforts or support any U.N.-
sanctioned entity
Section 104(d) requires penalties to be specified in regulations within 90 days.
Section 104(e) requires regulations (no date specified) to make this requirement retroactive to existing accounts,
pending an audit by the U.S. banks involved.
Implementation: Treasury Department regulations implementing Section 104(c) and (d) provisions issued August
16, 2010. Regulations to implement 104(e) finalized in October 2011, based on proposals by the Treasury
Department’s Financial Crimes Enforcement Network (FINCEN).
Sanctions on Iranian Human Rights Abusers:
Section 105 requires, within 90 days, a report listing Iranian officials (or affiliates) determined responsible for 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. See
“Measures to Sanction Human Rights Abuses and Promote the Opposition” section of this report for Iranians
sanctioned.
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Sanctioning Certain Information Technology Sales to Iran:
Section 106 prohibits U.S. executive agencies from contracting with firms that export sensitive technology to Iran.
“Sensitive technology” is defined as hardware, software, telecommunications equipment, or other technology that
restricts the free flow of information in Iran or which monitor or restrict “speech” of the people of Iran.
The contracting restriction is to be imposed “pursuant to such regulations as the President may prescribe.”
The contracting regulations issued September 29, 2010, “partial y” implement this requirement, with further
regulations to be issued.
Treasury Department Authorization to prevent misuse of the U.S. financial system by Iran
or other countries:
Section 109 authorized $102 million for FY2011 and “sums as may be necessary” for FY2012 and 2013 to the
Treasury Department Office of Terrorism and Financial Intelligence. Another $100 million was authorized for FY2011
for the Financial Crimes Enforcement Network, and $113 million for FY2011 for the Bureau of Industry and Security
for the Department of Commerce
Hezbollah:
Section 113 contains a sense of Congress that the President impose the full range of sanctions under the International
Emergency Economic Powers Act (50 U.S.C. 1701) on Hezbol ah, and that the President renew international efforts
to disarm Hezbol ah in Lebanon (as cal ed for by U.N. Security Council Resolutions 1559 and 1701).
Divestment:
Title II prevents criminal, civil, or 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, Reexportation, or Diversion of Sensitive Items to Iran:
Requires a report by the Director of National Intelligence that identifies all countries considered a concern to allow
transshipment or diversion of WMD-related technology to Iran (technical y: “items subject to the provision of the
Export Administration Regulations”).
Section 303 requires the Secretary of Commerce to designate a country as a “Destination of Possible Diversion
Concern” if such country is considered to have inadequate export controls or is unwilling to prevent the diversion of
U.S. technology to Iran.
Designation would set up a strict licensing requirement for U.S. exports of sensitive technologies to that country.
List of countries that are believed to be al owing diversion of specified goods or technology to Iran to be named in a
report provided within 180 days of enactment.
Implementation: Not clear that the required report has been submitted.
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Table 7. 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 Metallurgy Industries Group (controls 7th of Tir)
Parchin Chemical Industries (branch of DIO)
Karaj Nuclear Research Center
Novin Energy Company
Cruise Missile Industry Group
Sanam Industrial Group (subordinate to AIO)
Ya Mahdi Industries Group
Kavoshyar Company (subsidiary of AEIO)
Sho’a Aviation (produces IRGC light aircraft for asymmetric warfare)
Bank Sepah (funds AIO and subordinate entities)
Esfahan Nuclear Fuel Research and Production Center and Esfahan Nuclear Technology Center
Qods Aeronautics Industries (produces UAV’s, para-gliders for IRGC asymmetric warfare)
Pars Aviation Services Company (maintains IRGC Air Force equipment)
Gen. Mohammad Baqr Zolqadr (IRGC officer serving as deputy Interior Minister
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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 Metallurgy 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 nonbinding 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 control ed by Ministry of Defense)…….
Doostan International Company
Farasakht Industries
First East Export Bank, PLC (only bank added by Resolution 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 Metallurgy Industries
The following are Revolutionary Guard affiliated firms, several are subsidiaries of Khatam ol-Anbiya, the main Guard
construction affiliate:
Fater Institute
Garaghe Sazendegi Ghaem
Gorb Karbala
Gorb Nooh
Hara Company
Imensazan Consultant Engineers Institute
Khatam ol-Anbiya
Makin
Omran Sahel
Oriental Oil Kish
Rah Sahel
Rahab Engineering Institute
Sahel Consultant Engineers
Sepanir
Sepasad Engineering Company
The fol owing are entities owned or control ed 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 and Trading
June 2006
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
June 2007
Pars Trash (Iran, nuclear program)
Farayand Technique (Iran, nuclear program)
Fajr Industries Group (Iran, missile program)
Mizan Machine Manufacturing Group (Iran, missile prog.)
Aerospace Industries Organization (AIO) (Iran)
September 2007
Korea Mining and Development Corp. (N. Korea)
September 2007
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Islamic Revolutionary Guard Corps (IRGC)
October 21, 2007
Ministry of Defense and Armed Forces Logistics
Bank Melli (Iran’s largest bank, widely used by Guard); Bank Melli Iran Zao
(Moscow); Melli Bank PC (U.K.)
Bank Kargoshaee
Arian Bank (joint venture between Melli and Bank Saderat). Based in Afghanistan
Bank Mellat (provides banking services to Iran’s nuclear sector); Mellat Bank SB
CJSC (Armenia). Reportedly has $1.4 billion in assets in UAE
Persia International Bank PLC (U.K.)
Khatam ol Anbiya Gharargah Sazendegi Nooh (main IRGC construction and
contracting arm, with $7 billion in oil, gas deals)
Oriental Oil Kish (Iranian oil exploration firm)
Ghorb Karbala; Ghorb Nooh (synonymous with Khatam ol Anbiya)
Sepasad Engineering Company (Guard construction affiliate)
Omran Sahel (Guard construction affiliate)
Sahel Consultant Engineering (Guard construction affiliate)
Hara Company
Gharargahe Sazandegi Ghaem
Bahmanyar Morteza Bahmanyar (AIO, Iran missile official, see above under
Resolution 1737)
Ahmad Vahid Dastjerdi (AIO head, Iran missile program)
Reza Gholi Esmaeli (AIO, see under Resolution 1737)
Morteza Reza’i (deputy commander, IRGC) See also Resolution 1747
Mohammad Hejazi (Basij commander). Also, Resolution 1747
Ali Akbar Ahmadian (Chief of IRGC Joint Staff). Resolution 1747
Hosein Salimi (IRGC Air Force commander). Resolution 1737
Qasem Soleimani (Qods Force commander). Resolution 1747
Future Bank (Bahrain-based but allegedly control ed by Bank Melli)
March 12, 2008
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Entities sanctioned on July 8, 2008:
Yahya Rahim Safavi (former IRGC Commander in Chief);
Mohsen Fakrizadeh-Mahabadi (senior Defense Ministry scientist)
Dawood Agha-Jani (head of Natanz enrichment site)
Mohsen Hojati (head of Fajr Industries, involved in missile program)
Mehrdada Akhlaghi Ketabachi (heads Shahid Bakeri Industrial Group)
Naser Maliki (heads Shahid Hemmat Industrial Group)
Tamas Company (involved in uranium enrichment)
Shahid Sattari Industries (makes equipment for Shahid Bakeri)
7th of Tir (involved in developing centrifuge technology)
Ammunition and Metallurgy Industries Group (partner of 7th of Tir)
Parchin Chemical Industries (deals in chemicals used in ballistic missile programs)
August 12, 2008:
Karaj Nuclear Research Center
Esfahan Nuclear Fuel Research and Production Center (NFRPC)
Jabber Ibn Hayyan (reports to Atomic Energy Org. of Iran, AEIO)
Safety Equipment Procurement Company
Joza Industrial Company (front company for Shahid Hemmat Industrial Group, SHIG)
September 10, 2008:
Islamic Republic of Iran Shipping Lines (IRISL) and 18 affiliates, including Val Fajr 8; Kazar; Irinvestship; Shipping
Computer Services; Iran o Misr Shipping; Iran o Hind; IRISL Marine Services; Iriatal Shipping; South Shipping; IRISL
Multimodal; Oasis; IRISL Europe; IRISL Benelux; IRISL China; Asia Marine Network; CISCO Shipping; and IRISL Malta
September 17, 2008:
Firms affiliated to the Ministry of Defense, including Armament Industries Group; Farasakht Industries; Iran Aircraft
Manufacturing Industrial Co.; Iran Communications Industries; Iran Electronics Industries; and Shiraz Electronics
Industries
October 22, 2008
Export Development Bank of Iran. Provides financial services to Iran’s Ministry of Defense and Armed Forces
Logistics
Banco Internacional de Desarollo, C.A., Venezuelan-based Iranian bank, sanctioned as an affiliate of the Export
Development Bank.
Assa Corporation (alleged front for Bank Melli involved in managing property in
December 17, 2008
New York City on behalf of Iran)
March 3, 2009
11 Entities Tied to Bank Melli: Bank Melli Iran Investment (BMIIC); Bank Melli Printing and Publishing; Melli Investment
Holding; Mehr Cayman Ltd.; Cement Investment and Development; Mazandaran Cement Co.; Shomal Cement;
Mazandaran Textile; Melli Agrochemical; First Persian Equity Fund; BMIIC Intel. General Trading
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February 10, 2010:
IRGC General Rostam Qasemi, head of Khatem ol-Anbiya Construction Headquarters (key corporate arm of the
IRGC)
Fater Engineering Institute (linked to Khatem ol-Anbiya)
Imensazen Consultant Engineers Institute (linked to Khatem ol-Anbiya)
Makin Institute (linked to Khatem ol-Anbiya)
Rahab Institute (linked to Khatem on-Anbiya)
Entities sanctioned on June 16, 2010
- 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 control ed by Iran for purposes of the ban on U.S. trade
with Iran.
Entities sanctioned on November 30, 2010
- 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 on December 21, 2010:
- Bonyad (foundation) Taavon Sepah, for providing services to the IRGC
- Ansar Bank (for providing financial services to the IRGC)
- Mehr Bank (same justification as above)
- Moallem Insurance Company (for providing marine insurance to IRISL, Islamic Republic of Iran Shipping Lines)
- Bank of Industry and Mine (BIM)
May 17, 2011
- Tidewater Middle East Company
June 23, 2011
- Iran Air
- Mehr-e Eqtesad Iranian Investment Co.
- Bank Tejarat
January 23, 2012
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- Trade Capital Bank (Belarus-based but control ed by Tejarat)
March 28, 2012:
Iran Maritime Industrial Company SADRA (owned by IRGC engineering firm Khatem-ol-Anbiya, has offices in
Venezuela)
Deep Offshore Technology PJS (subsidiary of the above)
Malship Shipping Agency and Modality Ltd (both Malta-based affiliates of IRISL)
Seyed Alaeddin Sadat Rasool (IRISL legal adviser)
Ali Ezati (IRISL strategic planning and public affairs manager)
July 12, 2012:
- Electronic Components Industries Co. (ECI) and Information Systems Iran (ISIRAN)
- Advanced Information and Communication Technology Center (AICTC) and Hamid Reza Rabiee (software engineer
for AICTC)
- Digital Medial Lab (DML) and Value Laboratory (owned or control ed by Rabiee or AICTC)
- Miinstry of Defense Logistics Export (MODLEX)
Daniel Frosh (Austria) and International General Resourcing FZE)—person and his UAE-based firm al egedly supply
Iran’s missile industry.
Iran-Related Entities Sanctioned Under Executive Order 13224 (Terrorism Entities)
Martyr’s Foundation (Bonyad Shahid), a major Iranian foundation (bonyad)—for
July 25, 2007
providing financial support to Hezbollah and PIJ
Goodwil Charitable Organization, a Martyr’s Foundation office in Dearborn,
Michigan
Al Qard Al Hassan—part of Hezbol ah’s financial infrastructure (and associated
with previously-designated Hezbollah entities Husayn al-Shami, Bayt al-Mal, and
Yousser Company for Finance and Investment.
Qasem Aliq—Hezbol ah official, director of Martyr’s Foundation Lebanon branch,
and head of Jihad al-Bina, a previously-designated Lebanese construction company
run by Hezbol ah.
Ahmad al-Shami—financial liaison between Hezbollah in Lebanon and Martyf’s
Foundation chapter in Michigan
Qods Force
October 21, 2007
Bank Saderat (al egedly used to funnel Iranian money to Hezbol ah, Hamas, PIJ, and October 21, 2007
other Iranian supported terrorist groups)
Al Qaeda Operatives in Iran: Saad bin Laden; Mustafa Hamid; Muhammad Rab’a al-
January 16, 2009
Bahtiyti; Alis Saleh Husain
Qods Force senior officers: Hushang Allahdad, Hossein Musavi,Hasan Mortezavi,
August 3, 2010
and Mohammad Reza Zahedi
Iranian Committee for the Reconstruction of Lebanon, and its director Hesam
August 3, 2010
Khoshnevis, for supporting Lebanese Hizbal ah
Imam Khomeini Relief Committee Lebanon branch, and its director Ali Zuraik, for
August 3, 2010
providing support to Hizballah
Razi Musavi, a Syrian based Iranian official al egedly providing support to Hizbal ah
August 3, 2010
Liner Transport Kish (for providing shipping services to transport weapons to
December 21, 2010
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Lebanese Hizbal ah)
For alleged plot against Saudi Ambassador to the U.S.:
October 11, 2011
Qasem Soleimani (Qods Force commander)
Hamid Abdollahi (Qods force)
Abdul Reza Shahlai (Qods Force)
Ali Gholam Shakuri (Qods Force)
Manssor Arbabsiar (al eged plotter)
Mahan Air (for transportation services to Qods Force)
October 12, 2011
Ministry of Intelligence and Security of Iran (MOIS)
February 16, 2012
Yas Air (successor to Pars Air)
March 27, 2012
Behineh Air (Iranian trading company)
Ali Abbas Usman Jega (Nigerian shipping agent)
Qods Force officers: Esmail Ghani, Sayyid Ali Tabatabaei, and Hosein Aghajani
Entities and persons sanctioned for weapons shipments to Syria and an October
2011 shipment bound for Gambia, intercepted in Nigeria.
Entities Sanctioned Under the Iran North Korea Syria Non-Proliferation Act or Executive Order
12938
The designations are under the Iran, North Korea, Syria Non-Proliferation Act (INKSNA) unless specified. These
designations expire after two years, unless re-designated
Baltic State Technical University and Glavkosmos, both of Russia
July 30, 1998 (E.O. 12938).
Both removed in 2010—Baltic
on January 29, 2010, and
Glavkosmos on March 4, 2010
D. Mendeleyev University of Chemical Technology of Russia and Moscow Aviation
January 8, 1999 (E.O. 12938).
Institute
Both removed on May 21, 2010
Norinco (China). For alleged missile technology sale to Iran.
May 2003
Taiwan Foreign Trade General Corporation (Taiwan)
July 4, 2003
Tula Instrument Design Bureau (Russia). For alleged sales of laser-guided artillery
September 17, 2003 (also
shells to Iran.
designated under Executive
Order 12938), removed May
21, 2010
13 entities sanctioned including companies from Russia, China, Belarus, Macedonia, April 7, 2004
North Korea, UAE, and Taiwan.
14 entities from China, North Korea, Belarus, India (two nuclear scientists, Dr.
September 29, 2004
Surendar and Dr. Y.S.R. Prasad), Russia, Spain, and Ukraine.
14 entities, mostly from China, for al eged supplying of Iran’s missile program.
December 2004 and January
Many, such as North Korea’s Changgwang Sinyong and China’s Norinco and Great 2005
Wall Industry Corp, have been sanctioned several times previously. Newly
sanctioned entities included North Korea’s Paeksan Associated Corporation, and
Taiwan’s Ecoma Enterprise Co.
9 entities, including those from China (Norinco yet again), India (two chemical
December 26, 2005
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 Poly
August 4, 2006 (see below for
Products); two Russian firms (Rosobornexport and aircraft manufacturer Sukhoi);
Rosobornexport removal)
two North Korean entities (Korean Mining and Industrial Development, and Korea
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Pugang Trading); and one Cuban entity (Center for Genetic Engineering and
Biotechnology).
9 entities. Rosobornexport, Tula Design, and Komna Design Office of Machine
January 2007 (see below for
Building, and Alexei Safonov (Russia); Zibo Chemical, China National
Tula and Rosoboronexport
Aerotechnology, and China National Electrical (China). Korean Mining and
removal)
Industrial Development (North Korea) for WMD or advanced weapons sales to
Iran (and Syria).
14 entities, including Lebanese Hezbol ah. Some were penalized for transactions
April 23, 2007
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 International
October 23, 2008.
Corp.; Huazhong CNC (China); IRGC; Korea Mining Development Corp. (North
Rosoboronexport removed
Korea); Korea Taesong Trading Co. (NK); Yolin/Yullin Tech, Inc. (South Korea);
May 21, 2010.
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);
16 entities: Belarus: Belarusian Optical Mechanical Association; Beltech Export;
May 23, 2011
China: Karl Lee; Dalian Sunny Industries; Dalian Zhongbang Chemical Industries
Co.; Xian Junyun Electronic; Iran: Milad Jafari; DIO; IRISL; Qods Force; SAD
Import-Export; SBIG; North Korea: Tangun Trading; Syria: Industrial Establishment
of Defense; Scientific Studies and Research Center; Venezuela: CAVIM.
Entities Designated as Threats to Iraqi Stability under Executive Order 13438
Ahmad Forouzandeh. Commander of the Qods Force Ramazan Headquarters,
January 9, 2008
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 Iranian arms to
January 9, 2008
Shiite militias in Iraq.
Isma’il al-Lami (Abu Dura). Shiite militia leader, breakaway from Sadr Mahdi Army,
January 9, 2008
alleged to have committed mass kidnapings and planned assassination attempts
against Iraqi Sunni politicians
Mishan al-Jabburi. Financier of Sunni insurgents, owner of pro-insurgent Al-Zawra
January 9, 2008
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
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9. Tehran Prosecutor General Abbas Dowlatabadi (appointed August 2009). Has
Sanctioned on February 23,
indicted large numbers of Green movement protesters.
2011
10. Basij forces commander (since October 2009) Mohammad Reza Naqdi (was
head of Basij intel igence during post 2009 election crackdown)
11. Islamic Revolutionary Guad Corps (IRGC)
June 9, 2011.
12. Basij Resistance Force
13. Law Enforcement Forces (LEF)
14. LEF Commander Ismail Ahmad Moghadam
15. Ministry of Intelligence and Security of Iran (MOIS)
February 16, 2012.
Iranians Sanctioned Under Executive Order 13572 (April 29, 2011) for Repression of the Syrian People
Revolutionary Guard—Qods Force
April 29, 2011
Qasem Soleimani (Qods Force Commander)
May 18, 2011
Mohsen Chizari (Commander of Qods Force operations and training)
Same as above
Iranian Entities Sanctioned Under Executive Order 13606 Targeting Human Rights Abuses Via
Information Technology (April 23, 2012)
- Ministry of Intelligence and Security (MOIS)
- The IRGC (Guard Cyber Defense Command)
- Law Enforcement Forces
- Datak Telecom
Entities Names as Iranian Government Entities Under Executive Order 13599
Designations made July 12, 2012:
- Petro Suisse Intertrade Company (Switzerland)
-Hong Kong Intertrade Company (Hong Kong)
- Noor Energy (Malaysia)
- Petro Energy Intertrade (Dubai, UAE)
(all four of the above were name as front companies for NIOV, Naftiran Intertrade Company, Ltd (NICO), or NICO
Sarl)
- 20 Iranian financial institutions (names not released but available from Treasury Dept.)
- 58 vessels of National Iranian Tanker Company (NITC)
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Author Contact Information
Kenneth Katzman
Specialist in Middle Eastern Affairs
kkatzman@crs.loc.gov, 7-7612
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