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U.S. Heralds European Sanctions on Iran
July 2, 2012 | 10:17am
On July 1, the White House press secretary issued the following statement on the European Union’s new sanctions on Iranian oil, as they went into effect.
Statement by the Press Secretary on European Union Actions on Iranian Oil
The United States welcomes the European Union’s prohibition of all Iranian crude oil imports and other sanctions on Iran's oil industry, which go into full effect today. This collective decision of the 27 countries of the European Union represents a substantial additional commitment on the part of our European allies and partners to seek a peaceful resolution that addresses the international community’s concerns about Iran’s nuclear program. The United States and the European Union are committed to holding Iran accountable for failing to meet its international obligations. With this decision, our partners in the EU have underscored the seriousness with which the international community views the challenge of Iran’s nuclear ambitions.
This action is an essential part of our concerted diplomatic efforts to present Iran with a clear choice between isolation or meetings its obligations. Iran has an opportunity to pursue substantive negotiations, beginning with expert level talks this week in Istanbul, and must take concrete steps toward a comprehensive resolution of the international community’s concerns with Iran’s nuclear activities.
White House Briefing on New U.S. Sanctions
June 28, 2012 | 6:12pm
On June 28, three senior Obama administration officials gave a briefing on the growing impact of international sanctions on Iran and the new U.S. sanctions on countries that import oil from the Islamic Republic. The following are key excerpts, with factual assessments in bold:
Senior administration official # 1: Today marks two important milestones in our continued international effort to apply pressure on Iran to meet its international obligations with respect to its nuclear program. We’ve obviously been building a very robust and comprehensive sanctions regime for some time now, and we took another very important step forward today in that effort.
First, as of today, and as a result of the President’s determinations on March 30th -- June 11th on the availability of non-Iranian supplies of oil, any foreign financial institution based in an economy that has not been excepted from our sanctions, and knowingly conducts a significant transaction with the central bank of Iran for the sale or purchase of petroleum or petroleum products to or from Iran, is subject to U.S. sanctions…
Second…both China and Singapore have each significantly reduced the volume of crude oil purchases from Iran. So as a result, China and Singapore are excepted from the NDAA sanctions for the next 180 days. China and Singapore obviously join a list of countries that have received exceptions from the United States over the course of the last several weeks. This decision further represents the success of our sanctions policy, and our effort to build an international coalition to reduce Iran’s oil exports, thereby applying significant pressure on Iran.
We’ve seen that the sanctions on Iran’s central bank and oil sector are having a significant effect on the Iranian government and its economy. Just yesterday you saw an Iranian official admit that sanctions have led, according to their own estimates, to a 20 to 30 percent reduction in sales. According to the International Energy Agency, Iran’s crude oil exports in 2011 were approximately 2.5 million barrels per day, and have dropped to roughly 1.5 million barrels per day this year -- a reduction that has and will continue to cost the Iranian government billions of dollars, again, thereby having a significant impact on the revenue that the government can draw from.
We will continue to implement these sanctions fully to achieve additional reductions, as well as to continue to work with other oil producers to encourage increased production and development of their capacity so as to, again, maximize the impact on the Iranian government -- deny the increase in oil prices that could allow them to make up for lost revenue.
While we will continue to monitor closely the developments in the oil markets, including supply, demand, inventories and spare capacity, to assure that the market can continue to accommodate a reduction in purchases from Iran, we have every intention of maintaining these sanctions on the Iranian government, keeping in mind, of course, for instance, that we have the EU oil embargo that is coming fully online here, a process that will continue in the coming days, on July 1.
So the Iranian regime’s choice here has been to flout its international obligations, but they are paying an increasingly high price for that choice. And with these steps today and the steps we’re prepared to take going forward, the costs are only going to rise further for Iran. So it’s in their interest -- the Iranian interest -- to take concrete steps to address the international community’s concerns and to abide by their international obligations. They have an opportunity to do so through the P5-plus-1 negotiations. They have not yet done that. But we will continue to reiterate to the Iranian government that we need to see concrete actions by them to come in line with their obligations, or else we are going to continue to ratchet up these sanctions…
China has made clear that it is opposed to Iran developing and possessing nuclear weapons, and it supports our dual-track approach of diplomacy and pressure as well…Just with regard to the exception today, on June 27th, an authoritative statement was published on a China energy website, and I’d draw your attention to it -- it’s www.china5e.com. In this statement, the Chinese site indicated that there has been a structural change in China’s crude oil imports due to the downward pressure on the economy. These changes include a 25 percent year-on-year reduction between January and May of crude oil imports from Iran to China. The statement on this website noted that there would be a significant reduction in crude oil imports from Iran for 2012 relative to last year as well…
China has taken these actions for its own commercial and energy security reasons. Still, these actions very much align with our shared global interests and allow us to move forward with the exception we’re moving forward with today, and again, it is a part of efforts that have been undertaken by the international community to send a clear message to Iran that they need to come in line with their international obligations.
Senior administration official #2: Sanctions that the U.S. and its international partners have imposed on Iran are having a severe and growing impact…Iran’s energy sector is taking a very hard hit. It was just pointed out by my colleague that decisions by all the major importers of Iranian crude oil to significantly reduce their purchases will mean a sharp drop in Iran’s crude oil exports. This will cost Iran at least $8 billion in lost revenues each quarter, according to the IEA. Reductions in Iran’s oil exports andoil revenues can be expected to increase as the oil sanctions continue to take effect.
Sanctions against investments and the provision of goods and services for Iran’s oil and gas developmental activities have also had a significant impact. All major European and Japanese energy companies have pulled out of Iran’s energy sector. Iran’s inability to gain access to capital and technology has led to a steady decline in its oil production, which is devastating in the long run for an economy so dependent on oil revenues.
Sanctions have also had a crippling effect on Iran’s transportation sectors. Most European and Asian jet fuel providers have cut off supplies to Iran Air, which has provided support to Iran’s proliferation activities. As a result, a majority of airports previously serving Iran Air now refuse to do so. Major shipping lines such as Maersk have stopped calling on Iranian ports due to U.S. and multilateral sanctions. Reputable providers of flagging, insurance and classification services have stopped providing such services to Iran’s main shipping line.
Major indicators of economic activity are bringing more bad news to Iran. Inflation is well above 20 percent. Some estimates go much higher. Iran’s currency, the rial, has lost about 40 percent of its value since November 2011. Unemployment figures are increasing.
Senior administration official #3: We have already imposed very substantial sanctions on 24 of Iran’s largest banks. And those banks, as a result, are largely cut off from the international financial system. In addition, due to steps that the Europeans have taken, those banks are additionally cut off globally from the SWIFT messaging system, which makes it extremely difficult for them to transact business anywhere in the world.
Whereas just a couple of years ago, Iran was doing business on a fairly regular basis in Europe and Asia and the Middle East, all of these major international financial sectors are closing off to Iran, and now with the sanctions that come into effect today, these same restrictions are going to start kicking in with respect to the central bank of Iran.
So what we’re seeing -- what we are seeing and continue to see increasingly as it moves forward is it become increasingly difficult for Iran to support the rial…Since September, the rial has lost 40 percent of its value. It’s going to become increasingly difficult for Iran to finance its trade.
Back in January of this year when we designated Bank Tejerat, that was the remaining large Iranian bank that was accounting for a significant portion of Iran’s trade; with Bank Tejerat now designated and with the central bank of Iran increasingly unavailable to the Iranians to finance its trade, it’s going to become very difficult for Iran to finance its trade. It’s going to become increasingly difficult for Iran to access its foreign reserves and to generally manage its economy.
And if you look at the Iranian economy compared to similar economies of other oil-exporting nations, you can see that the Iranian economy is significantly underperforming to say the least. And I think the numbers on that speak for themselves.
China Cuts Back Iran Oil Imports
June 28, 2012 | 2:56pm
On June 28, Secretary of State Hillary Clinton issued a waiver on China and Singapore from facing U.S. sanctions because both have now significantly cut back on their imports of Iranian oil. The following is her statement.
Today I have made the determination that two additional countries, China and Singapore, have significantly reduced their volume of crude oil purchases from Iran. As a result, I will report to the Congress that sanctions pursuant to Section 1245(d)(1) of the National Defense Authorization Act (NDAA) for Fiscal Year 2012 will not apply to their financial institutions for a potentially renewable period of 180 days.
A total of 20 world economies have now qualified for such an exception. Their cumulative actions are a clear demonstration to Iran’s government that Iran’s continued violation of its international nuclear obligations carries an enormous economic cost. According to the International Energy Agency (IEA), Iran’s crude oil exports in 2011 were approximately 2.5 million barrels per day, and have dropped to roughly 1.5 million barrels per day, which in real terms means almost $8 billion in lost revenues every quarter. When the European Union oil embargo goes into effect July 1, Iran’s leaders will understand even more fully the urgency of the choice they face and the unity of the international community.
Today marks an important milestone in the implementation of the NDAA and U.S. sanctions toward Iran. Following the President’s determinations on March 30 and June 11 on the availability of non-Iranian supplies of oil, as of today, any foreign financial institution based in a country that has not received an NDAA exception is subject to U.S. sanctions if it knowingly conducts a significant transaction with the Central Bank of Iran for the sale or purchase of petroleum or petroleum products to or from Iran.
We have been clear all along that there is a path for Iran to fully re-join the global economy. Iran’s leaders have the opportunity to address international concerns by engaging seriously and substantively in negotiations with the P5+1. I urge Iran to demonstrate its willingness to take concrete steps toward resolving the nuclear issue during the expert-level talks scheduled in Istanbul on July 3. Failure to do so will result in continuing pressure and isolation from the international community.
Iran Both Fights and Facilitates Narcotics
June 26, 2012 | 10:40am
Garrett Nada
After struggling for decades to combat narcotics, Iran is today both fighting and facilitating narcotics, according to reports by the United Nations, the United States and Iran. Tehran has escalated its campaign against narcotics use and trafficking with help from the United Nations.
At the same time, however, an elite Revolutionary Guards force has reportedly allowed traffickers to smuggle drugs through Iran in exchange for helping Tehran arm Taliban forces fighting NATO troops in Afghanistan. In 2012, the United States sanctioned a senior Revolutionary Guard commander for facilitating drug smuggling that also aided an extremist group.
The Islamic Republic now openly admits having a drug problem that it denied for years. “For a long time nobody wanted to admit it, but drug abuse was ravaging our society…Now the scourge is so bad that we are finally reaching the point where the government is getting really involved,” Abbas Deylamizade, managing director of Rebirth, told The Toronto Globe and Mail in May 2012. Rebirth is Iran’s largest non-governmental organization working on drug treatment.
Since the 1979 revolution, Iran claims to have lost some 3,720 security forces fighting drug traffickers, many of whom were heavily armed. Tehran estimates that it spends around $1 billion annually on its war on drugs. In 2009, Iran accounted for 89 percent of worldwide opium seizures and 41 percent of heroin seizures, according to the 2011 U.N. World Drug Report.
Support for Traffickers
But in 2012, the United States revealed inconsistencies in Iran’s public narrative. The U.S. Department of the Treasury imposed sanctions in March on General Gholamreza Baghbani, a commander in the Revolutionary Guards’ Qods Force (IRGC-QF). The Qods Force is the elite military wing charged with overseeing foreign operations.
Baghbani allegedly allowed narcotics traffickers to smuggle opiates from Afghanistan through Iran in exchange for their assistance in delivering weapons across the border to the Taliban in Afghanistan. NATO officials claim the Iranian weapons have been used repeatedly against NATO forces.
“Today’s action exposes IRGC-QF involvement in trafficking narcotics, made doubly reprehensible here because it is done as part of a broader scheme to support terrorism. Treasury will continue exposing narcotics traffickers and terrorist supporters wherever they operate,” said Under Secretary for Terrorism and Financial Intelligence David S. Cohen on March 7.
In March, the House Foreign Affairs Committee also passed the Countering Iran in the Western Hemisphere Act of 2012. Congress found that, “Iran has used its proxies in Latin America to raise revenues through illicit activities, including drug and arms trafficking.”
Widespread Drug Use at Home
The Islamic Republic has long struggled to deal with domestic drug use. China has the highest number of opiate abusers in the world, but Iran is second in the percentage of population using opiates, according to the State Department’s International Narcotics Control Strategy Report for 2012.
The United Nations estimates that the Islamic Republic has some 1.2 million drug addicts. But recreational use is widespread, complicating accurate figures of drug users. Rebirth estimates that Iran may have up to five million addicts, along with millions more occasional users. Young people under the age of 30 have “turned aggressively” to drug abuse, the State Department reported in 2012.
Geography has contributed to the problem. Iran is a major trafficking hub for opiates produced in Afghanistan that are smuggled to Europe and beyond. The United Nations estimates that 5,800 tons of opium were grown in Afghanistan in 2011. A 2011 report by the Stimson Center estimated that almost half of Afghanistan’s opium crossed into Iran, where 15 percent—or some 435 tons—was consumed.
Drug use has in turn dramatically increased the spread of HIV/AIDS. As of mid-2011, drug use was a factor in 70 percent of more than 23,000 registered cases of HIV/AIDS infections in Iran, according to the State Department’s International Narcotics Control Strategy Report for 2012. The debilitating effects of drugs on Iranian society have forced the government to take a more active role in treatment and so-called harm reduction, an umbrella term for government programs to limit the impact of drug use. Harm reduction includes providing clean needles, methadone (a synthetic opium replacement), and condoms to prevent the spread of HIV from people who got it by sharing needles.
Changing Strategies: From Punishment to Treatment
After the 1979 revolution, the new Islamic government dealt with its drug problem through strict law enforcement and tough penalties. Iran ended treatment programs launched by the monarchy and instead imprisoned users and executed traffickers. But Iran shifted strategies again under reformist President Mohammad Khatami, who instituted a treatment-based approach after his election in 1997.
Users now have access to facilities and aid to cope with addiction. The government subsidizes some NGOs and community-based programs, but non-government groups have are now taking the lead. By 2012, only 150 out of the 850 clinics in Iran were government-run. Rebirth, Iran’s largest drug-focused NGO, runs more than 140 drug treatment centers that help 600,000 users, The Globe and Mail reported.
But Iran also still executes drug traffickers. On June 9, 2012, Iran publicly hanged five men for drug trafficking in Shiraz.
Stemming the Flow from Afghanistan
Tehran has reportedly intensified efforts to catch traffickers recently. It has deployed 50,000 border guards along its 1150-mile eastern border with Afghanistan and Pakistan. It has also spent $1 billion to erect land barriers—such as trenches and barbed wire fences—as well as observation towers and electronic detection equipment since 2005.
Iran claims it seized more than 500 tons of drugs in 2011. Iranian Police Chief Esmail Ahmadi Moqaddam said that security forces had seized 30 percent more narcotics between March and May 2012 than during the same period in 2011.
Narcotics is one issue on which Iran has worked closely with the international community. The United States has even approved licenses to permit American non-government organizations to help on drug issues in Iran. “The Iranian government has taken strong measures against illicit narcotics smuggling, including cooperation with the international community and interdiction of drugs moving into and through its territory,” the State Department said in its 2012 report.
The United Nations also commended Iran for its efforts to cut down on trafficking, attributing the global increase in opium seizures since 2002 primarily to Iran’s efforts. Since 1996, Iran has accounted for more than three quarters of opium seizures worldwide. In 2011, the Iranian Anti-Narcotics Police introduced a new squad of 40 drug-sniffing dogs with U.N. support.
Global Overspill
The crisis extends well beyond Iran’s borders, however. Most opiates processed in Iran, including heroin, have long been sold in Europe, Russia and the Middle East. But they have also recently been seized in Australia and the United States.
In March 2012, the U.S. Drug Enforcement Administration announced charges against six Iranians who imported opium from the Afghan border hidden in Persian rugs to the United States for distribution in New York, Los Angeles and Washington, D.C. The United Nations estimated that there are between 12 and 21 million opiate users worldwide; more than 100,000 people die annually as a result of Afghan opium, making it the deadliest drug in the world.
In 2007, the United Nations brokered the Triangular Initiative among Iran, Afghanistan and Pakistan to enhance cooperation among the countries in fighting drug trafficking. But the joint planning cell in Tehran launched only 12 joint operations between 2009 and 2011. On November 28, 2011, Yuri Fedotov, Executive Director of the U.N. Office on Drugs and Crime warned that, “Much more needs to be done.” Joint patrols, he advised, should become “routine, not exceptional events.”
Garrett Nada recently graduated from the George Washington University’s Elliott School of International Affairs with an MA in Middle East Studies.
What Happened when Putin and Netanyahu talked Iran?
June 25, 2012 | 5:04pm
Mark N. Katz
On Iran, what came out of the meeting between Russian President Vladimir Putin and Israeli Prime Minister Benjamin Netanyahu in Israel? What specifically did each leader want from the other?
The Putin-Netanyahu summit made little progress in bridging vast differences between Russian and Israeli positions over the Iranian nuclear program—or what do about it.
Israeli Prime Minister wanted Russian President Putin to support four specific demands on Iran:
- Expansion of sanctions against Tehran,
- A halt to all enrichment of uranium by Iran,
- Removal of all enriched uranium from Iran,
- Dismantling of Iran’s new underground nuclear facility near Qom.
In contrast, Putin did not advance any particular demands with regard to Iran.
On what did the men agree on Iran? And on what about Iran did they disagree?
In a joint press conference after meeting Putin, Netanyhau claimed that the two leaders agreed that a nuclear-armed Iran “presents a grave danger first of all to Israel, and to the region and the world as a whole.” Putin said “the talks were detailed and very useful.” But he was much more non-committal about their discussions of Iran’s nuclear program. He did not publicly support Netanyahu’s warning that Iran represents a grave danger or his four specific demands.
Is the meeting likely to change the dynamics of diplomacy by the world’s six major powers, especially given the stalemate during their talks with Iran on June 18-19?
The Moscow talks on Iran’s controversial nuclear issue were a disappointment. But for Putin to travel to Israel within a week—and to receive such a warm reception—must have been a disappointment to Tehran as well.
The Israelis will undoubtedly focus on how little support Putin offered for their position. But the Iranians are also sure to recognize that he did not support Tehran’s position either. This suggests that Tehran may have limited ability to play differences between the Russians on the one hand against the United States and Europe on the other in the new diplomatic effort.
How critical will this Russian-Israeli relationship be to what happens with Iran?
Putin’s visit to Israel underscores something that Tehran would prefer to ignore--and usually does. Under Putin, Russian-Israeli relations have grown quite close. And this is not likely to change as long as Putin is in power—which could be for six years, 12 years, or even longer. As a result, Tehran should not assume that Moscow will back Iran in any confrontation it may have with Israel.
Mark N. Katz is a professor of government and politics at George Mason University, and is the author of "Leaving without Losing: The War on Terror after Iraq and Afghanistan" (2012).
The Islamists Are Coming
The Islamists Are Coming, edited by Robin Wright, surveys the rise of Islamist groups in the wake of the Arab Spring. Often lumped together, the more than 50 Islamist parties with millions of followers now constitute a whole new spectrum—separate from either militants or secular parties. They will shape the new order in the world’s most volatile region more than any other political bloc. Yet they have diverse goals and different constituencies. Sometimes they are even rivals.
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