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Treasury Outlines New Sanctions

November 21, 2011 | 7:12pm

On Nov. 21, the Obama administration announced new sanctions designed to target Iran’s controversial nuclear and missile programs. The moves came on the same day that Britain cut all ties with Iranian banks and Canada announced a ban on exports for use in Iran’s petrochemical, oil and gas industries. The following is a fact sheet from the Treasury Department.
 

TREASURY DEPARTMENT

The United States is taking a series of actions to confront the threat posed by Iran and significantly increase pressure on Iran to comply with the full range of its international obligations and to address the international community’s longstanding concerns regarding its nuclear program.  These steps include: expanding sanctions to target the supply of goods, services, technology, or support (above certain monetary thresholds) to Iran for the development of its petroleum resources and maintenance or expansion of its petrochemical industry; designating eleven individuals and entities under Executive Order 13382 for their role in Iran’s WMD program; and identifying the Islamic Republic of Iran as a jurisdiction of “primary money laundering concern” under section 311 of the USA PATRIOT Act.

These actions underscore the Administration’s continued strong commitment – particularly in light of the IAEA Director General’s most recent report – to hold the Iranian regime accountable for its refusal to comply with its international obligations regarding its nuclear program.  The Administration is also sending an unequivocal message to the Government of Iran today that it will continue to face increasing international pressure until it addresses the international community’s legitimate concerns regarding the nature of Iran’s nuclear program.


New Sanctions under Executive Order (E.O.) 13590:

On November 19, President Obama signed E.O. 13590, which significantly expands existing energy-related sanctions on Iran to authorize sanctions on persons that knowingly provide:


   1. Goods, Services, Technology, or Support for the Development of Petroleum Resources:

  •           The sale, lease, or provision of goods, services, technology, or support to Iran that could directly and significantly contribute to the enhancement of Iran’s ability to develop petroleum resources located in Iran could trigger sanctions if a single transaction has a fair market value of $1 million or more, or if a series of transactions from the same entity have a fair market value of $5 million or more in a 12-month period.



   2. Goods, Services, Technology, or Support for the Maintenance or Expansion of the Petrochemical Sector:

  •           The sale, lease, or provision of goods, services, technology, or support to Iran that could directly and significantly facilitate the maintenance or expansion of its domestic production of petrochemical products could trigger sanctions if a single transaction has a fair market value of $250,000 or more, or if a series of transactions from the same entity have a fair market value of $1 million or more in a 12-month period.


If a person is found to have provided a good, service, technology, or support described in E.O. 13590, the Secretary of State, in consultation with other agencies, has the authority to impose sanctions, including prohibitions on: foreign exchange transactions; banking transactions; property transactions in the United States; U.S. Export-Import Bank financing; U.S. export licenses; imports into the United States; loans of more than $10 million from U.S. financial institutions; U.S. government procurement contracts; and, for financial institutions, designation as a primary dealer or repository of U.S. government funds.


Designation of Entities under E.O. 13382:

The U.S. Department of State has designated the Nuclear Reactors Fuel Company, Noor Afzar Gostar Company, Fulmen Group, and Yasa Part under E.O. 13382 for their role in Iran’s nuclear procurement networks.  They support a variety of Iran’s proscribed nuclear procurement activities, including centrifuge development, heavy water research reactor activities, and uranium enrichment.

The U.S. Department of the Treasury also has designated Javad Rahiqi, Modern Industries Technique Company (MITEC), Neka Novin, Parto Sanat, Paya Partov, Simatic, and the Iran Centrifuge Technology Company (TESA) under E.O. 13382.  These entities are linked to the Atomic Energy Organization of Iran (AEOI), which is a key actor in Iran’s nuclear program as the main Iranian organization for research and development activities in the field of nuclear technology, including Iran’s centrifuge enrichment program and experimental laser enrichment of uranium program.  The AEOI was listed in the Annex to E.O. 13382 and has been sanctioned by the United Nations in Security Council resolution 1737.

E.O. 13382 blocks the assets under U.S. jurisdiction of the designated persons and prohibits U.S. persons from engaging in transactions involving them.


Identification of the Islamic Republic of Iran as a Jurisdiction of “Primary Money Laundering Concern” Under Section 311 of the USA PATRIOT Act:

The U.S. Department of the Treasury identified the Islamic Republic of Iran as a jurisdiction of primary money laundering concern under Section 311 of the USA PATRIOT Act (Section 311) based on Iran’s support for terrorism; pursuit of weapons of mass destruction (WMD); reliance on state-owned or controlled agencies to facilitate WMD proliferation; and the illicit and deceptive financial activities that Iranian financial institutions – including the Central Bank of Iran – and other state-controlled entities engage in to facilitate Iran’s illicit conduct and evade sanctions.

In issuing today’s Finding, Treasury has for the first time identified the entire Iranian financial sector; including Iran’s Central Bank, private Iranian banks, and branches, and subsidiaries of Iranian banks operating outside of Iran as posing illicit finance risks for the global financial system.

The Finding also creates a clear public record of the scope and depth of Iran’s illicit conduct, detailing the involvement of Iranian government agencies and banking institutions in WMD proliferation, support for terrorism, and other illicit conduct.  In particular, the Finding includes new information about the Central Bank of Iran’s role in facilitating Iran’s illicit conduct and Iran’s efforts to evade international sanctions.

Today’s action reinforces U.S. and international sanctions already in place against Iran and provides greater certainty that the U.S. financial system is protected from Iranian illicit activity.

Treasury’s Financial Crimes Enforcement Network (FinCEN) also today filed a Notice of Proposed Rule Making (NPRM), in which it proposes imposing a special measure against Iran.  While current U.S. regulations already generally prohibit U.S. financial institutions from engaging in both direct and indirect transactions with Iranian financial institutions, this action would require U.S. financial institutions to implement additional due diligence measures in order to prevent any improper indirect access by Iranian banking institutions to U.S. correspondent accounts.


Link for the complete 311 finding: www.treasury.gov/press-center/press-releases/Documents/Iran311Finding.pdf

Link for the NPRM: www.treasury.gov/press-center/press-releases/Documents/Iran311Rulemaking...

 

Tags: Sanctions, U.S. Policy
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New Resolution on Iran and U.S. Reaction

November 18, 2011 | 3:58pm

On Nov. 18, 2011, a resolution by the U.N. nuclear watchdog agency expressed concern about Iran’s controversial nuclear program based on the latest report. Specifically, the IAEA Board of Governors:

1. Expresses deep and increasing concern about the unresolved issues regarding the Iranian nuclear program, including those which need to be clarified to exclude the existence of possible military
dimensions;

2. Stresses that it is essential for Iran and the Agency to intensify their dialogue aiming at the urgent resolution of all outstanding substantive issues for the purpose of providing clarifications regarding those issues, including access to all relevant information, documentation, sites, material, and personnel in Iran;

3. Urges Iran once again to comply fully and without delay with its obligations under relevant
resolutions of the UN Security Council, and to meet the requirements of the IAEA Board of
Governors, including the application of the modified Code 3.1 and the implementation and prompt ratification of the Additional Protocol;

4. Expresses its continuing support for a diplomatic solution, and calls on Iran to engage seriously and without preconditions in talks aimed at restoring international confidence in the exclusively peaceful nature of Iran’s nuclear program, while respecting the legitimate right to the peaceful uses of nuclear energy consistent with the NPT;

5. Commends the Secretariat for its efforts to implement the NPT Safeguards Agreement in Iran, and requests the Director General to include in his progress report to the March 2012 meeting of the Board of Governors an assessment of the implementation of this resolution; and

6. Decides to remain seized of the matter.

The vote was 32 in favor, Cuba and Ecuador voted against and Indonesia abstained.
Click here for the IAEA Resolution


 U.S. Reaction  

            Secretary of State Hillary Clinton released the following statement about the IAEA Board of Governor’s resolution:

We welcome today’s resolution by the International Atomic Energy Agency’s (IAEA) Board of Governors to hold Iran accountable for its failure to cooperate on its nuclear program.  The world has sent a clear and unified message to Tehran that it is deeply troubled by the evidence revealed in last week’s report by Director General Amano. This report supplied the clearest confirmation of what the United States has long believed – that, despite its constant denials, Iran’s government has pursued technologies and equipment that could only be applied to a nuclear weapons program.

Iran has said that it seeks nuclear power solely for peaceful purposes. However, the Director General’s report and today’s action by the IAEA Board of Governors underscore that the international community does not find Iran’s claims credible. The P5+1 countries have affirmed Iran’s right to a peaceful nuclear program but make clear that with that right comes responsibilities – responsibilities Iran has yet to fulfill. The P5+1 remains ready to engage with Iran if Iran is genuinely prepared to engage in serious negotiations, where Iran can choose to rebuild international confidence in the nature of its nuclear program.

We commend the Director General and his staff for their thorough, detailed and professional report. In the coming weeks, we will work with our international partners to increase the pressure on Iran’s government until it decides to meet its international obligations. 
 

Tags: IAEA, Nuclear Program, U.S. Policy
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Part II – Testimony by U.S. Officials

November 17, 2011 | 6:17pm
The following are excerpts from Congressional testimony at a Nov. 15 hearing on the Obama Administration’s policy toward Iran. The three officials appeared before the House Oversight and Government Reform Subcommittee National Security, Homeland Defense and Foreign Operations Subcommittee.
 
 
Mr. Adam Szubin, Director, Office of Foreign Assets Control, Department of the Treasury
 
Notwithstanding the sincere offer of engagement extended to the Iranian government by the
United States since the outset of this Administration, Iran has refused to respond meaningfully. In order to compel Iran to change its approach and to make clear to Iran the consequences of its existing approach, the United States is implementing a broad-based pressure strategy.
 
Among the most important elements of this strategy are targeted financial measures designed both to disrupt Iran's illicit activity and to protect the international financial sector from Iran's abuse. Our actions have focused on key government entities involved in Iran's illicit conduct, including nearly two dozen Iranian state-owned banks; the Islamic Revolutionary Guard Corps (IRGC) and its external arm, the IRGC-Qods Force; and, Iran's national maritime carrier, the Islamic Republic of Iran Shipping Lines (IRISL), and its affiliates. This strategy has yielded significant results. We have imposed costs directly on the entities we sanctioned, and by focusing our efforts on exposing Iranian entities' illicit and deceptive activities, we have built support among foreign governments to take similar actions. The global private sector also has amplified our actions - often taking voluntary steps beyond their legal requirements - because our actions have highlighted the pervasive nature of Iran's illicit and deceptive conduct and the reputational risks associated with any Iran-related business…
 
Although we are making progress, there is, of course, still much to be done. Iran is feeling the impact of the pressure, but we have yet to achieve the objective of our dual-track strategy: concrete action by Iran to comply with its international obligations and to address the international community's concerns regarding its nuclear program. Last week's release of the IAEA report only makes more clear to the world the severity of the current situation.
 
 
 
Mr. Henry Wooster, Deputy Assistant Secretary, Department of State
 
Our domestic measures are dissuading foreign companies from doing business in Iran, and this is inflicting financial, logistical, and economic pain on key sectors that support its proliferation efforts. Companies from other sectors have even voluntarily opted out of the Iranian market, including automotive firms Daimler, Toyota, and Kia, as well as Germany’s ThyssenKrupp. Caterpillar decided to prohibit its non-U.S.subsidiaries from exporting to Iran. The Swiss engineering firm ABB Ltd.; the Italian defense, aerospace, energy and transportation firm Finmeccanica; and the Irish industrial company Ingersoll-Rand Plc have all chosen to end their business with Iran. As the list of designated individuals and entities continues to grow, so does the cost, time, and energy required for Iran to pursue its current policies. Iran has felt the effect of these actions, as Iranian President Ahmadinejad recently admitted in a speech to the parliament when he said, “Which government can work under so much pressure? … Every day, all our banking and trade activities and our agreements are being monitored and blocked. This is the heaviest economic onslaught on a nation in history.” 
 
The result of our strategy is an Iran that is finding dwindling options for doing business internationally. But pressure is not an end unto itself, and this Administration remains committed to engagement with Iran through the P5+1 framework, and with other nations to address the threats posed by Iran…. If, however, Iran simply seeks to buy time to make further progress in its nuclear program, it will face ever-stronger measures and ever-increasing isolation…
 
At the same time, we use domestic and multilateral measures to call attention to and curb the regime’s behavior on another issue, human rights. With a long track record of human rights abuses, Tehran hit a new low with its systematic campaign of violence and intimidation against the massive demonstrations by Iranians in 2009, when they were protesting against fraud and manipulation in their presidential election. The regime and its forces beat back thousands of protesters, arrested hundreds, and killed dozens more. They detained – and continue to detain – prominent opposition figures; tortured, raped, and killed prisoners; and conducted more than 100 show trials. Despite the government’s best efforts to censor its population, many courageous Iranians found ways to share with the rest of the world their horrific stories of being attacked, silenced, and tortured.
 
 
 
Mr. Colin Kahl, Deputy Assistant Secretary, Department of Defense
 
The Department of Defense plays a supporting role in our whole-of government strategy of engagement and pressure toward Iran, which is led by the State and Treasury Departments. However, a supporting role should not be confused with a minor one. In support of interagency efforts to prevent Iran from acquiring nuclear weapons and counter its destabilizing efforts, the Department of Defense focuses on four major lines of effort. These efforts are: (1) ensuring Israel’s security; (2) building partnership capacity in the region; (3) developing a regional security architecture in the Gulf; and (4) prudent defense planning…
 
 We continue to work with partners in the region to build capacity to defend against Iranian destabilizing influence, particularly in Iraq and Lebanon. By the end of next month, we will complete the drawdown of U.S. forces in Iraq, in accordance with the 2008 U.S.-Iraq Security Agreement. Some have expressed concerns that we leaving behind a vacuum for Iran to fill. However, we are not disengaging from Iraq, and there is no vacuum for Iran to fill.
 
Due the extraordinary sacrifices of our armed forces, civilians, and the Iraqis, Iraq has emerged as an increasingly stable, sovereign, and self-reliant nation. Iraq has no desire to be dominated by Iran or anyone else. Iraqi nationalism is strong, and the Iraqis have consistently shown their willingness to resist the Iranians and their surrogates when Tehran has over-reached. This will continue as Iraq’s economy grows, particularly through its oil industry. 
The Iraqis have also made clear that they desire a strong and enduring relationship with the United States, including robust security cooperation, and we will purse that partnership under the Strategic Framework Agreement.
 
 
Tags: U.S. Policy
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Part I – Testimony by Iran Experts

November 17, 2011 | 5:58pm
The following are excerpts from Congressional testimony at a Nov. 15 hearing on the Obama Administration’s policy toward Iran. The three analysts appeared before the House Oversight and Government Reform Subcommittee National Security, Homeland Defense and Foreign Operations Subcommittee.
 
 
Dr. Kenneth M. Pollack, Director, Saban Center for Middle East Policy, The Brookings Institution
 
Because of Iraq's intrinsic importance coupled with its significance to the vital Persian Gulf region, preventing Iran from achieving its maximal goals in Iraq will be crucial to America's interests in the region. Moreover, given the remarkable transformations sweeping the Arab world, it would be a terrible tragedy if Iran were able to exploit the volatility of the Arab Awakening to strengthen its position and undermine the stability of the Middle East. Here as well, Iran's ability to shape the outcome in Iraq will play a major role in determining how well Tehran is able to influence the wider political changes in the region. For all of these reasons, what happens in Iraq, and what happens regarding Iranian influence in Iraq, is one of the crucial questions facing the region today.
 
Unfortunately, the situation at present is not favorable to the interests of the United States and its allies in the region. Although it is both premature and beside the point to ask whether the United States "lost" Iraq or if Iran has "won" it, there is no question that Iran today has considerable sway in Iraq—far more than we or the Iraqis would like. Moreover, while it is certainly possible to imagine a course of action that the United States could pursue to reverse this state of affairs,under current circumstances it seems unlikely either that Washington would be willing to make the necessary effort or that if we were, that it would do more than marginally diminish Iran's influence in the short term. This is part of the reason that a realistic assessment of Iraq's likely near-term future can only be a relatively pessimistic one. Most plausible scenarios for Iraq's future at this point are unhappy, at least in the near term, and the best (or perhaps, the least bad) scenarios do not seem to be the most likely. Iraq is liable to get worse before it gets better—if it gets better—although there are certainly things that the United States can do to minimize both the duration and the depth of these difficult times, if we are willing.
 
 
 
 
Mr. Mark Dubowitz, Executive Director, Foundation for Defense of Democracies
 
The recent report by the International Atomic Energy Agency on Iran‘s nuclear program has
raised legitimate questions about the effectiveness of sanctions to frustrate Tehran‘s nuclear
plans. Sanctions targeting Iran‘s energy, banking, and shipping sectors have cost the Islamic
Republic billions of dollars. These sanctions have led to the slow-motion demise of the Iranian
energy industry as Iranian oil production continues to materially decline. However, their
medium-to-long term impact is insufficient because Iran will likely cross the nuclear threshold
before these sanctions have time to work. There is also no evidence yet to suggest that economic pressure could make the Iranian regime rethink its decision to develop nuclear weapons.
 
For the West, however, sanctions have to be ―targeted. They cannot impose massive economic costs on a country‘s citizens. They can‘t inflict too much economic pain on international companies, or rattle voters with higher gasoline prices. Even against this Iranian regime, whose possession of nuclear weapons could lead to a cascade of proliferation resulting in a nuclear armed Middle East, the diminishment of American power, and a clerical regime even more willing to use terrorism, many in the West resist sanctions that are too ―”punishing” or ―”crippling.”  
 
So are sanctions against the Iranian regime destined to fail?
 
I believe sanctions can still work. But they must hit harder at the heart of Iran‘s oil industry,
specifically oil sales, which account for between 50 and 75 percent of the national budget, and 80 percent of hard-currency export earnings, without causing a significant increase in global petroleum prices. Otherwise, Tehran can sell less oil and make more money while roiling global markets. This is a scenario we want to avoid.
 
 
 
 
Dr. Suzanne Maloney, Senior Fellow, Saban Center for Middle East Policy, The Brookings Institution
 
Even as Iran‘s opposition remained largely dormant throughout the course of the early
months of the Arab spring, the political frictions within the regime have ramped up sharply. The longstanding resentment toward President Mahmoud Ahmadinejad harbored by the traditional stalwarts of the Iranian revolutionary regime exploded into public view. The outcome of this infighting has only reinforced the role of Iran‘s supreme leader, Ayatollah Ali Khamenei, as the country‘s paramount authority. The fierce contention has opened new fissures among the political elite, but this has not yet substantially eroded the regime‘s capabilities for maintaining authority in the short term.
 
Faced with profound popular dissatisfaction and intra-elite tensions at home, the turbulence
across the region has only reinforced the Iranian regime‘s determination to eradicate dissent and assert their influence across a changing Middle East. Despite their obvious vulnerabilities, Iran‘s dogmatic theocrats perceive the Arab uprisings in triumphal terms. From Tehran‘s vantage point, regional change has been a net positive so far. Several of the Islamic Republic‘s most determined regional adversaries were dispatched into exile, prison, or at minimum in a defensive crouch. This offers Tehran at least the possibility of new access in the Sunni Arab world, and the regime has sought to exploit the abiding uncertainty and undercurrents of mistrust for U.S. intentions that lie just beneath the surface of regional enthusiasm for change. The Arab spring has also ratcheted oil prices back up from a two-year downturn brought on by the global economic slowdown, and the instability premium will ensure Iranian revenues sufficient to ride out almost any pressures.
 
To be sure, the regional environment has also created new liabilities for Tehran. Whatever
soft power Iran could claim in its own neighborhood has surely faded by the Arab embrace of
democratic activism and government accountability. Iran‘s leaders have been exposed as tin-pot dictators, and their unflinching defiance of Washington rings far more hollow in a region where the mantle of heroism has been seized by the millions of ordinary citizens willing to risk their lives in pursuit of a better future. An even more immediate problem for Tehran is the violence in Syria, its only reliable Arab ally. Unrest in Syria jeopardizes the Islamic Republic‘s most trusted regional partner and its most reliable mechanism for resupplying its proxy Hezbollah and maintaining direct access into the political dramas of the Levant. Moreover, the scope and pace of Syria‘s devolution must be unnerving for Iranian leaders‘ confidence in their own capabilities for preserving control.
 
 
 
 
Tags: U.S. Policy
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Iran Letter to U.N. about Bomb Plot

November 17, 2011 | 9:26am

In response to a draft resolution against Iran, its mission at the United Nations issued the following letter refuting U.S. allegations about an Iranian plot to assassinate the Saudi ambassador to Washington as "circumstantial and unsubstantiated."

  

In the name of God, the Compassionate, the Merciful

No. 1312 15 November 2011

Excellency,

We are surprised to learn that a draft resolution contained in document A/66/L.8 entitled "Terrorist attacks on Internationally Protected Persons" is proposed by the United States under Agenda item 118 of the General Assembly, which refers to the alleged plot against the Ambassador of the Kingdom of Saudi Arabia in Washington. This is an unprecedented attempt with all its ramifications for the credibility of the United Nations. In this regard, I would like to state the following:

By submitting this draft the sponsor is inviting the General Assembly to consider an unsubstantiated allegation, and as such it would amount to an unprecedented, thus unacceptable move. While under Article 10 of the UN Charter any matter could be considered by the General Assembly, however, it is evident that placing hypothetical, circumstantial and unsubstantiated matters on the agenda of this august body would be a gross disservice thereto. The case at hand is a clear example in this respect. If the General Assembly allows the submission and consideration of such draft resolution, this principal organ of the United Nations would run the risk of turning into a venue for settling political scores through introducing countless draft resolutions on contentious issues, which should be seriously avoided. Consequently, such an action, if pressed on, would significantly undermine the role, authority, integrity, and credibility of the General Assembly as the highest and universal political body of the United Nations.

Furthermore, by proposing this draft resolution under agenda item "the United Nations Counter-Terrorism Strategy", the United States tends to exploit such an important document which is the symbol of global consensus against terrorism. Such a politically motivated move would indeed undermine the relevance and credibility of this major consensus document.

The United States attitude with regard to the alleged plot, which began with an explosive media campaign against Iran, and its long-standing hostile policies, is unconstructive and reveals once again the latter's ill-intentions. It is worth mentioning that this Government has supported acts of terrorism against the Islamic Republic of Iran in which many Iranians, including its diplomats were victims of such acts according to existing hard evidences, some of which were presented to the Secretary-General of the United Nations.

As I explained in my letters dated 11 October 2011 (document A/66/513–S/2011/633) and 4 November 2011 (document A/66/546–S/2011/696), my Government categorically rejects the involvement of any of its officials or organs in the alleged plot against the Ambassador of the Kingdom of Saudi Arabia in Washington as it has been claimed.

The Islamic Republic of Iran reaffirms its full commitment to its obligations under the relevant international legal instruments, including the 1973 "Convention on the Prevention of Punishment of Crimes against Internationally Protected Persons, including Diplomatic Agents".

Member States should be cautious about the adverse consequences of such a move, which is in contradiction to the spirit and letter of the Charter of the United Nations and 1970 "Declaration on Principles of International Law Concerning Friendly Relations and Co-operation among States in accordance with the Charter of the United Nations."

It would be appreciated if this letter could be circulated as a document of the General Assembly under the agenda item 83.

Please accept, Excellency, the assurances of my highest consideration.

 

 　Mohammad Khazaee

Ambassador

Permanent Representative

H.E. Mr. Nasser

President of the General Assembly,

United Nations, New York

 

cc: H.E. Mr. Ban Ki-moon

Secretary General

United Nations, New York

Tags: Plot, U.N.
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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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