Part 1: U.S. Reimposes Sanctions on Iran

November 5, 2018
Updated

On November 5, the U.S. Treasury reimposed sanctions on Iran that had been lifted or waived in January 2016 under the nuclear deal. The Office of Foreign Assets Control sanctioned more than 700 individuals, entities, aircraft, and vessels — its largest ever single-day action targeting the Iranian regime. The targets included banks, including Iran’s Central Bank, the Iranian oil company, and many other key economic actors. “Treasury’s imposition of unprecedented financial pressure on Iran should make clear to the Iranian regime that they will face mounting financial isolation and economic stagnation until they fundamentally change their destabilizing behavior. Iran’s leaders must cease support for terrorism, stop proliferating ballistic missiles, end destructive regional activities, and abandon their nuclear ambitions immediately if they seek a path to sanctions relief,” said Treasury Secretary Steven Mnuchin. 

At a press conference, Secretary of State Mike Pompeo announced that China, India, South Korea, Turkey, Italy, Greece, Japan, and Taiwan had been granted temporary oil waivers because they had worked to reduce their Iranian imports and “to ensure a well-supplied oil market.” The waivers are not intended to be permanent. Those countries “need some time to get down to zero,” National Security Advisor John Bolton told Fox Business Network. He also warned that more sanctions were on the way. “We’re not simply going to be content with the level of sanctions that existed under Obama in 2015.”  The following is the press release from the U.S. Treasury with additional information on the sanctions and remarks by U.S officials. 

 

The following is the press release from the U.S. Treasury with additional information on the sanctions. 

 

U.S. Government Fully Re-Imposes Sanctions on the Iranian Regime As Part of Unprecedented U.S. Economic Pressure Campaign

Treasury sealWASHINGTON – Today, in its largest ever single-day action targeting the Iranian regime, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned more than 700 individuals, entities, aircraft, and vessels.  This action is a critical part of the re-imposition of the remaining U.S. nuclear-related sanctions that were lifted or waived in connection with the Joint Comprehensive Plan of Action (JCPOA).  OFAC’s action is designed to disrupt the Iranian regime’s ability to fund its broad range of malign activities, and places unprecedented financial pressure on the Iranian regime to negotiate a comprehensive deal that will permanently prevent Iran from acquiring a nuclear weapon, cease Iran’s development of ballistic missiles, and end Iran’s broad range of malign activities.  This brings to more than 900 the number of Iran-related targets sanctioned under this Administration in less than two years, marking the highest-ever level of U.S. economic pressure on Iran.

“Treasury’s imposition of unprecedented financial pressure on Iran should make clear to the Iranian regime that they will face mounting financial isolation and economic stagnation until they fundamentally change their destabilizing behavior.  Iran’s leaders must cease support for terrorism, stop proliferating ballistic missiles, end destructive regional activities, and abandon their nuclear ambitions immediately if they seek a path to sanctions relief,” said Treasury Secretary Steven Mnuchin.  “The maximum pressure exerted by the United States is only going to mount from here.  We are intent on making sure the Iranian regime stops siphoning its hard currency reserves into corrupt investments and the hands of terrorists.”

Today’s action includes the designation of 50 Iranian banks and their foreign and domestic subsidiaries; the identification of more than 400 targets, including over 200 persons and vessels in Iran’s shipping and energy sectors, and an Iranian airline and more than 65 of its aircraft; and the placement on the list of Specially Designated Nationals and Blocked Persons (“SDN List”) of nearly 250 persons and associated blocked property that appeared until today on the List of Persons Identified as Blocked Solely Pursuant to Executive Order (E.O.) 13599 (“E.O. 13599 List”).  OFAC has deleted the E.O. 13599 List as part of the cessation of the United States’ participation in the JCPOA.  For a complete list of targets sanctioned today, please click here.

As of today, significant transactions with most persons moved from the E.O. 13599 List to the SDN List (other than those Iranian financial institutions identified solely pursuant to E.O. 13599) could be sanctionable.  Such persons will have a notation of “Additional Sanctions Information – Subject to Secondary Sanctions” in their SDN List entries.

This action targets the Iranian regime, not the Iranian people.  OFAC continues to maintain humanitarian authorizations and exceptions to our Iran sanctions that allow for the sale of agricultural commodities, food, medicine, and medical devices to Iran. 

OVERVIEW OF TODAY’S ACTION

On May 8, 2018, the President ceased the United States’ participation in the JCPOA.  That same day, the President issued National Security Presidential Memorandum–11, instructing the Secretary of State and the Secretary of the Treasury to begin taking steps to re-impose all U.S. sanctions lifted or waived in connection with the JCPOA, including to prepare to relist persons removed from U.S. sanctions lists in connection with the JCPOA as appropriate.  The President directed that these steps be accomplished as expeditiously as possible, and in no case later than 180 days from May 8, 2018. 

Yesterday marked the end of the 180-day wind-down period.  As of today, all U.S. sanctions lifted or waived in connection with the JCPOA are re-imposed and in full effect.  OFAC has published additional frequently asked questions (FAQs) with respect to the re-imposition of these sanctions here.

As part of the re-imposition of U.S. sanctions and the relisting of persons removed from U.S. sanctions lists in connection with the JCPOA, hundreds of targets were designated or identified and added to the SDN List today.  Among those identified are 92 entities owned or controlled by Ghadir Investment Company, which OFAC previously identified as an investment firm affiliated with the Execution of Imam Khomeini’s Order (EIKO).

Additionally, persons and associated blocked property that were previously included on the E.O. 13599 List have been moved to the SDN List.  OFAC has removed the E.O. 13599 List, which was created on January 16, 2016 to denote the continued status as blocked of persons solely identified pursuant to E.O. 13599 as meeting the definition of the terms “Government of Iran” or “Iranian financial institution.”

Moreover, an amendment to the Iranian Transactions Sanctions Regulations (ITSR) takes effect today that reflects the re-imposition of sanctions pursuant to certain sections of Executive Order 13846 and the changes to the SDN List and E.O. 13599 List. 

BANKING SECTOR

Today marks the largest single-day OFAC action targeting the Iranian regime’s abuse of Iran’s banking sector to fund its destabilizing activities.  For example, the Iranian regime has funneled the equivalent of billions of dollars for the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) through the banking sector.  The action targets, in particular, Iranian banks that have provided support to, or are owned or controlled by, persons designated in connection with the Iranian regime’s support to international terrorism, proliferation of weapons of mass destruction (WMD) or their means of delivery, and human rights abuses.  Some of the banks designated today have served as financial conduits for the IRGC-QF, the Ministry of Defense and Armed Forces Logistics (MODAFL), the Islamic Republic of Iran Broadcasting (IRIB), the Martyrs Foundation, Mahan Air, and Iran’s Law Enforcement Forces (LEF) — all entities that remained designated throughout the JCPOA.

“As the Iranian people suffer from fiscal mismanagement and a plummeting rial, the Iranian regime abuses the country’s banking system to enrich its elite and finance repressive state institutions.  The IRGC and other destabilizing entities leverage their access to the global financial system to fund proxies fighting in Syria, Iraq, and Yemen, subsidize the proliferation of WMD or their means of delivery, and arm those who abuse the human rights of Iranian citizens,” said Treasury Under Secretary Sigal Mandelker.  “This action is aimed at cutting off Iranian banks that facilitate Iran’s domestic repression and foreign adventurism from the international financial system, and will highlight for the world the true nature of the regime’s abuse of its domestic banking system.”

Today, more than 70 Iran-linked financial institutions and their foreign and domestic subsidiaries were designated or identified and placed on the SDN List.

Bank Melli is being designated pursuant to E.O. 13224 for assisting in, sponsoring, or providing financial, material, or technological support for, or financial or other services to or in support of, the IRGC-QF, which was previously designated pursuant to E.O. 13224 on October 25, 2007.  As of 2018, the equivalent of billions of dollars in funds have flowed through IRGC-QF controlled accounts at Bank Melli.  Bank Melli has acted as a conduit for payments to the IRGC-QF.  The IRGC-QF has used Bank Melli to dispense funds to Iraqi Shia militant groups, and Bank Melli’s presence in Iraq was part of this scheme.  Since the mid-2000s, Bank Melli increasingly provided services to Iranian military-related entities as they became further involved in all aspects of the Iranian economy.  Bank Melli has enabled the IRGC and its affiliates to move funds inside and outside of Iran.  The IRGC was designated pursuant to E.O. 13224 on October 13, 2017. 

Bank Melli has also provided financial services to MODAFL, which was designated pursuant to E.O. 13382 on October 25, 2007. 

Arian Bank, a Bank Melli subsidiary, is being designated pursuant to E.O. 13224 for being owned or controlled by Bank Melli. 

Along with Arian Bank, OFAC designated another 12 entities pursuant to E.O. 13224 for being owned or controlled by Bank Melli or one of Bank Melli’s subsidiaries:  Bank Kargoshaee, Melli Bank PLC, Tose-E Melli Group Investment Company, Tose-E Melli Investment Company, National Industries and Mining Development Company, Behshahr Industrial Development Corp., Cement Industry Investment and Development Company, Melli International Building & Industry Company, BMIIC International General Trading LLC, Shomal Cement Company, Persian Gulf Sabz Karafarinan, and Mir Business Bank (MB Bank). 

Future Bank B.S.C. is being identified as a person whose property and interests in property are blocked due to the fact that Bank Melli and Bank Saderat, entities whose property and interests in property are blocked pursuant to E.O. 13224, hold a 50 percent or greater aggregate interest in the bank. 

The Export Development Bank of Iran (EDBI) is being designated pursuant to E.O. 13224 for assisting in, sponsoring, or providing financial, material, or technological support for, or financial or other services to or in support of, MB Bank.  Three other entities are being designated pursuant to E.O. 13224 for being owned or controlled by, or for acting for or on behalf of, EDBI:  EDBI Stock Exchange, EDBI Exchange Brokerage, and Banco Internacional de Desarrollo, C.A.  Additionally, the Iran-Venezuela Bi-National Bank is being designated pursuant to E.O. 13224 for assisting in, sponsoring, or providing financial, material, or technological support for, or financial or other services to or in support of, EDBI.

Ghavamin Bank is being designated pursuant to E.O. 13553 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Iran’s LEF.  Ghavamin Bank has provided extensive banking services and facilitated routine financial transactions for the LEF.  The LEF was designated in 2011 for being responsible for or complicit in serious human rights abuses in Iran, including operating detention centers where detained protestors were deprived of basic needs such as medical care.

Bank Sepah is being designated pursuant to E.O. 13382 for having provided, or attempted to provide, financial, material, technological, or other support for, or goods or services in support of, MODAFL.  As of 2017, Bank Sepah served as a financial platform for MODAFL to pay its agents abroad. 

Bank of Industry and Mine (BIM) is being designated pursuant to E.O. 13382 for having provided, or attempted to provide, financial, material, technological, or other support for, or goods or services in support of, Bank Sepah.  As of 2018, BIM provided bank account services for Bank Sepah, including engaging in the exchange of Iranian rials for euros for the benefit of Bank Sepah.  BIM coordinated the transfer of the equivalent of millions of dollars’ worth of euros for the benefit of Bank Sepah.

Europaisch-Iranische Handelsbank AG (EIH) is being designated pursuant to E.O. 13382 for being owned or controlled by BIM, and for having provided, or attempted to provide, financial, material, technological, or other support for, or goods or services in support of, Bank Sepah.  As recently as 2018, EIH maintained active account services for Bank Sepah, including processing the equivalent of millions of dollars’ worth of euro payments in support of Bank Sepah.

Post Bank of Iran is being designated pursuant to E.O. 13382 for having provided, or attempted to provide, financial, material, technological, or other support for, or goods or services in support of, Bank Sepah.  As recently as 2018, Post Bank of Iran engaged in the exchange of Iranian rials for euros for the benefit of Bank Sepah through active euro accounts.

Bank Tejarat is being designated pursuant to E.O. 13382 for having provided, or attempted to provide, financial, material, technological, or other support for, or goods or services in support of, Bank Sepah.  As recently as 2018, Bank Tejarat provided critical financial services for Bank Sepah.  Bank Tejarat also is being designated pursuant to E.O. 13224 for assisting in, sponsoring, or providing financial, material, or technological support for, or financial or other services to or in support of, Mahan Air, a designated Iranian airline that provides transportation, funds transfers, and personnel travel services to the IRGC-QF.  Mahan Air was designated pursuant to E.O. 13224 on October 12, 2011.  Belarus-based Trade Capital Bank (TC Bank) is being designated pursuant to E.O. 13382 and E.O. 13224 for being owned or controlled by Bank Tejarat. 

Ayandeh Bank is being designated pursuant to E.O. 13846 and the Iran Threat Reduction Act of 2012 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, IRIB, Iran’s state-media apparatus that routinely broadcasts false news reports and propaganda, including forced confessions of political detainees.  IRIB was designated pursuant to E.O. 13628 in February 2013 for restricting or denying the free flow of information to or from the Iranian people.  IRIB was implicated in censoring multiple media outlets and airing forced confessions from political detainees.

Day Bank is being designated pursuant to E.O. 13224 for being owned or controlled by, and for assisting in, sponsoring, or providing financial, material, or technological support for, or financial or other services to or in support of, Martyrs Foundation, an Iranian parastatal organization that channels financial support from Iran to several terrorist organizations in the Levant, including Hizballah, Hamas, and the Palestinian Islamic Jihad (PIJ).  The Martyrs Foundation, which was designated pursuant to E.O. 13224 in July 2007, has established branches in Lebanon staffed by leaders and members of terrorist groups to serve the families of killed or imprisoned Hizballah and PIJ members.  Day Bank provides significant financial support and banking services to the Martyrs Foundation.   

Additionally, 14 entities are being designated pursuant to E.O. 13224 for being owned or controlled by Day Bank.  These 14 subsidiaries, which engage in a wide range of business activities across different Iranian economic sectors, are Atieh Sazan Day, Buali Investment Company, Tejarat Gostar Fardad, Day Exchange Company, Day Leasing Company, Day Bank Brokerage Company, Tose-e Didar Iranian Holding Company, Royay-e Roz Kish Investment Company, Day E-Commerce, Tose-e Donya Shahr Kohan Company, Damavand Power Generation Company, Omid Bonyan Day Insurance Services, Omran Va Maskan Abad Day Company, and Day Iranian Financial and Accounting Services Company.

Persia International Bank PLC, First East Export Bank PLC, and Mellat Bank Closed Joint-Stock Company are being designated pursuant to E.O. 13224 for being owned or controlled by Bank Mellat.  Bank Mellat was designated pursuant to E.O. 13224 on October 16, 2018.

SHIPPING SECTOR

Among those in Iran’s shipping sector placed on the SDN List today are Iran’s national maritime carrier, the Islamic Republic of Iran Shipping Lines (IRISL), and oil transport giant National Iranian Tanker Company (NITC), both of which were identified pursuant to E.O. 13599 for meeting the definition of the term “Government of Iran.”  In addition, these entities have been determined to be part of the shipping sector of Iran.  As a result, the knowing provision of significant financial, material, technological, or other support to, or goods or services in support of, these entities could be sanctionable. 

OFAC added to the SDN List 65 IRISL subsidiaries and associated individuals pursuant to E.O. 13599.  In addition, 122 vessels also were identified as property in which IRISL has an interest.

One IRISL subsidiary, Valfajr Shipping Company PJS, has been used regularly by the IRGC to transfer passengers, cargo, containers, and IRGC personnel from IRGC-controlled ports in Iran to major ports in the Persian Gulf region.

Another IRISL subsidiary, Hafez Darya Arya Shipping Company, has shipped cargo to at least one known cover company for Iran’s Defense Industries Organization (DIO).  DIO was previously designated pursuant to E.O. 13382 on March 30, 2007 for engaging in activities that materially contributed to the development of Iran's nuclear and missile programs.

In 2017, IRISL subsidiary Safiran Payam Darya Shipping Company shipped more than 136,000 metric tons of Iranian light crude oil from Iran to Syria.

Additionally, pursuant to E.O. 13599, OFAC identified 37 NITC-affiliated entities and vessels in which NITC has an interest.  Identifying information for another 52 vessels confirmed as being property in which NITC has an interest was updated as well.  Each year, these vessels move tens of millions of barrels’ worth of Iranian oil, as well as Iranian natural gas, which constitute a major source of revenue to fund the Iranian regime’s malign activities.  It is essential to close off this funding stream to Tehran. 

The Iranian shipping industry is reviving previously employed deceptive practices in an effort to obfuscate IRISL or NITC’s interests in vessels and other property.  Among the IRISL vessels identified today are four vessels that recently underwent name and partial ownership changes but that are still property in which IRISL has a blockable interest.  The global maritime industry should be on alert for Iran’s use of such tactics and make every effort to thwart Iran’s use of their jurisdictions to create front companies; to revoke their flags from IRISL and NITC vessels; and to deny other means that enable Iran to conceal its interest in the vessels.  For additional information related to Iran’s deceptive practices, please click here for FinCEN’s recent Iran Advisory.

ATOMIC ENERGY ORGANIZATION OF IRAN

Today, OFAC added to the SDN List the Atomic Energy Organization of Iran (AEOI) as well as 23 AEOI subsidiaries and associated individuals, and identified them as meeting the definition of the term “Government of Iran” pursuant to E.O. 13599 and section 560.211 of the ITSR.  AEOI has operational and regulatory control over Iran’s nuclear program and bears responsibility for nuclear research and development. 

Additionally, OFAC designated Morteza Ahmadali Behzad pursuant to E.O. 13382 for acting or purporting to act for or on behalf of, directly or indirectly, Pishro Company.  Pishro Company, which is responsible for research and development efforts across Iran’s nuclear program, was designated pursuant to E.O.13382 on May 9, 2013.

AVIATION

Today OFAC identified Iran Air, the national airline of Iran, pursuant to E.O. 13599 for being owned or controlled by the Government of Iran.  OFAC also added to the SDN List 67 aircraft operated by Iran Air.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of these targets that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.  OFAC’s regulations generally prohibit all dealings by U.S. persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of blocked or designated persons. 
In addition, persons that engage in certain transactions with the entities designated and identified today may themselves be exposed to enforcement action, designation, or blocking sanctions.  Furthermore, unless an exception applies, any foreign financial institution that knowingly facilitates a significant transaction for any of the entities designated today or for certain other Iranian persons on the SDN List (other than Iranian financial institutions solely identified as “Government of Iran”) could be subject to U.S. correspondent or payable-through account sanctions.

Identifying information on the entities designated today.

 

Press Availability with Secretary Pompeo and Secretary Mnuchin

SECRETARY POMPEO: In May of this year, after President Trump withdrew from the nuclear deal, the Trump administration announced a new strategy to fundamentally alter the behavior of the Islamic Republic of Iran’s leadership.  At the center of this effort – and there are multiple lines of effort – but at the center of it is an unprecedented campaign of economic pressure.  Our objective is to starve the Iranian regime of the revenue it uses to fund violent and destabilizing activities throughout the Middle East, and indeed around the world.

Our ultimate goal is to convince the regime to abandon its current revolutionary course.  Just look at what happened last week.  Denmark announced it had uncovered an Iranian regime assassination plot on its own soil.  The Iranian regime has a choice.  It can either do a 180-degree turn from its outlaw course of action and act like a normal country, or it can see its economy crumble. 

We hope a new agreement with Iran is possible, but until Iran makes changes in the 12 ways that I listed in May, we will be relentless in exerting pressure on the regime.  As a reflection of that resolve, today we’re reimposing all sanctions that were previously lifted under the nuclear deal.  This includes sanctions on energy, banking, shipping, and shipbuilding industries. 

Since the Trump administration came into office, we’ve done 19 rounds of sanctions targeting 168 Iranian entities.  Today’s sanctions will accelerate the rapid decline of international economic activity in Iran since the implementation of our strategy in May.  Since that time, since back in May, over 100 companies have withdrawn from Iran or canceled plans to do business there.  It should be noted that if a company evades our sanctions regime and secretly continues sanctionable commerce in the Islamic Republic, the United States will levy severe, swift penalties on it, including potential sanctions.  I promise you that doing business with Iran in defiance of our sanctions will ultimately be a much more painful business decision than pulling out of Iran and it – being connected to Iran entirely.

More than 20 importing nations have zeroed out their imports of crude oil already, taking more than one million barrels of crude per day off the market.  The regime today, since May, has lost over $2.5 billion in oil revenue.  We have decided to issue temporary allotments to a handful of countries responsible to specific circumstances and to ensure a well-supplied oil market.  The U.S. will be granting these exemptions to China, India, Italy, Greece, Japan, South Korea, Taiwan, and Turkey.  Each of those countries has already demonstrated significant reductions of the purchase of Iranian crude over the past six months, and indeed two of those eight have already completely ended imports of Iranian crude and will not resume as long as the sanctions regime remains in place.  We continue negotiations to get all of the nations to zero.

Additionally today, 100 percent of the revenue Iran receives from the sale of oil will be held in foreign accounts.  Iran can only use this money for humanitarian trade or bilateral – in bilateral nonsanctioned goods. 

Speaking of Iran’s nuclear program, we have decided to grant narrow and temporary waivers that permit the continuation of three nonproliferation projects currently underway.  Allowing these activities to continue for the time being will improve ongoing oversight of Iran’s civil nuclear program and make these facilities less susceptible to illicit and illegal nuclear uses.  Rest assured Iran will never come close to getting a nuclear weapon on President Trump’s watch.

SECRETARY MNUCHIN: Today the United States is executing on the final actions to withdraw on the Obama administration’s fatally flawed Iran deal.  This morning, we will fully impose sanctions on the Iranian regime.  This is part of a maximum unprecedented economic pressure campaign the United States is waging against the world’s largest state sponsor of terror.  Today we sanctioned more than 700 individuals, entities, aircraft, and vessels as part of Treasury’s largest ever single day action targeting Iran.  Over 300 of those sanctions are new targets.  In addition, we are relisting hundreds of individuals and entities that were previously sanctioned, granted sanctions relief under the JCPOA. 

These powerful sanctions directly target Iran’s banking, energy, and shipping sectors.  The Iranian regime has funneled billions of dollars for the Islamic Revolutionary Guard Corps force through the banking sector.  Today’s designation includes 50 Iranian banks and their foreign and domestic subsidiaries in conduction with Iran’s regime support for international terrorism, proliferation of mass destruction, or their means of delivery and human rights abuses. 

Our actions include the identification of more than 400 targets, including over 200 persons and vessels in Iran’s shipping and energy sector; Iran Air, the national airline of Iran, and more than 65 aircraft; the placement of nearly 250 persons in associated block properties on the Specially Designated Nationals list; the Atomic Energy Organization of Iran. 

Over the last five months, Treasury has implemented some of the most impactful sanctions ever seen.  Combined with the previous actions, more than 900 Iran-related targets have been sanctioned under this administration in less than two years, marking the highest-ever level of U.S. economic pressure on Iran.  We are making it abundantly clear to the Iranian regime that they will face mounting financial isolation until they fundamentally change their destabilizing behavior. 

Iran’s leaders must cease support for terrorism and end destructive regional activities immediately.  They must stop ballistic missiles and abandon their nuclear ambitions if they seek a path to sanctions relief.  We are watching the Iranian regime with laser focus.  If they try to evade our sanctions, we will take action to disrupt their activity time and time again.

The maximum pressure exerted by the United States is only going to mount from here.  Companies around the world need to know we will be strictly enforcing our sanctions.  Thank you.

QUESTION:  The President invoked Game of Thrones when he was discussing sanctions.  Do you think that was appropriate?

SECRETARY POMPEO:  This administration has been consistent from, frankly, President Trump’s campaign to the first day he was inaugurated about our intention.  We understand that the Islamic Republic of Iran presents a threat to the United States of America, and we are determined to stop it.  And much has been made about this Game of Thrones.  Qasem Soleimani responded, and I haven’t seen any of you comment on that.  This is a man who has American blood on his hands.  He’s killed American soldiers, and that’s not funny.  And the actions that the Islamic Republic of Iran are taking are not about little silly things that people get wrapped up here in Washington, D.C., but about very serious matters that impact all of Europe, all the Middle East and the world, and our young men and women who are in harm’s way today.

QUESTION:  I was wondering, what could you say to the European countries that were expecting to be in this list of countries that are not going to suffer the sanctions?  And what kind of relation have you have with them, what are the conversations regarding this topic?  Thank you.

SECRETARY MNUCHIN:  Well, I don’t think we’ve ever said that it relates to the European countries, that they’ll be exempt.  I think quite the contrary.  We’ve said that we expect them to honor the sanctions.  Having said that, there are certain transactions that they can continue to do, whether they’re humanitarian transactions or specific trade in the restricted accounts.  And again, let me just emphasize, as I said last week, we will make sure that humanitarian transactions are really going for those purposes.  So this is not about hurting the people of Iran, but we will not let money be diverted to humanitarian purposes and then put for terrorist activities.

SECRETARY POMPEO:  And then just to follow up, with respect to the relationship, we’ve been very candid and clear with all of the European countries.  There are more than three, we should note.  Many of them are fully supportive of what it is that we are undertaking.  They have taken a different approach with respect to the JCPOA, but it is also something that the whole world should know.  European businesses have already made their decisions.  They’ve decided not to do business with the Islamic Republic of Iran, and so we’re very confident that the sanctions regime that we’re putting in place will be effective.

QUESTION:  You talk about the destabilizing behavior of Iran in the region.  How does that differ from the behavior of Saudi Arabia?

SECRETARY POMPEO:  So let me just go through the list:  Underwriting Lebanese Hizballah, that presents a threat to the United States of America and Israel; underwriting the Houthis in Yemen, causing an enormous conflict to take place there in that country; the efforts in Iraq to undermine the Iraqi Government, funding Shia militias that are not in the best interests of the Iraqi people; their efforts in Syria; the list goes on.  The difference in behavior between those two countries is remarkable.  Since we’ve taken office, the Kingdom of Saudi Arabia has been very supportive of our efforts on counterterrorism.  They’ve assisted us.  I know Secretary Mnuchin has worked with them on a couple of projects as well.  It is completely clear the Islamic Republican of Iran is the destabilizing force in the Middle East today.

QUESTION:  For Secretary Pompeo.  Sir, you mentioned that three waivers have been issued for the civilian nuclear energy project.  Could you clarify what those are?  And Bushehr nuclear power plant, will it be the one under the waiver?  Thank you.

SECRETARY POMPEO:  It’s a pretty complicated area, that nonproliferation issue.  There are three.  Bushehr is one of the three.  But if I may, we will get out a full fact sheet on that here in the next hour or so that you’ll all be able to see.  What we’ve authorized is very narrow, very limited, very time limited as well, but important nonetheless that these nonproliferation projects are not things that are taking place without some ability to see what’s going on, and we’ll give you the full details of the scope of those waivers.

QUESTION:  Mr. Secretary, Iran has very powerful hands in Iraq.  Are you not concerned that with these sanctions Iran might increase the pressure on some of your allies in Iraq?  And in that case, what can you do to reassure those allies?

SECRETARY POMPEO:  So it’s a very reasonable question.  Here’s the facts.  Since the United States entered the JCPOA in 2015, Iran has turned up the heat on those very entities to which you’re referring.  So we have a history, we have data set, we have a historical basis upon which to say that we know that the JCPOA didn’t impede Iran one bit from putting pressure on Kurdistan, pressure in Baghdad, pressure throughout the region.  We are very hopeful that the set of efforts we’re undertaking – we’ve focused here on the financial and economic, but the full range of efforts we’re taking to push back against the Islamic Republic of Iran will have the intended effect of reducing Iran’s capacity to be destabilizing and present risk to the Middle East, to Europe, and the world.

—Nov. 5, 2018, during a press availability

 

National Security Advisor John Bolton on Fox Business Network

 

 

Excerpts from an op-ed by Secretary Mnuchin in The Financial Times

Renewed sanctions will push Iran towards a better nuclear deal

“Monday marks the heaviest economic pressure ever applied by the US against the Iranian regime. This effort is but a part of the US government’s strategy to change the behaviour of Ayatollah Khamenei, and Iran’s Revolutionary Guard Corps.”

“The people of Iran are not the targets of these sanctions. They are the longest-suffering victims of a regime that prioritises funding of terror proxies over the wellbeing of its citizens. Our sanctions include humanitarian exemptions for the sale of food, medicine, medical devices and agricultural commodities to non-designated Iranians.

“The Treasury will strictly enforce our sanctions. We will not tolerate banks, companies or other entities that seek to circumvent our actions. We will view them as complicit in funding Iran’s malign ambitions. 

“The US will lead a maximum-pressure campaign to stop global funds from flowing to the Iranian regime until it is no longer a threat to international security. Our pressure campaign is designed to bring the Iranian regime to the table to achieve a much better deal than the JCPOA.”

—Nov. 5, 2018, in an op-ed

 

Briefing with Secretary of State Michael R. Pompeo and Secretary of the Treasury Steven T. Mnuchin on Iran Sanctions

November 2, 2018 via teleconference

SECRETARY POMPEO:  Earlier this year, President Trump withdrew from the fatally flawed nuclear deal and implemented a new campaign aimed at fundamentally altering the behavior of the Islamic Republic of Iran.  This part of the campaign about which we’re speaking today is simple.  It is aimed at depriving the regime of the revenues that it uses to spread death and destruction around the world.  Our ultimate aim is to compel Iran to permanently abandon its well-documented outlaw activities and behave as a normal country.

Today, Secretary Mnuchin and I will discuss one of the many lines of effort to achieve these fundamental changes in the Iranian regime’s behavior as directed by the President.  While important, these economic sanctions are just a part of the U.S. Government’s total effort to change the behavior of the Ayatollah Khomeini, Qasem Soleimani, and the Iranian regime.

On November 5th, the United States will reimpose sanctions that were lifted as part of the nuclear deal on Iran’s energy, ship building, shipping, and banking sectors.  These sanctions hit at the core areas of Iran’s economy.  They are necessary to spur changes we seek on the part of the regime. 

In order to maximize the effect of the President’s pressure campaign, we have worked closely with other countries to cut off Iranian oil exports as much as possible.  We expect to issue some temporary allotments to eight jurisdictions, but only because they have demonstrated significant reductions in their crude oil and cooperation on many other fronts and have made important moves towards getting to zero crude oil importation. These negotiations are still ongoing.  Two of the jurisdictions will completely end imports as part of their agreements.  The other six will import at greatly reduced levels.

Let me put this in context for you.  The Obama administration issued SREs to 20 countries multiple times between 2012 and 2015.  We will have issued, if our negotiations are completed, eight and have made it clear that they are temporary.  Not only did we decide to grant many fewer exemptions, but we demanded much more serious concessions from these jurisdictions before agreeing to allow them to temporarily continue to import Iranian crude oil.  These concessions are critical to ensure that we increase our maximum pressure campaign and accelerate towards zero.

Our laser-focused approach is succeeding in keeping prices stable with a benchmark Brent price right about where it was in May of 2018 when we withdrew from the JCPOA.  Not only is this good for American consumers and the world economy, it also ensures that Iran is not able to increase its revenue from oil as its exports plummet.  We will, we expect, have reduced Iranian crude oil exports by more than 1 million barrels even before these sanctions go into effect. 

This massive reduction since May of last year is three to five times more than what many analysts were projecting when President Trump announced our withdrawal from the deal back in May.  We exceeded our expectations for one simple reason: Maximum pressure means maximum pressure.

The State Department closed the Obama era condensate loophole which allowed countries to continue importing condensate from Iran even while sanctions were in place.  This loophole allowed millions of dollars to continue to flow to the regime. 

This administration is treating condensate the same as crude since the regime makes no distinction between the two when it decides to spend its oil revenue on unlawful ballistic missiles, terrorism, cyberattacks, and other destabilizing activities like the assassination plot Denmark disclosed this past week. 

And starting today, Iran will have zero oil revenue to spend on any of these things.  Let me say that again.  Zero.  One hundred percent of the revenue that Iran receives from the sale of crude oil will be held in foreign accounts and can be used by Iran only for humanitarian trade or bilateral trade in nonsanctioned goods and services.  

These new sanctions will accelerate the highly successful effects of our sanctions that have already occurred.  The maximum pressure we imposed has caused the rial to drop dramatically, Rouhani’s cabinet is in disarray, and the Iranian people are raising their voices even louder against a corrupt and hypocritical regime.

On that note, our actions today are targeted at the regime, not the people of Iran, who have suffered grievously under this regime.  It’s why we have and will maintain many humanitarian exemptions to our sanctions including food, agriculture commodities, medicine, and medical devices. 

I will now turn the call over to Secretary Mnuchin.

SECRETARY MNUCHIN:  Thank you very much.  Since the beginning of the Trump administration, the Treasury Department has been committed to putting a stop to Iran’s destabilizing activities across the world.  We’ve engaged a massive economic pressure campaign against Iran, which remains the world’s largest state sponsor of terrorism.  To date, we have issued 19 rounds of sanctions on Iran, designating 168 targets as part of our maximum pressure campaign.  We have gone after the financial networks that the Iranian regime uses to fuel its terrorist proxies and Hizballah and Hamas, to fund the Houthis in Yemen, and to support the brutal Assad regime in Syria.

The 180-day wind-down period ends at 11:59 p.m. Eastern Standard Time on Sunday November 4th.  As of Monday November 5th, the final round of snapback sanctions will be enforced on Iran’s energy, shipping, shipbuilding, and financial sectors.  As part of this action on Monday, the Treasury Department will add more than 700 names to our list of blocked entities.  This includes hundreds of targets previously granted sanctions relief under the JCPOA, as well as more than 300 new designations.  This is substantially more than we ever have previously done.  Sanctions lifted under the terms of Iran’s nuclear deal will be reimposed on individuals, entities, vessels, and aircraft that touch numerous segments of Iran’s economy.  This will include Iran’s energy sector and financial sectors.  We are sending a very clear message with our maximum pressure campaign that the U.S. intends to aggressively enforce our sanctions.  Any financial institution, company, or individual who evades our sanctions risks losing access to the U.S. financial system and the ability to do business with the United States or U.S. companies.  We are intent on ensuring that global funds stop flowing to the coffers of the Iranian regime. 

I want to make a couple of comments on the SWIFT messaging systems since I’ve received lots of questions about this over the last few weeks.  So I’d like to make four points.  Number one, SWIFT is no different than any other entity.  Number two, we have advised SWIFT the Treasury will aggressively use its authorities as necessary to continue intense economic pressure on the Iranian regime, and that SWIFT would be subject to U.S. sanctions if it provides financial messaging services to certain designated Iranian financial institutions.  Number three, we have advised SWIFT that is must disconnect any Iranian financial institution that we designate as soon as technologically feasible to avoid sanctions exposure.  Number four, just as was done before, humanitarian transactions to nondesignated entities will be allowed to use the SWIFT messaging system as they have done before, but banks must be very careful that these are not disguised transactions or they could be subject to certain sanctions.  Thank you very much.

QUESTION:  Both – either or both of you, on SWIFT, there are a lot of complaints among the President’s allies in Congress that this does not go far enough, and that without designating – without going after SWIFT harder for these messaging transactions, that it allows a serious loophole.  I understand Secretary Mnuchin’s four points on it, but how will you address this criticism?  Because it’s already coming even before this announcement today.

SECRETARY MNUCHIN:  Okay, well let me – Secretary Mnuchin – let me make some comments.  First of all, I think there’s been a lot of fueled misinformation as it relates to SWIFT and what we’re doing with SWIFT.  So that’s why I want to be very clear.  So one, okay, I think there was information that SWIFT would not be subject to sanctions.  That’s not the case.  SWIFT will be subject to sanctions.  Number two, as I said, that – could be subject to sanctions, excuse me.  Number two, it is our intent that they cut off designated entities as was done before.  And again, I think there’s misinformation that they cut off everybody last time.  Again, they did allow for certain entities to do humanitarian transactions consistent with what’s allowed under our sanctions.  There are exceptions for humanitarian sanctions, but I want to very clear, people need to be careful that those are real humanitarian – those are real humanitarian transactions.  So again, I would just say I – hopefully this will clarify the misinformation that’s out there.

QUESTION:  I had a question about the oil sanctions going into effect.  Will those include – or will there be exceptions granted for nonhumanitarian transactions such as consumer goods, as were allowed last time, or will Iran only be allowed – or will Iran only be allowed to spend revenue that it gains through – on humanitarian items?  And then second, if you’re giving eight waivers and two jurisdictions are already cutting imports to zero, what’s the point of giving them – those two jurisdictions waivers?  Thanks.

SECRETARY POMPEO:  With respect to your first point, you’ll see the details on Monday.  There are nonhumanitarian goods that we included in there, but they’re small.  They’re ones that you would’ve already seen in the exemptions that were granted under the direction of the President.  Second, some of these will take a few months to get to zero.  So by November 5th they won’t be there.  That’s the purpose of those exemptions, to give them a little bit longer to wind down.  Weeks.

QUESTION:  Secretary Mnuchin, you said that certain financial institutions in Iran will be cut off from SWIFT.  Could you explain exactly which financial institutions, or maybe the financial institutions described in a Treasury FAQ, the Central Bank of Iran and other Iranian financial institutions described in section 104(c)(2) blah blah blah – could you be more specific about which institutions?  And how can – how can the United States Government be confident in SWIFT’s ability to monitor transactions using SWIFT that they – I imagine there are numerous of these transactions going on daily.  How can the United States Government be confident that those are not transactions that are funding the bad actions that the government says is – they are trying to stop?

SECRETARY MNUCHIN:  So again, let me comment on the first issue, which – that the list of banks, which will be substantially longer than last time, will be coming out over the weekend.  And as it relates to monitoring transactions, again, financial institutions have liability for any transactions that go through SWIFT or any other mechanisms.  I’m being told the list will come out on Monday.  And again, it’s our expectation that that will be implemented as soon as technologically feasible.

QUESTION:  Could you address the workaround that the Europeans are trying to institute to avoid U.S. banks, maybe using their own central banks or electronic transactions?  For Secretary Mnuchin, how much revenue do you think this would give the Iranians, and how seriously are you taking that in terms of a financial component?


And then Secretary Pompeo, could you talk about once these sanctions go into effect and if the Europeans do try to institute this workaround, what the diplomatic implications for relations with European allies?  

SECRETARY MNUCHIN:  I’ll comment on the Special Purpose Vehicle.  I have no expectation that there will be any transactions that are significant that go through a Special Purpose Vehicle based upon what I’ve seen.  But when the details come out of some Special Purpose Vehicle, if there are sanctions – if there are transactions that go through there that have the intent of evading our sanctions, we will aggressively pursue our remedies.

SECRETARY POMPEO:  And let me take the second part of that.  We’ve been working closely with the Europeans on this set of issues.  We’re very confident that our sanctions will be incredibly effective.  And frankly, I can prove that already.  As I stated, the Iranian economy today is already feeling the effects of this.  It’s already feeling the effects of this effort not because the sanctions have snapped back – that won’t occur until – on Monday – but because the world and Iran knew this was coming.  And so European entities of any scale that are doing business with the United States of America have already ceased their conduct with Iran.  There may be an exception to that, but there has been an enormous departure of European businesses.

So whatever it may be that the EU is proposing, the folks who have risk – financial risk, business risk, operation risk – have already made their decision about the effectiveness of the sanctions that will be reimposed this coming week.

QUESTION:  One quick question that – just technically, which of the eight countries are getting these waivers?  And then secondly, for Secretary Pompeo, you said in one of your interviews this week that the U.S. wants to restore democracy in Iran.  Is that one of the goals of this campaign?  And if so, how do you make sure that these sanctions aren’t going to hurt average Iranians who, as you point out, are suffering under this corrupt regime?

SECRETARY POMPEO: The President’s policy is very clear:  We are looking to change the Iranian leadership’s behavior.  I laid out the 12 things we’ve asked them to do; that is the goal not only of what we’re speaking about this morning – and please don’t lose sight, we’re talking about a set of sanctions that will be reimposed on Monday.  The administration’s efforts to change Iranian behavior are far broader, far deeper, there are many other lines of effort.  We’re simply focused on this line of effort today because of the significance of November 5th.


My comments about restoring democracy are completely consistent with what we have described before.  We’re counting on the Iranian people to have the opportunity and we are working towards allowing the Iranian people to have the opportunity to have the government they want, a government that doesn’t take wealth from their country and spend it on malign activity around the world.  I mean, this is a regime that is conducting a assassination campaign inside of Europe today, murdering not Iranian citizens in those countries, but folks who live, reside, and are citizens of those European countries.  These are the behaviors we’re trying to change, and our every effort is aimed at giving the Iranian people the opportunity to have the government that they not only want but deserve.

QUESTION: I’d like to ask you about the Atomic Energy Organization of Iran.  My understanding is that you waived secondary sanctions on foreign firms that do business with that organization, mostly Russian and Chinese firms that are involved in the Arak and Fordow facilities.  Why did you make that decision, and why are you letting Arak and Fordow continue?  And are there plans to change that in the future?  Thank you.

SECRETARY POMPEO:  We are not allowing the continued work to develop nuclear weapons and nuclear weapons systems in Arak and Fordow.  We will provide on Monday a complete explanation of what we’re going to do with the continued efforts to prevent those facilities from doing the things that put the world at risk through proliferation, and we’ll give you all the detail.  It’s a long and complex answer, but we’re happy to provide it to you on Monday morning.

QUESTION:  One, exactly how many financial institutions are going to be redesignated, i.e. put back on the SDN list on Monday?  Previously I believe the number was close to or slightly above 30.  You said it would be substantially more.  How many is it going to be?
Secondly, you pointedly said that you were granting the exceptions to eight jurisdictions.  Is one of those jurisdictions the European Union, thereby covering a much larger group of countries, i.e. 28 EU member-states?

SECRETARY MNUCHIN:  So the bank list will come out on Monday.  Again, it will be more than last time, and again, we may continue to add banks to that in the future.  But the original list will come out on Monday and we’ll carefully monitor situations to add on more banks as needed.

SECRETARY POMPEO:  The second part of your question, we will provide the list of the eight jurisdictions on Monday.  The EU will not be receiving an SRE.

QUESTION:  Say in the past, the Iranians have blended their oil with foreign oil to evade sanctions, and there have already been reports that they are turning off the ID tags on their tankers.  So what in particular are you going to be doing to track their attempts to evade these sanctions?

SECRETARY POMPEO:  Make no mistake about it, the Iranians will do everything they can to circumvent these sanctions – that’s unsurprising to me.  They’ll turn off ships, they’ll try and do it through private vessels, they’ll try and find third parties that don’t interact with the United States to provide insurance mechanisms.  The list of Iranian efforts to circumvent these sanctions is long.  You should all recognize there’s a reason for that.  These sanctions are far tougher than the sanctions that have ever been imposed on the Islamic Republic of Iran.  That is why they are so desperate to find ways to circumvent it. 
And I won’t speak to our efforts to counter those circumvention efforts.  There are many, they are varied, and make no mistake:  The United States is fully prepared to do all that we can to prevent Iran from circumventing not only the crude oil sanctions and the financial sanctions, but all of the designations and all of the other sanctions that are being reimposed this coming Monday and those that are already in place.

SECRETARY MNUCHIN:  And I would just add to that that anybody that does facilitate those transactions will be subject to sanctions and will be added to the list.

 

Secretary Pompeo’s Interview with BBC Persian

QUESTION: You say that you have put maximum pressure on Iran, most severe sanctions, but do you see any sign that the Iranian leaders are coming to the table to have negotiations? 

SECRETARY POMPEO: We haven’t seen any indication of that yet, but we’re very hopeful that they will do that. We think it’s what the Iranian people would want them to do. Remember the purpose. The purpose is to stop Iran’s destabilizing influence in the region, assassination campaigns in Europe, work to support Lebanese Hizballah that’s threatened Americans and Israelis, and using Iranian people’s wealth to foment this terror around the world is not what the Iranian people want. And so our effort – not just the sanctions, but the American effort – is aimed at getting the Iranian leadership to understand this isn’t in the best interests of their country or their people and to change their behavior. 

QUESTION: And what if they don’t come to the table? What’s your next move? What could be your next move? 

SECRETARY POMPEO: We don’t talk about what next moves are, right? We’re hopeful that they will conclude it’s in their best interest to change this behavior. It’s not even just about coming to the table, right? It’s not about negotiations. It’s about a change in behavior. They’re arming people in Yemen, the Houthis, who are launching missiles into Riyadh and into other parts of the Middle East that threaten Americans, threaten, frankly, other Iranians who are traveling through these airports too. This is deeply destabilizing. It’s not what the Iranian people want. 
And so our efforts – our efforts aren’t aimed to punish the Iranian people and, indeed, exactly the opposite. Our aim here is to get the regime to decide it is not in its own country’s best interest to engage in this behavior and to change their ways. 

QUESTION: You say you are not punishing the people. You say that the sanctions are not targeting the people. But what if -- 

SECRETARY POMPEO: No, they’re not. 

QUESTION: But what if the sanctions hurt the Iranian people, the ordinary lives of them? 

SECRETARY POMPEO: The folks who are hurting the Iranian people are the ayatollah and Qasem Soleimani and the Iranian leadership. That’s who is bringing the difficulties to Iran today. And you see this. You see this when you read of the protests. You see this when Iranian people have a chance to speak, although we know the human rights there don’t permit the Iranian people to speak freely. It’s the regime that is inflicting harm on the Iranian people, not the world and not the United States. 

QUESTION: But as you – but you say that this is not a democratic regime. You say that the regime doesn’t care for Iranian people. But you say you do care for Iranian people. 

SECRETARY POMPEO: We do. 

QUESTION: So if the sanctions – if you see the facts that these sanctions are actually hurting Iranian people, if you see the facts that there are hardship in importing medicine for Iranian people, would that make any difference to you? 

SECRETARY POMPEO: Hadi, I’m glad you mentioned medicine. None of the sanctions that have been imposed prevent humanitarian assistance and, indeed, there are big exemptions for medicine for sure, pharmaceuticals, but also more broadly than that for agricultural imports too so that the Iranian people have foodstuffs as well. We have provided, we have accommodated the Iranian people with our sanctions, and it’s now the Iranian Government’s responsibility to make sure that they do the right thing with the wealth, the enormous wealth, the incredible place and the incredible people in Iran. It’s their job to do the right thing for their people. 

QUESTION: You said that there are waivers for – there are exemptions for medicine and for agricultural imports, but the issue is with the banking transfers. BBC sees the facts – we investigated about this – that these sanctions that are already in place are affecting that part of imports for medicine and agricultural and also food. And do you mind – I mean, do you mind mentioning more details about your efforts to make sure that medicine and food could be exempted from all the sanctions? 

SECRETARY POMPEO: Of course. Not only are the transactions themselves exempted – that is, the transactions in medicine, for example – but the financial transactions connected to that activity also are authorized. There’s nothing that prevents this from happening in the sanctions that have been reimposed, and so we are confident that this process will work properly. 

QUESTION: But then practically, when the process goes ahead, and if you see facts -- 

SECRETARY POMPEO: Yeah, we’re going to work to do two things: that things that are sanctioned don’t happen, and things that are permitted to happen are permissible, and can in fact happen. Well, remember, just so you remember, the leadership has to make a decision that they want their people to eat. They have to make a decision that they want to use their wealth to import medicine, and not use their wealth to fund Qasem Soleimani’s travels around the Middle East with – causing death and destruction. That’s the Iranian Government’s choice on how to use Iranian wealth. If they choose to squander, if the Iranian leadership chooses to spoil it, if they choose to use it in a way that doesn’t benefit the Iranian people, I’m very confident the Iranian people will take a response that tries to fix that themselves as well. 

QUESTION: This also happened under previous administration, Obama administration, under those sanctions, that medicine and food were – I mean, there were difficulties in putting them – I mean -- 

SECRETARY POMPEO: I hope that doesn’t happen here. It’s not our intention. 

QUESTION: And your critics say that Iran has outmaneuvered U.S. by staying in the deal while only – your only major allies that are supporting your policy are Israel and Saudi Arabia. On the other side, your European allies, China, Russia, even India – they want to keep business with Iran. Javad Zarif, your Iranian counterpart, just released a video yesterday saying that the U.S. is isolated here. Do you feel isolated here? 

SECRETARY POMPEO: Yeah, I’ll tell you who’s isolated. It’s the man who just went out and said he wasn’t isolated: Mr. Zarif. We have an enormous coalition supporting our effort. The crude oil exports from nearly every country in the world have stopped already, even before the sanctions were re-imposed. 
There are European countries that support us, there are countries throughout the Middle East that support us, there are countries all around the world who understand that Iran’s malign activity is inappropriate. Even the E3, although they have tried to stay within the JCPOA, they understand too that Iran’s malign activity – there was an assassination attempt by Iran in Denmark, in the heart of Europe – they understand this risk, and they too are beginning to push back against the Iranian leadership and say enough is enough, behave like a normal nation, and when you do, we’ll welcome you back into the community of nations. 

QUESTION: And Democrats were so much anger – angry about Saudi Arabia’s behavior in Yemen, also about Khashoggi’s death. Now that they hold the House, do you think they could make some obstacles for your foreign policy regarding the regional policy – for example, stopping arms sales, maybe, to Saudi Arabia? And how does that affect your regional policy about Iran? 

SECRETARY POMPEO: Yeah, so two thoughts. First, the challenge in Yemen is in large part the responsibility of the Iranian leadership. It’s the Iranian leadership that continues to fuel the Houthis in a way that has engendered this civil war that has wreaked so much death and destruction inside of Yemen, so much – you see the pictures, they are heartbreaking. The Saudis have provided millions and millions of dollars of humanitarian relief. Hadi, do you know how much money Iran has provided for humanitarian relief in Yemen? 

QUESTION: You tell me, please. 

SECRETARY POMPEO: Yeah, almost nothing. Almost nothing. This is a fundamental difference in the humanitarian nature of these two nations. Iran causes death and destruction inside of Yemen and does nothing to prevent the starvation, and the Saudis provide millions and millions of dollars – as do the Emiratis – to mitigate this risk and this harm. And so it’s a complicated problem; I made a statement last week. I’m very hopeful that every side will lay down their weapons in Yemen, and that Martin Griffiths, the UN special representative tasked with finding a political solution in Yemen – but that can’t happen unless the Iranians decide that the Houthis will no longer engage in violence there. If they do, we can find a peaceful path forward in Yemen, and I am very hopeful that that will happen. It’s the right outcome for everyone.

—Nov. 7, 2018, in an interview with BBC Persian’s Hadi Nili
 

Briefing with Special Representative for Iran Brian Hook

MR HOOK:  Now that our sanctions on the Iranian regime have been reimposed, we want to alert nations of the risk of doing business with Iran’s shipping sector.  If Iranian tankers make calls to your ports or transit through your waterways, this comes at great risk.  The United States urges you to consider the advisory we are issuing today. 

The sanctions that were reimposed on Monday include sanctions on Iran’s port operators as well as its energy shipping and shipbuilding sectors.  We placed on our sanctions list Iran’s national maritime carrier, the Islamic Republic of Iran Shipping Lines, and its oil transport giant, the National Iranian Tanker Company.  These sanctions are critical to our maximum pressure campaign.  Iran’s energy sector accounts for up to 80 percent of the country’s income from exports.  The regime uses this revenue to support its terrorist militias, fund missile proliferation, and sustain its revolutionary exploits that destabilize the Middle East.

We have also reimposed sanctions on the provision of underwriting services, insurance, and re-insurance.  Knowingly providing these services to sanctioned Iranian shipping companies will result in the imposition of U.S. sanctions.  As Iran’s maritime carriers and vessels are redesignated and lose access to insurance on the international market, they are likely to turn to self-insurance.  We suspect they will use Iranian insurance providers such as Kish P&I.  Should there be an accident involving an Iranian tanker, there is simply no way these Iranian insurance companies can cover the loss. 

This is especially important for Iran’s crude oil tankers, which are usually insured for amounts of $1 billion or more.  Oil spills and accidents involving tankers are extremely costly.  The immediate costs associated with response and cleanup can range from hundreds of millions of dollars to billions of dollars.  When litigation costs and penalties are added, the total liability is even greater.  But the costs of these accidents extend well beyond the initial response and cleanup.  Tanker spills can imperil fishing and maritime industries for generations, harm tourism, and create irreversible economic and environmental costs on communities and ecosystems. 

From the Suez Canal to the Strait of Malacca and all chokepoints in between, Iranian tankers are now a floating liability.  Countries, ports, and canal operators, and private firms should know they will be likely responsible for the costs of an accident involving a self-insured Iranian tanker.

We sincerely hope there will be no accidents, but accidents are a very real possibility given Iran’s record.  Only 10 months ago in January, an oil tanker managed by the National Iranian Tanker Company collided with a vessel in the East China Sea.  The tanker was carrying one million barrels of condensate.  The tanker burned for one week and then sank.  The collision led to the largest release of condensate ever and caused an oil spill the size of the city of Paris.  As the cleanup continues, the liability for this will be in the hundreds of millions of dollars.  Iranian insurance companies only covered a small portion of that vessel’s liability.  The majority of the tanker’s value is covered by international insurers. 

Now that our sanctions are back in place, these international insurers will no longer be in the risky business of covering Iran’s tankers.  Self-insured Iranian tankers are a risk to the ports that permit them to dock, the canals that allow them to transit, and the boats that cross their path.  This exposes the entire maritime shipping network to immense liability.

If entities continue to do business with Iran’s tankers, they may assume that Iranian insurers can and will absorb the full liability associated with the accident.  This is a fantasy.  There is little to gain by taking on so much risk for so little return.  Just as concerning, entities who allow self-insured Iranian tankers to transit through their canals or dock in their ports may be facilitating Iran’s illicit activity.

Iran has supported the Assad regime in Syria by regularly shipping millions of barrels of Iranian crude to the country.  Those entities who permit the transit of Iranian tankers may very well be enabling this activity.  I have described very serious liability concerns, but all nations should also be aware of the safety standards and practices of Iran’s oil tankers. 

There are increasing reports that Iranian tankers are switching off their AIS transponders at sea.  These transponders are safety devices used for collision avoidance and navigation.  They enable ships to see other ships and to communicate with coastal authorities.  Under international maritime law, vessels have been required since 2004 to use them to broadcast their identity and location.  Based on credible data, we now know that up to a dozen Iranian tankers have recently disabled their maritime transponders and have effectively gone dark.  We should not be surprised that an outlaw regime also violates basic maritime law.

Turning off these transponders makes tankers harder to track and is a tactic that Iran has used in the past to evade sanctions.  In 2012, a majority of vessels in the National Iranian Tanker Company’s fleet turned off their transponders in the run-up to the imposition of U.S. oil-related sanctions.  This tactic is a maritime security threat.  These transponders are designed to maximize visibility at sea and turning them off only increases risk of accidents and injuries.

Self-insured Iranian tankers engaging in unsafe behavior with many tons of crude oil onboard is courting environmental and financial disaster.  Our strong message to any entity considering doing business with these Iranian tankers is to rethink your decision.  Protect your port, protect your business, and promote maritime safety.

—Nov. 7, 2018, in a press briefing
 

 

Briefing with Special Representative for Iran Brian Hook

QUESTION:  Can you talk about kind of the broader efforts on trying to get Iran to behave like a normal regime?  I mean, does that include kind of the Twitter messaging or social media messaging, or is it something more than that, more concrete about supporting opposition groups or protestors?

MR HOOK:  The Iranian regime has historically not come to the negotiating table absent significant economic and diplomatic pressure.  The reimposition of our sanctions are designed to do two things:  deny the regime the revenue it needs to fund violent wars abroad, and also to change the cost-benefit analysis in our favor so that Iran decides to come back to the negotiating table. 
The Ayatollah Khamenei has said that require hostility with the United States, which is the kind of thing that you expect to hear from a revolutionary regime.  We have been very clear.  Secretary Pompeo has been very clear that we have an ear open to what is possible.  We very much want to begin work on a new and better deal to replace the insufficient Iran nuclear deal that the President left in May, and our campaign of maximum economic pressure is a critical tactic to achieve that goal.

QUESTION:  But he’s [Secretary Pompeo] also talking about restoring democracy. 

MR HOOK:  The President, the Secretary of State, the Vice President, at all levels of the administration, have stood with the Iranian people and their aspirations for a better way of life.  The Iranian people want a more representative government, a government that does not rob them blind, that supports their human rights, their economic rights, their freedom of expression, freedom of assembly.  These are all rights that the United States wants for the Iranian people.  We think they deserve a much better way of life, and Secretary Pompeo has repeatedly made remarks addressed to the Iranian people in support of their demands for reforms from this regime.

QUESTION:  How is this escrow account that he talked about going to work, and how do you make sure that the Iranians are going to get basic needs fulfilled – medicine, food?

MR HOOK:  The escrow accounts that are being created for those nations that need to continue importing Iranian oil deny Iran hard currency, and it denies Iran any revenue from oil sales.  Any time Iran sells oil, that money goes into an escrow account in the importing nation’s bank, and Iran has to spend down that credit.  We strongly encourage those nations to ensure that Iran spends that money on humanitarian purchases to benefit the Iranian people.  The longest-suffering victims of the Iranian regime are the Iranian people.  This regime uses fake companies disguised as humanitarian organizations to divert purchases that should go to food, medicine, and medical devices, and they use that to enrich the regime and support revolutionary activities overseas.

QUESTION:  So you’re counting on countries like China to make sure that they don’t use money for those things?

MR HOOK:  The United States will be monitoring these escrow accounts very closely.  Unlike in prior administrations, we will ensure that the money is not spent on illicit activities, that there isn’t any leakage in these escrow accounts, and we will work closely with countries to encourage the purchase and – the sale and purchase of humanitarian goods to benefit the Iranian people.  Our sanctions regime has very clear exceptions for the sale of food, medicine, and medical devices.

QUESTION:  So for the countries that you say need to keep importing oil, do you foresee issuing these exemptions over and over again?  Are you going to put an upper limit on how many times they’ll be renewed?

MR HOOK:  Our goal remains getting countries to zero imports of Iranian oil.  In 2019, our projections are that oil supply will exceed demand, and that creates a much better atmosphere for us to bring remaining nations to zero as quickly as possible.

QUESTION:  So you’re not putting an upper limit on how – for how – how many times these exemptions will be renewed at this point?

MR HOOK:  We are not looking to grant additional SREs at the end of the 180-day period.  We are being very careful to advance our maximum economic pressure campaign without increasing the price of oil.  Next year we anticipate a stronger oil supply coming online, and that will allow us to accelerate the path to zero.

QUESTION:  On the humanitarian transaction, Europeans have expressed concern in the past weeks that even though there were exemptions to humanitarian goods and services, the financials mechanism were not safe enough, that you have to clarify what are the means by which the countries and entities can do those kind of transactions.  Do you think that what you announced today clarifies this and that it’s safe to do humanitarian transactions with Iran?

MR HOOK:  The Iranian regime has a history of creating front companies to divert the distribution of humanitarian goods.  Financial institutions around the world know of Iran’s history of deceiving banks on the sale of humanitarian goods.  The burden is on Iran to open up its dark economy so that banks around the world have more confidence that when they facilitate humanitarian transactions that the humanitarian goods will reach the Iranian people. 
The United States is the largest donor of humanitarian assistance in the world.  Every sanctions regime we have makes exceptions for food, medicine, and medical devices.  That is, we have done our part; the Iranian regime needs to do its part by making those transactions possible in an open and transparent financial system.

QUESTION:  Sounds like there’s not very many safe ways of trade – like, for pharmaceutical companies and medical companies.

MR HOOK:  The Iranian regime makes it very difficult to facilitate the sale of humanitarian goods and services.

QUESTION:  The European countries say that companies fear that if they sell those goods to Iran, they will be targeted by U.S. sanctions.  So they ask you to say what are the safe channels to do that.

MR HOOK:  The burden is not on the United States to identify the safe channels.  The burden is on the Iranian regime to create a financial system that complies with international banking standards to facilitate the sale and provision of humanitarian goods and assistance.

QUESTION:  Right, but I think that the point is that they are looking for some kind of, like, assurance --

MR HOOK:  We have been – OFAC has given very clear guidance over many years --

QUESTION:  That’s not what the Europeans say.

MR HOOK:  We have done our part to permit the sale of humanitarian goods to Iran.  That is our part.  That is our role.  Iran has a role to make these transactions possible.  Banks do not have confidence in Iran’s banking system – often don’t have confidence in Iran’s banking system to facilitate those transactions.  That’s Iran’s problem; it is not our problem.

QUESTION:  But banks do not have confidence, the companies do not have confidence in Iran banks because they are subject to American sanctions from now on.

MR HOOK:  That’s not true.

—Nov. 2, 2018, to the press
 

Updated