U.S. tiptoes through sanctions minefield toward Iran nuclear deal
As the US seeks a way back to the 2015 Iran nuclear pact, it is treading carefully over a minefield laid by former US President Donald Trump.
According to a Reuters tally of US Treasury activities, Trump placed Iran-related sanctions on more than 700 institutions and individuals after abandoning the nuclear agreement and restoring all sanctions that it had removed.
Among these, Trump blacklisted over two dozen entities critical to Iran’s economy, including its central bank and national oil corporation, citing U.S. legislation intended to prosecute international players that promote extremism or nuclear proliferation.
Many of those restrictions would have to be lifted if Iran is to sell its crude, which is the primary advantage of compliance with the nuclear deal and reining in its nuclear programme.
Dropping them, though, exposes Democratic President Joe Biden to allegations of being lax on extremism, an electoral punch that could be inevitable if the contract is to be resurrected.
The prospect has already sparked outrage among Republicans.
“This is unethical,” Trump’s former Secretary of State Mike Pompeo said last month when promoting bills to make it more difficult for Biden to remove Iran sanctions.
From 2015 to 2018, John Smith, the head of the Treasury’s Office of Foreign Assets Control (OFAC), characterised Trump’s surge of Iran sanctions as “unprecedented in scale in modern American history.”
Targeting Iranian entities for terrorist funding or ties to the Islamic Revolutionary Guard Corps (IRGC) has rendered reviving the contract even more difficult, according to Smith, who is now a partner at law firm Morrison & Foerster.
“By including global extremism, the IRGC, or human rights violations on any registry, you find things extremely impossible strategically… to exclude certain names from the list,” he said. “You can do that, but you’ll face a lot of backlash if you do.”
According to a US official, Reuters’ list of Trump sanctions was similar to the Biden administration’s count, while judgement decisions on what to include will result in slightly different counts.
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The reintroduction of US sanctions has harmed the Iranian economy, which shrank by 6% in 2018 and 6.8 percent in 2019, according to figures from the International Monetary Fund.
Trump, a Republican, withdrew from the agreement in 2018, claiming it provided Iran with undue sanctions relief in exchange for insufficient nuclear curbs, and he launched a “maximum pressure” effort in an unsuccessful bid to push Tehran to recognise more strict nuclear restrictions.
He also said that the deal had struggled to limit Iran’s support for insurgency, its support for regional proxies in Syria, Iraq, and Lebanon, and its pursuit of ballistic missiles.
Biden seeks to restore and, if necessary, expand the pact’s nuclear restrictions, while still opposing Iran’s other destabilising practises.
US and Iranian officials have started informal negotiations in Vienna to find a way to restore compliance with the pact, which Iran began breaching in response in 2019 after waiting for a year following Trump’s withdrawal.
In exchange for exemption from economic sanctions levied by the United States, European Union, and United Nations, Tehran agreed to curtail its nuclear programme in order to render it less capable of producing an atomic weapon, an aim Iran opposes.
Since Tehran refuses direct negotiations, European diplomats are shuttled between the US and Iranian delegations. Officials are attempting to reach an agreement by May 21, but significant challenges exist. more details
Among them is what to do with the Central Bank of Iran (CBI) restrictions, which were imposed in 2012 to obstruct its properties under US jurisdiction. These restrictions were lifted as part of the nuclear settlement, but they were reinstated after Trump withdrew.
Trump went even further in September 2019 by blacklisting the CBI, accusing it of providing financial assistance to jihadist organisations and legally banning outsiders from engaging with it.
He also accused the National Iranian Oil Company (NIOC), the National Iranian Tanker Company, and the National Petrochemical Company of supporting terrorism.
Sanctions lawyers argue that if Iran is to export its oil internationally, these businesses must be sanctioned-free, or else they would be poisonous to international businesses. Under various controls, US companies are still prohibited from doing business with them.
Elliott Abrams, the Trump administration’s last special envoy for Iran, insisted that the restrictions were placed on legal grounds, foreshadowing a possible Republican line of assault.
“Those were constitutionally, socially, and justifiably sufficient and justifiable designations,” he said. “They were not plucked from thin air.”
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According to a top US State Department official, the Biden administration does not plan to contest the Trump administration’s “evidentiary ground” for imposing the sanctions.
In effect, it would not claim that these organisations would not have funding for terrorism.
Rathe, he added, the Biden administration has decided that returning to the nuclear agreement, officially known as the Joint Comprehensive Plan of Action (JCPOA), is in the best interests of US national security, thereby justifying the lifting of sanctions.
Trump’s April 2019 decision to designate the IRGC and its overseas paramilitary and espionage arm, the Quds Force, as a Foreign Terrorist Organization (FTO) has further complicated matters.
This was the first time the US officially designated another country’s military as a terrorist organisation.
OFAC used counterterrorism authority to attack Iran’s central bank in September 2019, accusing it of providing billions of dollars to the IRGC, the Quds Force, and Lebanon’s Hezbollah, which Washington has long designated as a terrorist organisation.
“A action that would alter the sanctioning of the IRGC for terrorist activity, since the IRGC participates in terrorist activities, will be especially unacceptable to me. It is an unequivocal case “Abrams said.
The Biden government, on the other hand, would not need to revoke the IRGC’s FTO status in order to lift the central bank’s sanctions.
Former U.S. officials said the Treasury secretary has the authority to reverse any restrictions imposed on the central bank under U.S. executive orders, which grant the president the authority to enforce or revoke them at any time.
The State Department has only stated that if Tehran returns to comply with the agreement, it would lift the sanctions that are “inconsistent with the JCPOA,” without providing more information.
“The political heat is going to be very intense,” said Eurasia Group’s Iran analyst Henry Rome. “Anything including the ‘T’ term in this situation would be a ready-made talking point among all who condemn a return” to the nuclear agreement, he added, referring to terrorism.
“The political dilemma here is to conclude, ‘The designations might have been valid, but we have other foreign policy priorities that need us to remove them anyway.’ That’s a difficult needle to thread, so they’ll have to do it.”