Economic Sanctions: Pressuring Iran's Nuclear Program

Introduction

With a year's worth of diplomatic overtures from the Obama administration having made little headway in bringing Iran's nuclear program into conformity with UN Security Council resolutions, the United States and 11 other members of the Security Council voted on June 9 for stepped up sanctions against Tehran.

For many of these states, economic sanctions are viewed as a middle-of-the-road approach, offering more potential pressure than diplomatic engagement, while avoiding some of the possible drawbacks from a military strike. Although sanctions are not without certain flaws or limitations, many believe that sanctions, with proper implementation, offer the only credible means of influencing the Iranian nuclear program in any significant form. President Obama imposed new sanctions on a leader and several affiliates of Iran's powerful Islamic Revolutionary Guard Corps (IRGC) in early February; the U.S. Congress is currently considering legislation that would place further economic pressure on Iran.

This issue brief will detail the history of unilateral U.S., as well as UN, sanctions against Iran. It will then discuss pending U.S. legislation sanctioning Iran and measures imposted by the European Union. Specifically, it will explore three levels of interactive measures against the Iranian regime: U.S. unilateral measures, multilateral sanctions, and the shifting efforts of like-minded European states. Finally, the brief will conclude by discussing the specific areas in which properly targeted sanctions against Iran may result in some measure of success.

An Overview of U.S. Sanctions on Iran

The first U.S. unilateral sanctions against Iran began after the November 1979 takeover of the U.S. Embassy in Tehran. President Jimmy Carter responded immediately to the assault and hostage crisis by issuing Proclamation 4702, which imposed a ban on the importation of Iranian oil. He issued Executive Order 12170 less than two weeks later, thereby blocking all property (assets) owned by the Central Bank and the government of Iran within U.S. jurisdiction. In April 1980, Carter issued Executive Order 12205, creating an embargo on U.S. exports to Iran and restrictions on financial transactions. Carter also implemented Executive Order 12211 that month, imposing a ban on all imports from Iran and prohibiting U.S. citizens from traveling to Iran or conducting financial transactions there. Upon the release of the U.S. hostages and the end of the crisis, Carter revoked all previous executive orders with the exception of the order blocking Iranian government property within U.S. jurisdiction (Executive Order 12170); the United States subsequently committed to avoid intervening in Iran's internal affairs.[1]

After the 1983 bombing of the U.S. embassy and Marine barracks in Lebanon, the Reagan administration officially declared Iran "a sponsor of international terrorism" in January 1984. This designation rendered Iran ineligible for various forms of U.S. foreign assistance. The Reagan administration additionally withheld funds from international organizations in 1985 that were equal to the amounts allocated by those organizations for Iran.[2] Reagan ordered U.S. executive directors at international financial institutions, such as the World Bank and the International Monetary Fund, to vote against issuing loans to Iran in 1988. Given the leading role of the United States at these institutions, this significantly limited their support for Tehran. The passage of the U.S. Arms Export Control Act in August 1986 prohibited the sale of U.S. arms, including spare parts, to Iran.

Congressional criticism of U.S. purchases of Iranian oil for the Strategic Petroleum Reserve prompted, at least in part, Reagan to implement Executive Order 12613, which imposed a ban on U.S. imports of Iranian crude oil and all other Iranian imports in October 1987. An additional reason for the ban included the widespread belief that Iran was engaged in terrorism.

The Iran-Iraq Arms Non-Proliferation Act, signed in October 1992, included provisions regarding dual-use items with potential military purposes. The act, sponsored by future Vice President Al Gore and Senator John McCain, included Iran due to concerns over its potential for developing WMD programs. Specifically, the act called for the sanctioning of any person or entity that assisted Tehran in weapons development or acquisition of chemical, biological, nuclear, or destabilizing numbers and types of advanced conventional weapons. Much of this concern, particularly the belief that Iran was attempting to develop WMD, emerged from the legacy of the 1980-1988 Iran-Iraq War.

Further use of unilateral sanctions against Iran expanded considerably under the Clinton administration, in large part due to the dissolution of the Soviet Union, which might have capitalized on any tough behavior from the United States. Moreover, the Republican-controlled House and Senate after 1994 pushed for sanctions against unpopular foreign governments.[3] After Iran announced a $1 billion contract with Conoco, a U.S. oil company, to develop selected oil fields, President Bill Clinton issued Executive Order 12957 in March 1995, effectively banning all U.S. participation in the development of petroleum (although not gas) in Iran. Executive Order 12959, issued two months later, broadened the sanctions to encompass a total trade and investment embargo on Iran. Despite the implementation of the two executive orders in 1995, the Senate and House overwhelmingly passed the Iran and Libya Sanctions Act (ILSA) of 1996 to expand U.S. sanctions legislation to cover foreign companies, a step taken to reduce the risk that sanctions would place U.S. firms at a disadvantage. Hoping to curtail revenues that Iran might use to support its emerging WMD programs, the act focused on reducing Iran's ability to export oil and gas, the mainstay of the Iranian regime.

More than a decade later, however, Iran continued to rely heavily on energy exports for its income: Iran's net oil export revenues in 2007, for example, totaled approximately $57 billion with oil exports providing approximately half of Iran's government revenues; crude oil and its derivatives accounted for nearly 80% or more of total exports.[4] ILSA imposed sanctions on U.S. and foreign companies investing $40 million in Iran's petroleum sector during the first year of enforcement, thereafter lowering to a limit of $20 million.[5] ILSA instructed the president to select at least two from a list of six authorized economic punishments for sanctioned firms: for example, the president could deny access to U.S. financial markets; deny access to U.S. equipment and parts; forbid U.S. government purchases of goods and services from the offending companies, and so forth.

ILSA provoked strong European criticism and opposition, creating serious challenges when a number of European companies signed substantial contracts with Iran worth hundreds of millions of dollars after it took effect. Under Section 9c, the president possessed the authority to waive selected sanctions if deemed important to U.S. national interests.[6] To avoid a confrontation at the World Trade Organization (WTO), the Clinton administration pledged to refrain from sanctioning EU firms investing in Iran in return for increased cooperation from the EU on nonproliferation and counter-terrorism.[7] Nevertheless, the act received an extension in 2001 and again in 2006, when Libya, which had renounced terrorism and its WMD programs, was removed as a target of sanctions and the act was renamed the Iran Sanctions Act. Its current expiration date is 2011.

In 2005, President George W. Bush issued Executive Order 13382, which intended to freeze the assets of proliferators of WMD and their supporters and isolate them financially. Eight Iranian entities and external organizations believed to be supporting Iranian WMD programs were designated under the executive order and sanctioned.

This order was followed in 2006 by the Iran, North Korea, and Syria Nonproliferation Act (INKSNA). The act provides for "penalties on entities and individuals for the transfer to or acquisition from Iran since January 1, 1999, the transfer to or the acquisition from Syria since January 1, 2005, or the transfer to or acquisition from North Korea since January 1, 2006, of equipment and technology controlled under multilateral control lists (the Missile Technology Control Regime, Australia Group, Chemical Weapons Convention, Nuclear Suppliers Group, Wassenaar Arrangement)."[8] INKSNA also provided for sanctions for the transfer of equipment or technology that might contribute to the development of WMD, cruise, or ballistic missile systems. Subsequently, the United States imposed sanctions on dozens of firms in the countries that sold prohibited commodities to Iran, particularly Chinese companies.[9]

In October 2007, Washington imposed sanctions on Bank Melli, Bank Mellat, and Bank Saderat and listed the Revolutionary Guards as a proliferator of weapons of mass destruction.[10] Two years later in October 2009, the Treasury Department sanctioned Bank Mellat in Malaysia.[11] Furthermore, the United States implemented new sanctions on affiliates of the Islamic Revolutionary Guard, a branch of Iran's military that has injected itself into nearly every aspect of Iranian society and is largely suspected of overseeing the alleged nuclear weapons program, in early February 2010. Specifically, the sanctions froze the U.S. assets of Revolutionary Guard General Rostam Qasemi and four companies affiliated with Qasemi's Khatam al-Anbiya construction company, believed to be the engineering arm of the IRGC that assists in funding its operations.[12]

Past U.S. sanctions have significantly constrained Iran's energy sector; economic sanctions and the international isolation of Iran has stunted, although not decreased, oil production. Iran itself remains heavily dependent on gasoline imports.[13] While the exact Iranian response, both short- and long-term, to international or U.S. pressure on the oil and gasoline sectors remains unclear, it is likely that those variables alone will not be enough to fully dismantle or undermine the possible Iranian nuclear program or intention to acquire nuclear weapons.

The Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 and other recent unilateral sanctions

In April 2009, several bills were introduced in Congress seeking to impose new sanctions on Iran. The bills, namely H.R. 2194, S. 908, H.R. 1208, and H.R. 1985, called for the imposition of sanctions on foreign firms that supply refined gasoline to Iran or equipment with potential use in expanding or creating oil refineries in that country. S. 908 and H.R. 2194, both entitled the Iran Refined Petroleum Sanctions Act of 2009 (IRPSA), also attempted to expand the range of possible sanctions that could be imposed against designated firms. These new mandatory sanctions included the prohibition of transactions in foreign exchange by the firm, the prohibition of any acquisition or ownership of U.S. property by said entity, and the prohibition of any financial transactions with U.S. banks on behalf of the sanctioned firm.[14] The House passed H.R. 2194 on December 15, 2009 by a vote of 412-12. The legislation displayed some measureable effect as companies such as Swiss-based Glencore International AG, which cut gasoline supplies, were starting to distance themselves from transactions with Iran in order to avoid fallout from anticipated U.S. sanctions.[15]

The Senate sanctions bill, known as the Dodd-Shelby Comprehensive Iran Sanctions, Accountability, and Divestment Act or S. 2799, was reported to the full Senate on November 19, 2009. It called for sanctions on gasoline and refinery equipment sales, expanding the definition of "person" to include a "financial institution, insurer, underwriter, guarantor, and any other business organization including a foreign subsidiary, parent, or affiliate, or a governmental entity acting as an export credit agency," and prevents U.S. government agencies from contracting with any firm supplying such items to Iran.[16] The bill also requires the re-imposition of several import restrictions lifted in 2000; a U.S. freeze on all assets of any Iranians involved with Iran's illicit nuclear activities, reinstatement of the U.S. trade ban to encompass foreign subsidiaries of U.S. firms, and shields investment companies from legal action based upon divesting from or refusing to invest in Iran.[17] Additionally, the sanctions bill also incorporates a new licensing requirement for exports to countries listed as questionable areas that do not cooperate to strengthen established export control systems. As such, the bill strengthens export controls to stop the illegal black market export of sensitive technology to Iran through other countries and imposes tough new licensing requirements on those who refuse to cooperate. The Senate passed S.2799 by a voice vote on January 28, 2010

Whereas many perceive H.R. 2194 as incorporating a more narrow focus and thus much less likely to trigger serious European opposition, S. 2799 created concern from the Obama administration that the legislation might undermine allied unity on Iran at a crucial time for imposing new international sanctions on the Islamic Republic. In a December 11, 2009 letter to Senate Foreign Relations Committee Chairman John Kerry (D-Mass.), Deputy Secretary of State James Steinberg stated that the current version of the Senate bill raises questions regarding "the lack of flexibility, inefficient monetary thresholds and penalty levels, and blacklisting that could cause unintended foreign policy consequences."[19] The administration refrained from threatening to resort to an actual presidential veto, however.

The differences between the House and Senate bills were ironed out in conference committee, and the joint bill was passed by both chambers on June 24, 2010. The conference bill directs the president to impose sanctions on any person (meaning any individual, organization, or institution) that makes an investment of $20 million or more in Iran's petroleum industry. Similarly, the legislation requires that the president sanction any person that provides Iran with goods, services, technology or information with a fair market value of $1 million or more for the maintenance or expansion of Iran's production of refined petroleum products.[20]*

In addition, the bill would apply U.S. sanctions to any individual or organization that exports more than $1 million worth of gasoline to Iran, or provides $1 million worth of goods or services that could contribute to Iran's ability to import gasoline.[21]*

The conference bill would also prohibit the export or transfer of any facility, material, component, goods, services or technology that would be subject to an agreement for peaceful nuclear cooperation in any country with jurisdiction over a person subject to U.S. sanctions. These sanctions do not apply if the president determines that the country in question had no knowledge of the activity, and is working to penalize the person in question. The president may also approve transfers of items covered by the act on a case-by-case basis if he determines that the transfer serves the vital national interests of the United States.[22]*

The original Iran Sanctions Act described a menu of six possible sanctions that the president could impose on individuals or organizations as described in the law: a ban on assistance from the Export-Import Bank of the United States, a ban on U.S. exports to that individual or organization, a prohibition on loans from U.S. institutions, penalties related to dealing with the Federal Reserve, a ban on U.S. government contracts with the sanctioned organization, and additional restrictions on imports.[23]*

The 2010 conference report adds an additional three categories of possible sanctions: a prohibition on any transactions in foreign exchange under the jurisdiction of the United States affecting the targeted organization or person, a ban on any financial transfers under the jurisdiction of the United States, a ban on any U.S. property transactions.[24]* Whereas the 1996 legislation required the president to select at least two forms of sanctions to be used against targeted individuals or organizations, the new legislation directs the president to select at least three.

The bill allows the president to waive any of these sanctions if the waiver serves the national security interests of the United States, as in the 1996 ISA. The new bill explicitly allows the president to waive sanctions with respect to countries that are cooperating with the United States in multilateral efforts to prevent Iran from developing chemical, biological, nuclear or related weapons or destabilizing numbers of types of conventional weapons.[25]The congressional sanctions share some broader commonalities with sanctions imposed by the in that both incorporate banning selected Iranians from international travel and freezing their assets. Restricting gasoline sales to or refining-related investments in Iran, however, has garnered much less support abroad and is likely a measure the United States will have to implement unilaterally. The exact implications of such a ban are debatable: some perceive the Iranian government would respond by either rationing or reducing subsidies in an overall effort to reduce gasoline consumption. Others point to potential gasoline suppliers like Venezuela that might not only ignore U.S. laws or even UN resolutions but also step in to compensate deficiencies. Additionally, any effects the bill might have on Iran may very well be perceived by the general public as evil machinations of the United States and thereby increase support for President Mahmoud Ahmadinejad and the overall regime. This possibility also applies to multilateral sanctions

The Treasury Department has, as of late, undertaken "targeted financial measures" designed to influence the financial affairs of Iran with the goals of limiting investment and furthering economic isolation from the international community. In doing so, the administration hopes that such financial stresses might force the Iranian government to limit funding for the nuclear program, leaving Iran unable to continue importing the numerous components for the effort that it is incapable of manufacturing itself. As such, Treasury officials are actively engaging foreign companies and banks to persuade them that any established relationship with Iran not only may contribute to proliferation but also exposes the firms involved to significant negative publicity. Evidence suggests some measure of success regarding these efforts: reports from the International Monetary Fund indicate an overall reduction in financing for the Iranian energy industry, including the withdrawal of some investors from the Iranian energy sector and decisions by others to delay finalizing pending projects.[26] According to testimony before the House Foreign Affairs Committee from Treasury officials in April 2008, over 40 banks had withheld financing for exports to Iran or to process dollar transactions for Iranian banks.[27] Earlier U.S. financial diplomacy reportedly persuaded Kuwaiti banks to abstain from all transactions with Iranian accounts.[28]

However, the Treasury Department continues to refrain from imposing sanctions against the Central Bank (Bank Markazi) of Iran, despite allegations that it is assisting other Iranian banks and financial institutions in circumventing current international banking limitations and punishments.[29] Such non-action is likely a result of the administration's unwillingness to anger European states, who might oppose such punitive actions on humanitarian grounds by alleging that such efforts would destabilize Iran's currency. Ultimately, as long as the Obama administration continues to give priority to multilateral efforts and sanctions, it is unlikely to support any action that might jeopardize such cooperation.

Designing and implementing the appropriate sanctions in order to accomplish selected objectives, particularly within an environment and regime such as Iran, are daunting tasks. In a testimony on December 15, 2009 before the House of Representatives Subcommittee on National Security and Foreign Affairs of the Committee on Oversight and Government Reform, Suzanne Maloney of the Brookings Institution noted that in order to influence Iran properly, success depends on constructing clear, realistic, and limited objectives. These objectives must target the economic foundations of the Islamic Revolutionary Guards and other aspects of the hard-line power structure with the goal of halting the nuclear weapon program, not overthrowing the regime.[30] Furthermore, sanctions integrated within the continuum of U.S. diplomacy, emphasizing their role in creating a diplomatic solution, may lessen the perception of many Iranian policymakers that such measures are purely punitive in a "carrot-and-stick" framework.[31] Offering new and lucrative business opportunities to U.S. allies that are reticent about sanctions on Iran entail one possible means of preventing defection from the sanctions regime, especially given that Iran will most likely continue to exploit differences in order to undermine Western leverage.[32] Naturally, the United States must convince these allies that such measures will influence the intended targets. Finally, implementing sanctions that incorporate immediate and direct costs to the business deals between the international community and the Iranian regime, while remaining mindful of the internal political climate since the Iranian presidential elections in the summer might influence's Iran's decisions more than measures that impact long-term investments.[33]

Others, however, argue that a regime change is the only possible means of preventing Iran from acquiring either a nuclear weapons capability or an actual device. Richard Haass, president of the Council on Foreign Relations, stated in a recent Newsweek article that the United States, the Europeans, and others must shift policies toward galvanizing political change; the current approaches display no progress in halting Iran's alleged nuclear weapons development program.[34] Haass argued that the turmoil from the presidential elections in summer 2009 offers the best opportunity to instill regime change within Iran. Many experts generally agree that sanctions on the Revolutionary Guard, particularly on the group's financial holdings, are necessary to cripple the nuclear program. However, Haass argues even further for isolation of the regime's leaders, thereby emphasizing the illegitimacy of Iran's behavior, while the UN should decide on gasoline sanctions in order to avoid questions concerning the legality of unilateral American measures.

The Like-Minded European States

In a manner similar to the United States, the European Union (EU) has pursued and implemented a variety of sanctions on Iranian organizations, both private and governmental, as well as select individuals with the broad intention of slowing missile and nuclear proliferation in Iran.

In 2007, the EU adopted Common Position 2007/140, which implemented UN Security Council Resolution 1737 within the European states. Additionally, it banned all travel of listed individuals in that resolution within the EU; the actual UN resolution, by contrast, simply urged, rather than required, states to do so.[35]

Two months later, Common Position 2007/246 amended 2007/140 and incorporated stronger sanctions.[36] Common Position 2007/246 banned trade with Iran in all nuclear- and missile-relevant commodities contained in the control lists of the Nuclear Suppliers Group and the Missile Technology Control Regime and restricted the provision of training and financing activities to support Iran's development of uranium enrichment and plutonium separation capabilities.[37] It also froze the assets of corporate and governmental entities and individuals directly associated with Iran's sensitive nuclear activities and missile development programs, prevented EU members from making transfers of conventional weapons and military equipment to Iran, and banned member states from establishing new commitments for grants, financial assistance, or concessional loans to the government of Iran.[38] UN Security Council Resolution 1747, comparatively, refrained from requiring the implementation of the last three bans, instead calling on states to do so without actually mandating those actions

One year later, the EU Council implemented additional measures amending the prior Common Positions. In June 2008, the Council adopted Common Position 2008/479, which identified additional persons and entities under the restriction of admission and asset freezing.[39] Additionally, the EU adopted Common Position 2008/652 in August of that year. It requests all member states to exercise restraint when entering into new commitments to provide official financial support for trade with Iran as well as continued vigilance over the activities of financial institutions with Iranian banks and Bank Saderat in particular.[40] Furthermore, Common Position 2008/652 requests member states to inspect the cargos to and from Iran of both aircraft and vessels at ports or airfields within their territories.[41]

Currently, the European Union has imposed visa bans on a number of senior Iranian officials and other individuals associated with the alleged nuclear weapon program. Additionally, Britain announced on June 18, 2009 that Iranian assets frozen in Britain under EU and UN sanctions totaled approximately $1.59 billion.[42] The British government further announced on October 12 the suspension and freezing of business ties with Bank Mellat and Islamic Republic of Iran Shipping Lines, both accused of involvement in the nuclear program.[43] It remains uncertain, however, whether the EU will accept economic sanctions stronger enough to heavily pressure the Iranian regime. Trade between Iran and Europe has increased within the past decade, particularly within the natural resources sector, as the Islamic Republic is now the sixth leading supplier of energy products for the EU.[44] As of 2008, EU goods imported from Iran totaled €11.3 billion, with over 90 percent of such goods either energy or energy related products.[45] Given this high dependency, the extent of EU commitment to harsh multilateral sanctions, much less cooperation with U.S. ones, remains uncertain.

In the case of previous U.S. sanctions against Iran, the European states declined to join in stringent measures against the Islamic Republic; European opposition and the existence of numerous deals between European firms and Iran constrained many of the harsher U.S. measures that required sanctions against foreign firms dealing with Iran. While unilateral U.S. sanctions certainly pressured the regime, strongly contributing to the underdevelopment and underinvestment of Iran's gas and oil sectors, continued vital trade between Iran and Europe enabled the state to continue, albeit not quite as effectively, the various programs that the United States sought to dissolve.

As in the case of UNSCR 1737, the European states typically refrain from imposing punitive measures until the UN Security Council reaches an agreement. The same pattern held true following Resolution 1929, passed in June 2010. Once the Security Council issued the new resolution, the European Council issued a declaration calling for the implementation of the resolution by European states and initiating additional, harsher sanctions. The Council declaration instructs the EU Foreign Affairs Council to develop sanctions focusing on trade with Iran, financial restrictions, and investment in the Iranian gas and oil industries:

    ...especially dual use goods and further restrictions on trade insurance; the financial sector, including freeze of additional Iranian banks and restrictions on banking and insurance; the Iranian transport sector, in particular the Islamic Republic of Iran Shipping Line (IRISL) and its subsidiaries and air cargo; key sectors of the gas and oil industry with prohibition of new investment, technical assistance and transfers of technologies, equipment and services related to these areas, in particular related to refining, liquefaction and LNG technology; and new visa bans and asset freezes especially on the Islamic Revolutionary Guard Corps (IRGC).[46]

Once these EU sanctions are elaborated and implemented, they could be quite damaging to Iran, given the importance of European trade to Tehran.

Past and Continuing UN Sanctions against Iran

In late 2002, evidence revealed a clandestine enrichment program in Iran potentially capable of producing weapon-grade uranium; a 2003 IAEA report identified a number of reporting failures by Iran.[47] With the release of the IAEA Director-General's report in February 2006 that found Iran noncompliant with IAEA safeguard obligations and listed a number of issues with potential military dimensions concerning Iran's nuclear program, the IAEA Board referred the issue to the UN Security Council. Subsequently, the President of the Security Council issued a statement in March 2006 urging Iran to suspend all enrichment activities. Such suspension, the statement argued, would contribute to a diplomatic solution by restoring confidence in the peaceful intentions of the Iranian nuclear program.[48]

When Iran failed to comply with the Security Council's demands, the Council adopted Resolution 1696 by a vote of 14-1 (with only Qatar opposing) in July 2006, which demanded a total suspension of all enrichment-related and reprocessing activities within Iran and urged the state to reconsider the construction of a research reactor moderated by heavy water.[49] Iran's activity in reprocessing raised considerable concern within the international community since reprocessing, which chemically separates fissionable uranium and plutonium from irradiated nuclear fuel, could provide the plutonium for nuclear weapons. The resolution allowed Iran one month to comply with these demands or risk the imposition of economic and diplomatic sanctions. The Security Council demanded Iran's submission to full verification by the IAEA in order to assuage concerns regarding its continued engagement in sensitive nuclear activities.

Six months later, in December 2006, after Iran again disregarded the Security Council's demands, the Council imposed sanctions on Iran for failing to halt its sensitive nuclear activities. A press release for Resolution 1737, unanimously adopted, announced the blockage of "the import or export of sensitive nuclear matériel and equipment and froze the financial assets of persons or entities supporting its proliferation sensitive nuclear activities or the development of nuclear-weapon delivery systems."[50] Resolution 1737 also demanded verification by the IAEA of all heavy-water related projects.[51] The Council declared that Iran must immediately suspend all spent fuel, enrichment-related, and reprocessing-related activities, including research and development. The Security Council ordered the IAEA to verify that Iran had suspended all listed activities.

In the face of Iran's continued of defiance of its resolutions, the Council imposed additional sanctions against Iran through Resolution 1747, which it adopted in March 2007.[52] The principal new sanction was a ban on Iranian arms exports, in part due to international concerns about Iranian sales to Hamas and Hezbollah.[53] The resolution also froze the assets and restricted the travel of additional individuals identified as involved in the state's proliferation-sensitive nuclear activities.[54] Unanimously adopted, the resolution also requested a report from the IAEA within 60 days as to whether Iran had complied with the Council's demands and suspended all proscribed activities.

In March 2008, the Security Council passed Resolution 1803 by a vote of 14-0-1 (with Indonesia abstaining). This third measure strengthened travel and financial restrictions on designated Iranian individuals and companies. It expanded a partial ban on trade in items with both civilian and military uses to cover sales of all such technology to Iran and additionally added new entities, both individuals and companies, to the list of those suspected of aiding Iran's nuclear and missile programs. These bans marked an important change by abandoning the policy of restricting only nuclear specific items and instead focusing on all nuclear relevant items. The resolution also increased state monitoring of Iranian banks and the inspection of "cargo to and from Iran of aircraft and vessels owned or operated by Iran Air Cargo and Islamic Republic of Iran Shipping Line, provided 'reasonable grounds' existed to believe that the aircraft or vessel was transporting prohibited goods."[55]

The Security Council voted 12-2-1 (with Brazil and Turkey voting against, and Lebanon abstaining) to pass Resolution 1929 on June 2, 2010. Resolution 1929 expands the lists of organizations and individuals subject to sanctions, but also goes further in outlawing most conventional arms transfers to Iran and prohibiting Iran from carrying out any activities related to ballistic missiles. The resolution also calls upon states to prevent the provision of financial services or insurance to if there are reasonable grounds to believe that such services could contribute to Iran's nuclear or missile programs.[56]

Conclusion

The United Nations, the European Union, and the United States all imposed or began to impose strict new sanctions on Iran in June 2010, targeting Iran's oil and gas industries, financial institutions, arms imports, and ballistic missile program. These measures on their own indicate that international patience with Iran's behavior in the nuclear and missile fields is wearing thin, including in historically sanctions-skeptical Russia and China. However, it is the strict implementation of these measures by the international community that will ultimately determine the effectiveness of sanctions in penalizing Iran's defiance of Security Council resolutions demanding it halt its uranium enrichment and other nuclear programs.

Resources

  • Iran Watch, Wisconsin Project, www.iranwatch.org
  • GlobalSecurity.org factsheet on Iranian nuclear program, www.globalsecurity.org.
  • United States Department of the Treasury Sanctions Program Summaries, www.ustreas.gov.
  • Nuclear Threat Initiative Country Profile: Iran, www.nti.org.
  • IAEA and Iran, International Atomic Energy Agency, www.iaea.org.
  • Nuclear Iran, Institute for Science and International Security (ISIS), www.isisnucleariran.org.
  • Iran, Council on Foreign Relations (CFR), www.cfr.org.
  • IranTracker, American Enterprise Institute (AEI), www.irantracker.org

Sources:

[1] Herman Franssen and Elaine Morton, "A Review of US Unilateral Sanctions against Iran," The Middle East Economic Survey, Vol. XLV, No. 34, 26 August 2002.
[2] Ibid.
[3] Ibid.
[4] U.S. Energy Information Administration, Iran, Oil, 20 January 2010, www.eia.doe.gov.
[5] Ibid.
[6] U.S. Congressional Research Service. Iran Sanctions (RS20871; Dec. 24, 2009), by Kenneth Katzman. Text In: Federation of American Scientists Congressional Research Service Reports, 19 January 2010, www.fas.org.
[7] Ibid.
[8] U.S. Department of State. Iran, North Korea, and Syria Nonproliferation Act Sanctions (INKSNA), 15 January 2010, www.state.gov. For additional information regarding imposed sanctions under INKSNA, www.state.gov.
[9] Ibid.
[10] Farah Stockman, "US Issues New Sanctions on Iran's State Banks, Seeks to Push Regime to Halt Nuclear Efforts," Boston Globe, October 26, 2007.
[11] "US Announces Sanctions on Subsidiary of Iranian Bank," PressTV, Nov. 5, 2009, www.presstv.ir.
[12] "Washington hits Iran's Revolutionary Guard with new sanctions," Radio Free Europe/Radio Liberty, February 10, 2010.
[13] U.S. Congressional Research Service. Iran Sanctions (RS20871; Dec. 24, 2009), by Kenneth Katzman.
[14] Ibid.
[15] Luke Pachymuthu and Yaw Yan Chong, "Glencore Halts Fuel Sales to Iran; Eyes Sanctions." Reuters, January 11, 2010.
[16] "S.2799: Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2009," Congressional Research Service Summary, accessed 5 February, 2010, www.govtrack.us.
[17] U.S. Congressional Research Service. Iran Sanctions (RS20871; Dec. 24, 2009), by Kenneth Katzman.
[19] Peter Crail, "House Adopts Iran Oil Sanctions," Arms Control Today, January/February 2010.
[20] Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, conference report, June 2010. Pp. 18-19, www.aipac.org.
[21] Ibid. Pp. 20-21.
[22] Ibid. Pp.25-26.
[23] Public Law 104-172, "The Iran and Libya Sanctions Act of 1996," August 5, 1996. Pp. 5-6, www.iranwatch.org.
[24] Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, conference report, June 2010. Pp. 29-30, www.aipac.org.
[25] Ibid. Pp. 39-40.
[26] U.S. Congressional Research Service. Iran Sanctions (RS20871; Dec. 24, 2009), by Kenneth Katzman.
[27] Ibid.
[28] Steven Mufson and Robin Wright, "Iran Adapts to Economic Pressure," Washington Post, October 29, 2007.
[29] U.S. Congressional Research Service. Iran Sanctions (RS20871; Dec. 24, 2009), by Kenneth Katzman.
[30] Suzanne Maloney, "Iran Sanctions: Options, Opportunities and Consequences," Testimony Before the Subcommittee on National Security and Foreign Affairs. Committee on Oversight and Government Reform, House of Representatives Hearing, December 15, 2009, www.brookings.edu.
[31] Ibid.
[32] Ibid.
[33] Ibid.
[34] Richard Haass, "Regime Change Is the Only Way to Stop Iran," Newsweek, January 22, 2010.
[35] Leonard Spector and Benjamin Radford, "Summary of Recent United Nations Security Council, European Union, and United States Sanctions against Iran," WMD Insights, April 2008.
[36] Official Journal of the European Union, "Council Common Position 2007/246/CSFP," 23 April 2007, http://eur-lex.europa.eu.
[37] Leonard Spector and Benjamin Radford, "Summary of Recent United Nations Security Council, European Union, and United States Sanctions against Iran."
[38] Ibid.
[39] Official Journal of the European Union, "Council Common Position 2008/479/CSFP," 23 June 2008, http://eur-lex.europa.eu.
[40] Official Journal of the European Union, "Council Common Position 2008/652/CSFP," 7 August 2008, http://eur-lex.europa.eu.
[41] Ibid.
[42] David Cutler, London Editorial Reference Unit and Tom Doggett, "Sanctions to Deter Iran from Nuclear Path." Reuters, January 20, 2010.
[43] Ibid.
[44] European Commission, Trade, Iran, accessed 19 January 2010, http://ec.europa.eu. For more detailed information concerning overall trade between the European Union and Iran, http://trade.ec.europa.eu.
[45] Ibid.
[46] "Conclusions," European Council, June 17, 2010. Page 14, http://ec.europa.eu.
[47] Revati Prasad and Jean Marie Parillo, "Iran's Programs to Produce Plutonium and Enriched Uranium," Carnegie Endowment, February 2006, accessed 5 February 2010, www.carnegieendowment.org.
[48] UN Security Council, 5403rd Meeting (PM), SC/8679, "Security Council, in Presidential Statement, Underlines Importance of Iran's Re-Establishing Full, Sustained Suspension of Uranium Enrichment Activities," 29 March 2006., www.un.org.
[49] UN Security Council, 550th Meeting (AM), SC/8792, "Security Council Demands Iran Suspend Uranium Enrichment by 31 August or Face Possible Economic, Diplomatic Sanctions," 31 July 2006, www.un.org.
[50] UN Security Council, 5612th Meeting (AM), SC/8928, "Security Council Imposes Sanctions on Iran for Failure to Halt Uranium Enrichment, Unanimously Adopting Resolution 1737 (2006)," 23 December 2006, www.un.org.
[51] UN Security Council, S/Res/1737 (2006), "Resolution 1737 (2006)," 23 December 2006, http://daccess-dds-ny.un.org.
[52] UN Security Council, S/Res/1747 (2007), "Resolution 1747 (2007), 24 March 2007 http://daccess-dds-ny.un.org.
[53] Lionel Beehner, "Russia-Iran Arms Trade," Council on Foreign Relations, February 1, 2006.
[54] UN Security Council, 5647th Meeting (PM), SC/8980, "Security Council Toughens Sanctions Against Iran, Adds Arms Embargo With Unanimous Adoption of Resolution 1747 (2007)," 24 March 2008, www.un.org.
[55] UN Security Council, 5848th Meeting (PM), SC/9268, "Security Council Tightens Restrictions on Iran's Proliferation-Sensitive Nuclear Activities, Increases Vigilance Over Iranian Banks, Has States Inspect Cargo," 3 March 2008, www.un.org.
[56] Resolution 1929, UN Security Council, June 9, 2010, http://daccess-dds-ny.un.org.

June 24, 2010
About

Richard Sabatini provides an overview of American, European and multilateral sanctions imposed on Iran aimed at coercing Tehran to discontinue its controversial nuclear program.

Authors
Richard Sabatini

Center for Nonproliferation Studies

This material is produced independently for NTI by the James Martin Center for Nonproliferation Studies at the Middlebury Institute of International Studies at Monterey and does not necessarily reflect the opinions of and has not been independently verified by NTI or its directors, officers, employees, or agents. Copyright 2017.