NIAC Policy Memo: Why are U.S. sanctions blocking medicine for Iranians and how can we fix this?
Beginning in 2012, there have been widespread reports that U.S. and European sanctions on Iran, in addition to Iranian government mismanagement, have created shortages of life-saving medicine in Iran, including drugs needed to treat cancer, hemophilia, multiple sclerosis, thalassemia and some other severe ailments.
Beginning in 2012, there have been widespread reports that U.S. and European
sanctions on Iran, in addition to Iranian government mismanagement, have
created shortages of life-saving medicine in Iran, including drugs needed
to treat cancer, hemophilia, multiple sclerosis, thalassemia and some
other severe ailments.
are several Executive Order sanctions under which Iran’s international banks are
sanctioned, notably Executive
Order 13224 (terrorism) and Executive
Order 13382 (proliferation). Any financial institution, foreign or
domestic, risks being cut off from the U.S. financial system if it does any
business with these banks.
- While Congress has consistently exempted
medicine from legislative sanctions, and the Treasury has issued a general license
the sale of medicine and medical devices from Iran trade sanctions, the
exemption does not apply to financial transactions directly or indirectly
involving banks designated under these executive orders.
- If a prohibited Iranian bank is indirectly
involved in any permitted transaction, such as by providing foreign currency to
the Iranian bank carrying out the transaction, there is a strong risk of
incurring sanctions. Therefore, the general licenses for food and medicine are effectively
superseded by the Executive Orders that block transactions with Iran’s
- Additionally, if financial institutions
facilitate any authorized transactions that involve Iran, these banks are now
required to publicly report this to the U.S. Securities and Exchange Commission—incurring
potential negative publicity related to perfectly legal, humanitarian
- The sanctions and reputational risks have
deterred all U.S. banks and nearly all foreign financial institutions from
facilitating even authorized humanitarian transactions.
Order 13599 was implemented to enforce the 2012 National Defense
Authorization (NDAA), which required the president to block transactions with all
Iranian financial institutions. Accordingly, EO 13599 adds all Iranian
financial institutions to the U.S. Treasury Department’s sanctions blacklist
Designated Nationals List, or “SDN” list).
- Humanitarian trade is still authorized with the
small Iranian financial institutions that became sanctioned under Executive
Order 13599. However, the inclusion of these institutions on the SDN list has
led most international banks to cut all transactions with them anyway.
- The result is that, because all humanitarian
trade with Iran carries risk for foreign financial institutions, only the
biggest and most lucrative transactions are carried out. Even the banks
most willing to facilitate humanitarian transactions simply view transactions
that are not for tens of millions of dollars as inviting too much risk for too
little potential reward.
- The Administration should open banking channels
for authorized transactions by providing third country banks a blanket
waiver that they will not be sanctioned for facilitating legitimate
- Alternatively, the Administration could heed the
recommendation of a recent Atlantic Council report by
"[d]esignating a small number of US and private Iranian financial
institutions as channels for payment for humanitarian, educational, and
public diplomacy-related transactions carefully licensed by the US
Treasury's Office of Foreign Assets Control." This measure would
completely cut out the need to use foreign banks as intermediaries.
Wilson Center: Sanctions and Medical
Supply Shortages in Iran
Council: Time to Move From Tactics to
Strategy on Iran
York Times: Blocking Medicine to Iran