March 15, 2024

The Iranian Sanctions Enforcement Act Risks Supercharging Tensions with Iran

The innocuously-named “Iranian Sanctions Enforcement Act of 2023” (H.R. 6201/S. 3197) seeks to significantly increase U.S. interdictions of Iranian shipping vessels to enforce unilateral U.S. sanctions, a highly escalatory proposition that risks heightening tensions and inviting Iranian reprisals. The push is particularly unwise in the current context of regional hostilities that have spilled across the Middle East and threatened to bring the U.S. and Iran into a full-blown war. Critically, the bill seeks to police Iranian oil shipments that are not “illicit” in the context of international law. They do not violate existing UN Security Council Resolutions on Iran, but rather the unilateral U.S. sanctions Donald Trump reimposed – contrary to UN Security Council Resolution 2231 – when he unilaterally exited the 2015 nuclear deal.

The bill requires the administration to establish a new fund at the U.S. Treasury Department, known as the “Iran Sanctions Enforcement Fund,” to fund governmental efforts to seize more Iranian assets. In deploying the funds, U.S. officials would be directed to prioritize “activities that result in the seizure and forfeiture of oil or petroleum products or other commodities or methods of exchange that fund the efforts of Iran or covered Iranian proxies to carry out acts of international terrorism or otherwise kill United States citizens.” It also mandates an annual report for the next decade on all seizures facilitated by the bill, including all goods seized, their status and how they have been distributed. Additionally, the bill sets up a process wherein net proceeds from the seizures will be paid into a U.S. government fund for victims of state-sponsored terrorism as well as, potentially, to pay down the national debt. This will incentivize authorities to seize more Iranian oil, regardless of the geopolitical context.

The bills were originally introduced in November following a joint effort by Senators Blumenthal and Ernst, who had complained that the U.S. wasn’t confiscating enough Iranian oil. They claimed, “For nearly two of the past three years, (Homeland Security Investigations) wasn’t able to conduct a seizure of illicit Iranian oil shipments.”

Yet urging more seizures of Iranian oil tankers is inherently destabilizing and would undoubtedly lead to significant Iranian reprisals. In the past, this has included Iranian harassment of oil tankers transiting the vital chokepoint of the Strait of Hormuz, which could have significant impacts not just on individual tankers but on the global economy as a whole. Threatening to supercharge tensions on the basis of highly dubious promises, such that this project could pay down the U.S. national debt, is deeply unwise and should not be entertained by the U.S. Congress.

For example, after the U.S. seizure of the Suez Rajan in April 2023, Iran seized the oil tanker Advantage Sweet shortly thereafter, which was carrying Chevron oil from Kuwait to Houston. While the U.S. netted $74 million in an auction from the Suez Rajan oil, Iran’s courts just ordered the auction of the oil aboard the Advantage Sweet, which could net the Islamic Republic roughly $50 million. They did so to justify paying for specialized medicine that Iran alleges is blocked by U.S. sanctions.

The message is clear: two can play at the piracy game pushed by these bills, with significant ramifications for the safety of the Persian Gulf waterway and security in the Middle East writ large.

The bill advances a simplistic narrative to sanctions that does not match the real world. Trump officials promised that by squeezing Iranian oil and taking it off the market, Iran’s activities – including its nuclear program, its funding of designated-terrorist organizations, and its internal repression – would cease. The Trump administration did succeed in taking some Iranian oil off the market, yet none of the geopolitical goals it set out were achieved. In fact, the opposite occurred: Iran’s nuclear program advanced unchecked, Iran’s ties with the “axis of resistance” strengthened, and Iran became more repressive as hardliners clawed back power and banished moderates from the political scene. Moreover, Iranian oil began to rebound under Donald Trump – not Joe Biden. Sanctions are not a silver bullet and there is bound to be leakage over time – particularly when imposed in violation of international law as they have been. 

The same Trump-era fiction underpins the Iranian Sanctions Enforcement Act of 2023 – if the U.S. engages in what is essentially international piracy, Iran would back down and halt its destabilizing activity. There is absolutely nothing indicating that would be the case. Iran would almost certainly match any confiscation of its own tankers with the confiscation of Western tankers.

If the U.S. truly desires that Iran halt its destabilizing activities, it must engage Iran diplomatically and put serious sanctions chips on the table. This led to the successful 2015 nuclear deal and coincided with a period where there were no active threats against U.S. forces in Iraq, despite the fact that they were operating in very close proximity to militias aligned with Iran in the fight against ISIS. Trump’s Iran policy and the failure to reverse it has done significant damage, and there is a better and proven approach that must be returned to. The Iranian Sanctions Enforcement Act of 2023 would take us further from the successful diplomatic path.

National Iranian American Council Action is also concerned by provisions that could funnel taxpayer funds to organizations that inflict political pressure on the U.S. government to take a more militaristic position towards Iran. These provisions would authorize the U.S. government to make payments for “awards for information or assistance leading to a civil or criminal forfeiture made with respect to a violation by Iran or a covered Iranian proxy of sanctions.” Taxpayer dollars should not be used to finance and incentivize vigilante sanctions enforcers, particularly those who have a conflict of interest given the political nature of their work. Notably, hawkish groups like United Against Nuclear Iran have claimed a key role in securing the eventual seizure of Iranian oil tankers in the past, both through research efforts but significantly through political pressure it imposes on the U.S. government. It is a bad precedent for the U.S. government to financially reward actors seeking to foment tensions in ways that jeopardize U.S. security and maritime commerce across the board.

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