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July 8, 2014

Policy Memo: Nuclear-Related or Not? Sanctions Relief Under a Final Nuclear Deal with Iran

Under the Joint Plan of Action the P5+1 and Iran agreed to last November, the United States committed to lift all “nuclear-related” sanctions on a “step-by-step reciprocal basis” in return for concessions on Iran’s nuclear program should a final deal be reached. It is thus critical that policymakers have a clear understanding of what constitutes a “nuclear-related” sanction that is available for relief and what constitutes a “non-nuclear-related” sanction that will be unaffected by any prospective agreement.

This memo details existing “nuclear-related” sanctions, as well as “non-nuclear-related” sanctions – i.e., those targeted exclusively at Iranian activities unrelated to the nuclear issue. This is intended as an aid to policymakers when evaluating the scope of sanctions relief under any final nuclear agreement.

Click here for a PDF version of the Policy Memo.

‘Nuclear-Related’ Sanctions

For the past decade, the United States has viewed developments in Iran’s nuclear program as an enduring source of concern. Exacting limits to Iran’s nuclear program, all the while avoiding an outbreak of war, has repeatedly been characterized by US lawmakers and executive branch officials as a priority of the first-order. When former House Representative Howard Berman introduced the Comprehensive Iran Sanctions, Accountability, and Divestment Act –the centerpiece of the Iran sanctions regime – in 2009, he stated:

“This bill has one overriding goal: to prevent Iran from achieving a nuclear weapons capability. The prospect of a nuclear-armed Iran is the most serious and urgent strategic challenge faced by the United States.”

By agreeing to lift all “nuclear-related” sanctions on Iran under a final nuclear deal, US negotiators thus inched closer to using the sanctions for their intended purpose: to limit Iran’s nuclear program and restore and maintain confidence in its exclusively peaceful nature.

Sanctions available for relief under a final nuclear deal include all or substantial part of the Iran-related provisions of the below statutes and executive orders:

STATUTE YEAR TARGET
Iran-Iraq Arms Non-Proliferation Act 1992 Export control
Iran Sanctions Act 1996 Energy investment; trade; transportation
Iran Nuclear Proliferation Prevention Act 2002 IAEA voting
CISADA 2010 Trade; Financial; Energy; Export Control
2012 National Defense Authorization Act 2012 Financial
Iran Threat Reduction Act 2012 Shipping; Insurance; Financial
Iran Freedom and Counter-Proliferation Act 2013 Energy; Shipping; Financial; Insurance
EXECUTIVE ORDER  YEAR TARGET
Executive Order 13382 2005 Asset Freeze
Executive Order 13590 2011 Petrochemicals
Executive Order 13599 2012 Financial
Executive Order 13622 2012 Financial; Energy
Executive Order 13628 2013 Financial; Asset Freeze; Energy
Executive Order 13645 2013 Financial; Energy; Gold; Automotive

Relief on all or substantial part of these sanctions would be extensive and would satisfy Iran’s core interest in seeing restrictions on its financial institutions, its oil exports, and its ability to attract and retain energy-sector investments lifted. Undoubtedly, the removal of these sanctions would be scheduled out over the duration of a final nuclear deal and would thus be wielded in such a way as to secure and sustain Iran’s compliance with an agreement.

Terrorism Sanctions

The United States has long had a significant interest in ending Iran’s support for acts of international terrorism and, most especially, its support for groups like Hezbollah, Hamas, and Palestinian Islamic Jihad. Despite concerns that a nuclear deal will render the US incapable of challenging Iran on this issue, the President will retain important legislative authorities to target and sanctions individuals and entities in Iran that are responsible for supporting acts of terrorism.

Sanctionable activities include committing or sponsoring acts of terrorism that threaten the security of the United States and its nationals; assisting or sponsoring elements in the Syrian regime of Bashar al-Assad; and supporting the activities of designated Foreign Terrorist Organizations (FTOs). Sanctions include visa restrictions, asset freezes, arms embargoes, and prohibitions on US financial assistance to Iran.

Legislative authorities that are unrelated to the nuclear issue and thus could not be characterized as “nuclear-related” sanctions include:

Section 104(c)(2)(A)(ii) of CISADA

Under a final nuclear deal, the President will retain the power to sanction foreign financial institutions (FFIs) that facilitate Iran’s support for designated FTOs. (The Secretary of State can designate an organization an FTO under Section 219 of the Immigration and Naturalization Act, which mandates US financial institutions to block any assets it controls or possesses. Hamas, Hezbollah, and Palestinian Islamic Jihad are all designated FTOs.) Designated foreign financial institutions are denied from opening up correspondent or payable-through accounts at US banks and thus restricted from accessing US financial markets.

Executive Order 13224

Soon after September 11, President Bush issued EO 13224, which permits the President to impose IEEPA-based sanctions on foreign persons involved in acts of terrorism that threaten US national security. Persons who provide financial, material, or technological support to or on behalf of designated persons could also be subject to sanctions under EO 13224.

Under this authority, the Treasury Department designated Iran’s largest bank, Bank Saderat, for sanctions. Sharing the designation are Iran’s Ministry of Intelligence and Security, Mahan Air, and the Lebanese Martyrs Foundation. These designations are unlikely to be affected by a nuclear deal.

Executive Order 12947

Under EO 12947, the President can impose IEEPA-based sanctions on persons that have committed (or pose a significant risk of committing) acts of violence that have the purpose or effect of disrupting the Middle East peace process. Persons who assist in, sponsor, or provide financial, material, or technological support for such acts of violence are also subject to sanctions under this Order. As of now, both Hamas and Hezbollah have been designated as SDTs (Specially Designated Terrorists) under EO 12947.

Executive Order 13582

Under this Order, the President can impose IEEPA-based sanctions on persons that have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, large parts of the Syrian Government. President Obama has designated Iran’s Ministry of Intelligence and Security, the IRGC-Qods Force, IRGC-Qods Force Commander Qasem Soleimani, and the Law Enforcement Forces of the Islamic Republic for sanctions under EO 13582.

Arms Export Control Act (22 U.S.C. §2780)

This Act enacts a de facto arms embargo on countries that the President finds have supported acts of international terrorism. Iran is a designated state sponsor of terrorism under the statute. The US Government is prohibited from engaging in transactions relating to the export of munitions, licensing the export of munitions, and providing credits, guarantees, or other financial assistance to Iran.

Foreign Assistance Act of 1961 (22 U.S.C. §2371)

This Act bars the provision of US financial assistance to countries that the President finds have repeatedly provided support for acts of international terrorism. Iran remains designated under this Act as a state sponsor of terrorism.

Export Administration Act of 1979 (50 USC app. 2405(j))

This statute requires a validated license before goods or technology can be exported to a country that the President has determined has provided support for acts of international terrorism. Iran is a designated state sponsor of terrorism under the Act.

These sanctions will be retained under any nuclear agreement reached with Iran, as they target Iran’s behavior in the region as opposed to Iran’s nuclear program. Such provisions provide the United States a significant source of leverage to deal with other Iranian activities of concern to the US.

Human Rights Sanctions

Under a final nuclear deal, the President will retain significant legislative authorities to tackle Iran’s poor human rights record, including Iranian censorship, surveillance, Internet monitoring, and other human rights abuses. These provisions authorize the President to impose targeted sanctions – such as visa restrictions and asset freezes – on Iranian individuals and entities that he determines are responsible for abuses taking place on or after the contested June 2009 election. Such measures are more likely to conform to US objectives, as they are likely to directly impact the persons and entities targeted without having broader effects on Iran’s civilian population.

Legislative authorities that would survive a final nuclear deal include:

Section 105 of CISADA

This provision targets individuals who are Iranian government officials or who are persons acting on behalf of the Iranian government and are determined to be responsible for human rights abuses committed after the contested June 2009 presidential election. The President is granted full discretion to designate individuals and impose visa restrictions and block US-based assets.

Title IV of Iran Threat Reduction Act

Title IV of the TRA amends the above provision to broaden the class of persons in Iran that the President can target with sanctions. Sanctionable activities include the provision of goods and technologies to be used to repress and surveil Iran’s citizens. Persons who engage in censorship in Iran are also targeted with sanctions, which again include visa restrictions and a block on US-based assets.

Executive Order 13553

Utilizing his IEEPA-based authorities and those granted him by Section 105 of CISADA, President Obama issued EO 13553 in the aftermath of the contested June 2009 presidential election in Iran. In doing so, the President sought to target persons or entities that assisted or provided financial or material support to designated individuals or entities. The President also designated several top-level officials in Iran’s security apparatus, including IRGC Commander Mohammad Ali Jafari, Head of Intelligence Heydar Moslehi, and head of Iran’s Law Enforcement Forces Mostafa Mohammad Najjar. These individuals remain designated and under sanction at present.

Executive Order 13606

Utilizing his IEEPA-based authorities, President Obama issued EO 13606 to target computer and network disruption, monitoring, and tracking by government authorities in Iran and Syria. Sanctionable activities include the operation or provision of technologies that facilitate computer and network disruption, monitoring, or tracking and that could be used to commit serious human rights abuses against Iranian citizens. When issuing the order, the President designated such entities as the Islamic Revolutionary Guard Corps (IRGC), the Iranian Ministry of Intelligence and Security (MOIS), and the Law Enforcement Forces of the Islamic Republic. These entities remain under sanction to the present.

This list is non-exhaustive. The United States also has several non-Iran-specific statutes in place, such as the Foreign Assistance Act of 1961, which would target Iran for its human rights violations. Moreover, the President has the discretion to impose additional sanctions under IEEPA, as he has previously found the serious human rights abuses in Iran to constitute a threat to the national security and foreign policy of the United States.

Conclusion

Trading nuclear-related sanctions to achieve a first-order priority on the nuclear issue would prove to be a significant foreign policy victory, all the while enabling the U.S. to retain significant sanction authorities aimed exclusively at terrorism, human rights, and areas of concern beyond the nuclear issue.

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