NIAC’s Reaction to Mike Pompeo’s ‘Iran Action Group’

WASHINGTON, DC — Moments ago, Secretary of State Mike Pompeo announced that the Trump administration is forming an ‘Iran Action Group’ to coordinate and manage U.S. policy toward Iran after the administration withdrew from the Iran nuclear deal. Pompeo announced on Thursday afternoon that the Iran Action Group would be “directing, reviewing and coordinating all aspects of the State Department’s Iran-related activity.” The group will be headed by Brian Hook, the State Department’s former director of policy planning.

In reaction to the announcement, Jamal Abdi, President of the National Iranian American Council, issued the following statement:

“Not only is the Trump administration content to sabotage a successful nonproliferation agreement with Iran and collectively punish 80 million Iranians with harsh sanctions, the State Department’s new “Iran Action Group” is nothing more than an attempt to bypass the State Department’s civil servant experts to implement Pompeo’s dangerous vision to destabilize Iran and close diplomatic off-ramps.

“The Iran Action Group echoes the lead-up to the 2003 invasion of Iraq, when the George W. Bush administration launched the ‘Office of Special Plans’ out of the Pentagon to cherry-pick intelligence and make the case for a bloody war. It is particularly alarming that Brian Hook, a person who touted his ties to John Bolton and oversaw a disastrous deterioration of Iran policy, is tasked with escalating tension with Iran and sabotaging diplomatic opportunities.

“The Trump administration should reverse course on the nuclear accord and return to the diplomatic table, end the outrageous ban on Iranians obtaining visas, and mitigate the snapback of sanctions that hurt the Iranian people and many in the United States.”

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Shifting Social and Political Landscape in Iran As Trump Ramps up Pressure

  • Iran’s political elites have rejected immediate talks, though some have signaled flexibility if the U.S. returns to the nuclear deal
  • Hardliners scapegoat Rouhani amid measured support from Supreme Leader Ayatollah Khamenei
  • U.S. pressure has spurred increased calls for unity among  parts of the ruling elite
  • Continued protests highlight depth of generational divide, institutional incapacities 
  • Reformist leaders and Green Movement leaders under house arrest issue calls for major change but condemn foreign intervention

Amid continued sporadic protests and reinstated U.S. sanctions, the political and social landscape inside Iran is in a state of flux. The depreciation of the Rial and rising inflation have fueled economic grievances and spurred intense debate over both domestic shortcomings and foreign threats. However, bitter jockeying between political factions has given way to a collective sense of needing to put aside differences for the sake of preserving stability and the ruling system. Senior officials have also united in rejecting Donald Trump’s offer for an unconditional meeting with President Rouhani but have differed on the nature and severity of their opposition to renewed U.S.-Iran negotiations.

Demonstrations

A new wave of protests that began in the city of Isfahan on July 31st spread to other parts of the country, including Tehran, Mashhad, Hamedan, Kazeroun, and Shiraz. Though small in scope, the protests lasted for days and underscored the failure of governmental institutions to address the economic and political grievances that have brought many Iranians to the streets since late December 2017. According to journalists and human rights activists, dozens of protesters were arrested across the country and one protestor, 26-year-old Reza Outadi, was killed on August 3rd in Karaj, north-west of Tehran. The Prosecutor General of Karaj has since stated that an investigation has been launched into the killing.

The protests and deteriorating economic situation have been used by Iran’s competing political factions to advance their contrasting agendas. President Rouhani has sought to push ahead with his 2017 presidential campaign promises of increased institutional transparency and economic liberalization, particularly with respect to the privatization of semi-public or Revolutionary Guards-operated industries. On the other hand, conservative rivals of Rouhani have held him responsible for the country’s economic woes, placing more blame on his management of the economy than U.S. sanctions. Meanwhile, prominent reformists and Green Movement leader Mehdi Karroubi–who along with 2009 reformist presidential candidate Mir Hossein Mousavi continues to be under house arrest–have called for immediate and far-reaching reforms but have also condemned foreign intervention and urged unity between ruling elites and the general population.

Prominent sociologist Maghsoud Farasatkhah discussed the protests in a recent interview with the reformist Shargh newspaper. He opined: “We cannot lose sight of the fact that these protests are not representative of the voice of all the people in Iranian society, they aren’t even representative of critics and dissidents in society, but they are nonetheless an important voice and have the right to be heard and must be heard.” Farasatkhah further stated: “The youth have played an important role in these protests .. we are talking about a generation that is up to date in the world on communication and information and will, despite any limitations, connect to the world, and familiarize themselves with different issues.”

“Resistance” Economy vs. Rouhani Calls for Breaking Up IRGC Economic Power

A recent letter by Iran’s powerful Assembly of Experts—charged with monitoring and appointing the Supreme Leader—laid much of the blame for Iran’s economic downturn on Rouhani. “What has caused the current unacceptable economic conditions is weak economic management and non-belief in the ‘resistance economy’ and infiltration by the enemy and corruption … and having an economic pivot to foreigners,” the letter stated. “It is expected that the President, without hesitation, changes in a major way his cabinet and senior economic managers.”

Supreme Leader Ayatollah Khamenei also entered the fray in a recent speech in which he censured the Rouhani administration’s handling of the economy. “Most economic experts and many officials say that the cause all of these problems are not sanctions but are due to internal problems and the method of management and implementing policies,” Ayatollah Khamenei stated. “I won’t say that sanctions have no effect, but most of our recent economic problems are related to actions than have been taken and, if better, more prudent, and stronger actions are taken, the sanctions will not have much of an effect and we can stand against them.”

However, Ayatollah Khamenei also voiced support for President Rouhani in the face of calls for his resignation by some conservatives, declaring: “Those who say the administration must be impeached are playing a role in the enemy’s plan … The government must stay in power and with strength accomplish its responsibilities to alleviate problems.”

Ayatollah Khamenei also lauded a letter by 38 economists friendly to the Rouhani administration outlining prescriptions for addressing Iran’s economic crises. Notably, the economists’ letter stated that Iran’s current downturn was partly due to “figures not responsible for foreign policy entering foreign policy arena” and called for “clear and wise positions based on positive diplomatic engagement to be officially announced regarding foreign policy,” increased privatization, and the end of military (i.e. Revolutionary Guards) involvement in the economy. The economists’ call for non-foreign ministry officials refraining from commenting on foreign policy was likely a reference to comments by the commander of Iran’s Revolutionary Guards, Mohammad Ali Jafari, who personally penned a letter to Trump and vociferously rejected his offer of unconditional talks with Rouhani.

Condemnations of Leaders “Looking to the West”

The return of U.S. sanctions has also spurred renewed talk of Iran’s foreign policy orientation and whether it can rely on the West or should pivot decisively towards rising powers such as Russia and China. The conservatives, known as “principlists,” have sought to downplay the effect of economic sanctions largely because of their fundamental opposition to detente with the United States and belief that Iran must overcome its problems by relying on domestic resources. The principlist school of thought in Iran is rigidly attached to the ideological principles of the Islamic revolution and sees an unavoidable clash between an independent Iran and the United States.

A recent editorial in the principlist Kayhan criticized officials that “look to the West” to solve the country’s economic problems. “The manager who isn’t able to make effort to solve problems gives the wrong address, and says we have problems because there are sanctions and the path we must take is negotiations and deals with America,” the editorial stated. Another recent Kayhan editorial called for Iran to form deeper ties with the Shanghai Cooperation Council (SCO) countries, stating: “Countries in the SCO have 50 percent of the global population and a third of the global production of goods and services. The future of the global economy is in the east … the sooner Iran realizes that the West won’t secure its interests, it will have a better future.”

Negotiations with the U.S.

Ayatollah Khamenei also ruled out negotiations with the Trump White House, stating that the administration was ” playing a worn-out tactic that is worthless politically … one of them says without condition [we will meet], the other lays out the conditions.” He went on: “Even if the impossible occurred and we negotiated with the Americans, we definitely won’t negotiate with the current administration.” However, he also added a caveat:  “We can only enter the dangerous game of negotiations with the U.S. when we feel we’ve reached a point of economic, political, & cultural authority and U.S. pressures and blackmail don’t affect us—but for now negotiations will definitely be to our detriment and are forbidden.”

President Rouhani and Foreign Minister Javad Zarif have in recent interviews stressed that Iran was not the side that left the Joint Comprehensive Plan of Action (“JCPOA”) and that Iran is not intransigent regarding pursuing diplomatic compromise. “We negotiated on every word on JCPOA and Trump with one signature voided it. And now he comes and talks of negotiations? This just a propaganda ploy,” Zarif proclaimed in an August 6th press conference.

In an August 15th meeting with administration officials, Rouhani blamed Trump for shuttering the diplomatic channels that had formed between the two countries under the Obama administration and called for Trump to first rebuild these connections before speaking of meeting. “The U.S. itself has acted in such a way that has destroyed the circumstances required for negotiations. It has burned its bridges,” Rouhani proclaimed. “Now, the U.S. is standing on the other side … If it is honest, it should fix that bridge again.”

 



Below please find a summary of key developments in Iran:

Fatemeh Karroubi, wife of Green Movement leader Mehdi Karroubi, recently met with former President Mohammad Khatami and delivered a message from the opposition leader under house arrest.

  • “Hojatoleslam Karroubi has for the entirety of his detention and more than his own fate has thought about the people, the country, and is worried about the condition of the people and the revolution and Iran being hurt by external and internal dangers.”
  • “Hojatoleslam Karroubi while condemning the pressures against the Rouhani administration, criticizes the shortcomings that we witness in government officials and asks that tangible, coherent, and immediate steps be taken to alleviate current problems and eliminate the dangers that face our dear Iran.”
  • “Hojatoleslam Karroubi asks all Iranians who care for the revolution and the country to put aside their differences, and especially the different reformist currents, to show that they understand the pain of the people and country through coordination and solidarity.”

Ayatollah Khamenei in a major speech on August 13 ruled out negotiations with the Trump administration and defended the Rouhani administration against calls for his resignation.

  • Khamenei on the nuclear negotiations leading to the JCPOA: “I pushed strongly for hard positions. However, the red lines I outlined were not met.”
  • On negotiations with the U.S.: “We can only enter the dangerous game of negotiations with the United States when we feel we’ve reached a point of economic, political, & cultural authority & U.S. pressures and blackmail don’t affect us—but for now negotiations will definitely be to our detriment and are forbidden.”
  • “We will not negotiate with Americans for reasons based on precise arguments, our past experience, and the wide-ranging costs of negotiations with a regime that is untrustworthy and aggressive, and in the light of unity between the people and officials, we will easily pass through this period.”
  • On effect of U.S. sanctions: “Most economic experts and many officials that the cause of all these problems are not sanctions but are due to internal problems and the method of management and implementing policies.”
  • “I won’t say that sanctions have no effect, but most of our recent economic problems are related to actions taken and if better, more prudent, and stronger actions were taken, the sanctions will not have much of an effect and we can stand against them.”
  • Khamenei voiced his support for a letter from 38 economists to Rouhani outlining recommendations for alleviating Iran’s current economic crisis. The economists are allied to Rouhani: “Recently some economic specialists, who are not against the [Rouhani] administration and some are renowned, wrote a caring letter to the respected president and on top of reviewing the structural and current economic problems, offered solutions, of which most of these were correct.”
  • The letter by the economists stated that Iran’s current currency crisis is rooted in “public distrust”, the “instability in positions that have been taken domestically to confront increasing foreign tensions”, and “the figures not responsible for foreign policy entering foreign policy arena.” They called for “clear and wise positions based on positive engagement to be officially announced on foreign policy.” They called for increased privatization and the removal of any military involvement in the economy, among numerous other measures. Link.  
  • Called for aggressive actions against corruption, supported letter of head of judiciary.
  • On negotiations with the U.S.: “I stress there won’t be a war and we will not negotiate.”
  • “On this issue they are playing a worn-out tactic that is worthless politically, one of them says without condition [we will meet], the other lays out the conditions.”
  • “Given America’s formula for approach to negotiations, any government in the world that negotiates with them will have problems, unless they are totally aligned with the U.S., which even today is actually not the case as we see the current American government tries to force/bully the Europeans.”
  • “Even if the impossible occurred and we negotiated with the Americans, we definitely won’t negotiate with the current administration.”
  • “Negotiations with a bullying and demanding country like America is not a means to lower their hostility but it is a means of giving them tools with which they can more effectively commit hostility and reach their goals.”
  • “They are pursuing economic warfare to create discontent in the hopes this will turn into unrest and instability.

Iranian sociologist Maghsoud Farasatkhah on the protests in an interview with the reformist Shargh blames the government for failing to taking the steps necessary to alleviate grievances that cause protests. Stresses generational divide and structural inability to address problems:

  • “It’s not just the Rouhani administration and the executive branch that has responsibilities for these developments, but the entire government must take responsibility. Our entire social system and the prominent figures in our society must take responsibility and not just scapegoat the [Rouhani] administration.
  • “We cannot lose sight of the fact that these protests are not representative of the voice of all the people in Iranian society, they aren’t even representative of critics and dissidents in society, but they are nonetheless an important voice and have the right to be heard and must be heard.”
  • “At the present, there are many criticisms between the ruling elite. As long as there is not real reconciliation, there can’t be a minimum consensus on the problems in cities, the inequalities that exist, so they can reach an understanding of the poverty [that exists.]”
  • “The youth have played an important role in these protests .. we are talking about a generation that is up to date in the world on communication and information and will, despite any limitations, connect to the world, and familiarize themselves with different issues.”
  • “Our governmental institutions in many areas have not changed in accordance to the changes in society. These institutions are not even capable of seeing these changes. Some of the decisions that are taken for this society, have no meaning and are unacceptable by society.”
  • “They blame some issues on the executive branch, who in turn blames other branches. This is as the main issue is how people in society live … These voices have to be taken seriously and it’s necessary for [government-society] relations to change, such issues should not be reflexively viewed through a security lens.”
  • “If we had a strong civil society, there would be no need for these protests. Civil society is a calm space that in a peaceful and public way reflects on public issues and wisely engages in dialogue on these issues. When civil society is more aware, all pains are quickly heard and civil society can help the government to solve the problems by bringing psychological pressure.”

Iranian sociologist Saeed Madani in an interview with Shargh also emphasizes lack of opportunity for the youth:

  • “The phenomenon of unemployment among the youth and the educated [those with university degrees] has long afflicted the Iranian labor market and has expanded.”
  • “In the fall of 1393 (2014), unemployment was 10.5% and for the youth from ages 15 to 29 it was 21.8%. These numbers are far worse today given the economic recession.”
  • “Unfortunately there is no sign that the government has had the least bit of a clear and realistic understanding of the protests. If the voice of the protests were heard by officials, we should have witnessed serious changed in major policies. I have not seen the slightest change in policies affecting the economy, society, or culture.”

Donya Eqtesad piece arguing that many of the issues facing Iran today are due to the gradual weakening and undermining of the executive branch. It calls for more unity and less attacks on the executive branch/Rouhani administration:

  • “The current conditions are partly due to internal fights and foreign pressures, or to be more specific, the economic-psychological-security war of the United States against Iran.”
  • “The Iranian executive branch, which from 1360 to 1390 (2012) was the principal institution of the country after the Leadership, in that year became an ineffectual institution and even became a weight on the foot of other institutions.”
  • “The weakening of the executive branch … has two major implications that may be the biggest threats to national interests and security in all the years since the revolution. The first is the weakening of the political system speaking with one voice and an increase in contradictory comments by officials and non-officials.”
  • “The second is the message sent to society that nothing can be expected of the executive branch and public requests should be directed elsewhere. This means that the responsibility for shortcomings of the executive but that the whole system must be accountable. The small and sporadic protests of last winter and this past few weeks reflect this belief.”
  • “To escape the current situation, it is enough that, first senior officials believe that the system is stable, second, everyone rereads the constitution regarding what their areas of responsibility are and aren’t, and third, give message to society that the responsibilities of the executive branch now have the attention of all institutions, and they should remember that the biggest demonstration of stability is to have calm and respectful dialogue.”

Prominent sociologist Hamid-Reza Jaleipour lauds Rouhani’s TV address:

  • “In my opinion Rouhani’s comments were overall good and in the current time of tension spurred calmness domestically and projected strength abroad … Rouhani also left the door open to negotiations with honor with America.”
  • “The impact of this calculated was seen the next day. The same day Trump imposed the first waves of sanctions against the Iranian people, we saw that the cost of gold dropped by 12 percent and the Euro lost 7 percent of its value against the Rial.”
  • “On foreign policy Rouhani made the right points. He said we had negotiations with America. We negotiated and reached an agreement and now Trump has turned his back on America’s promise. So the ball is on Trump’s side.”
  • “At the same time Rouhani was aware that for the Congressional elections, Trump needs a picture with Rouhani. But Rouhani, without ruling out negotiations, has essentially pushed the issue of negotiations with Trump to after the U.S. elections.”

Former reformist president Mohammad Khatami gave a speech last week to former parliamentarians in which he highlighted the need for reforms and offered 15 suggestions to alleviate Iran’s current problems. Highlights from the speech:

  • “[Outside] regime-changers know that as long as reformism is alive there is no room for regime change. Internally there are also those who are set on avenging and eliminating reformists—they’re other side of same scissor.”
  • “The passivity of the [Rouhani] administration and the surprise reaction of reformists in the face of such propaganda is shocking.”
  • “creating chaos in the hope of removing the Islamic Republic will not solve country’s problems. Actions by foreign powers sound alarm bells regarding threat of breaking up (partitioning) Iran.”
  • “The system must be reformable. Hopelessness regarding the system’s ability to reform is a serious problem that would be irreversible.”
  • “As a citizen who cares about Iran and Islam, from the bottom of my heart I apologize for shortcomings and deficiencies that currently exist.”
  • Khatami then outlined 15 suggestions to alleviate current crises faced by Iran:
    1. Creating and strengthening unity among all the different political factions. Removing zero-sum mentalities.
    2. Unity among all forces committed to aims of Iran’s glory, progress, and safety and security of Iranian people. National dialogue.
    3. Changing state TV’s programming angle. State TV shouldn’t just be representative of one perspective in society.
    4. Creating political atmosphere that is open, safe, and free.
    5. Eliminating thinking that narrows specialists, scientists, and politicians to those who “are like us.”
    6. Ending house arrest of Mir Hossein Mousavi and Mehdi Karroubi.
    7. Freeing all political prisoners and prisoners of conscious.
    8. Announcing public amnesty; giving trust to many specialist Iranians inside and outside the country to work for Iran’s progress.
    9. Removing unjust limitations; having elections that are open and free and centered on people’s aspirations and hope
    10. Ending extremism/radicalism; all factions have to works towards this.
    11. 3 branches of government must become more efficient and coordinate more.
    12. Hearing people’s grievances. We all need to hear these grievances and instead of preventing protests, we must work towards removing problems leading to protests.
    13. Accountability by Rouhani admin. Shortcomings cannot be blamed on political rivals, administration must prove its efficiency.
    14. Maintain people’s trust in parliament.
    15. Forming courts with juries selected from the ordinary people.

Sociologist Hamid Reza Jaleipour on Khatami’s speech, states that while reformists have lost votes as recent elections show, they still have most legitimacy among public in comparison with other opposition groups/”forces of change”:

  • “Khatami offered guidelines to escape the current crises, criticized the regime-changers, and did not attack the system but instead offered them a path. Khatami focused on ‘rebuilding public trust in public institutions” to escape the current crises.”
  • “It is said that people have moved past reformism and Khatami. This is true to an extent and reformists have lost votes … However, there are other issues to consider. For example, look at the situation of the ‘forces of change’ in the present time and compare them and see who is trustworthy: the Rajavists [MEK], the Shahis [Reza Pahlavi supporters], the Mesbahis [support of a fundamentalist cleric], the Shireen Ebadis, or the Khatamis. The situation for reformists in public opinion may not be good, but in comparison to other forces pushing for change, they have the most credibility.”
  • “Also, if Trump increases his threats, the positive but sleeping Iranian nationalism will be awoken and will increase participation in public life.”
  • “The regime changers slander every freedom-seeking person who has striven for change inside Iran. Their slanders have not only been aimed at Khatami or Mostafa Tajzadeh, but even Ebrahim Yazdi and Amir Entezami.”

Former hardline President Mahmoud Ahmadinejad releases video calling for Rouhani’s resignation and blaming the whole political system for the protests:

  • Ahmadinejad: “The people are totally discontent. They don’t accept the [Rouhani] administration. They don’t accept the other government institutions either.”
  • “The best way for Rouhani to gain approval is to no longer continue [as president].”
  • “The economy is on the verge of collapse. Public trust in the entire system is almost zero. Discontent has reached a peak. Poverty is widespread. Who is responsible for this? All officials. All three branches. More than anyone Rouhani.”
  • “Rouhani gave massive concession and got nothing” in his nuclear negotiations.
  • Threatens Rouhani: “For you to stay will be harmful both to the country and to you yourself.”

Raja News, far-right/hardline outlet issues a warning to the parliament: the start of new negotiations with the U.S. would be the “last bullet” for Rouhani’s qualification to be president. Negotiations with Trump would “mean this administration has no ability to manage the country’s affairs.” Link.  

Article in reformist Shargh by former member of National Front (Mossadegh’s party). Says Iran cannot rely much on Russia or China and must convince Europeans to come out stronger against the US. So unlike Kayhan, this piece argues that Iran should have more reliance on Europe. Link.

  • “Some groups in Iran stand alongside Israel’s lobbies and U.S. Republicans in their desire for the defeat of the JCPOA.”
  • “What Russia and China are up to is clear, in this threatening environment, they are using the Iran card to maximize the economic and even diplomatic concessions they can get from the West. We shouldn’t rely on them, but the EU on the other hand has certain capabilities.”

Article in Etemad Daily, close to Green Movement Leader Mehdi Karroubi. Author Farid Marjaee says in reaction to Trump’s offer of unconditional negotiations:

  • Before the start of any negotiations Trump must make his position on Pompeo’s 12 conditions clear. If Iran must accept these conditions what is the point of negotiations? Especially because Pompeo declared that Iran should satisfy some conditions after Trump’s offer of unconditional negotiation.
  • Trump must go back to JCPOA and start negotiations from there. The JCPOA was an international agreement accepted by all powers.

Revolutionary Guards commander Mohammad Ali Jafari wrote a letter to Trump responding to his offer for a meeting with Rouhani without conditions. The letter was provocative and ruled out any possibility for negotiations. Link.

  • “Mr. Trump, Iran is North Korea to give you a positive response to your desire for negotiations. You should know the Iranian people’s religion and faith was revived by Islam and nurtured by Imam Khomeini and they have many differences with hegemonic nations and will never allow their officials to negotiate with the Great Satan.”
  • “You are a president that is unprofessional in politics … previous presidents whether from military or political backgrounds who knew more than you or learned that Iran and Iranians are not susceptible to threats and would unite and become one in the face of any foreign threat or pressure.”
  • “You should ask your specialists and experts with experience and who are impartial whether they accept your games or whether they believe in the conclusion that you expect? Our revelatory and secret intelligence shows they do not.”
  • “You will take your desire that the Islamic Republic of Iran’s officials will want to negotiate with you or that they will get permission from the Iranian people to negotiate with you. You will never see this day. Sit in your black palace [means the White House] and stay there with your delusions about negotiating with Iran and know that this wish will not only stay with you until the end of your presidency but will be unfulfilled for future American presidents as well.”

 

Risks Rise As US Reimposes Sanctions on Iran

Several undesirable consequences are becoming more likely.

This week, a set of Iran sanctions previously lifted under the Iran nuclear deal will snap back into effect as part of President Trump’s complete violation of the accord. Thus far, Iran has avoided rash action, instead seeking to secure concessions from Europe, Russia, and China that could reduce the sanctions’ impact. The cautious response may have lulled the Trump administration into thinking its approach is working, but several potential consequences loom on the horizon.

Renewed proliferation: Before the nuclear deal was signed in 2015, Iran’s heavy-water reactor at Arak was close to going online; it could have produced weapons-grade plutonium for several nuclear weapons per year. Moreover, the deeply buried Fordow facility was already being used to enrich uranium. However, under the nuclear accord Iran destroyed the core of the Arak reactor and agreed to redesign it with international partners so that it would not produce significant amounts of weapons-grade plutonium. Similarly, international partners in collaboration with the Atomic Energy Organization of Iran, or AEOI, are working to turn Fordow into a research-and-development facility, ensuring that Iran experiments with zinc or other benign materials instead of uranium at the site.

Read More at Defense One

Memo: Consequences of Sanctions Snapback on Iran

Not satisfied with withdrawing from the Iran nuclear accord, or Joint Comprehensive Plan of Action (“JCPOA”), the Trump administration intends to start sanctioning foreign parties that seek to comply with the terms of the international agreement. As outlined by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the Trump administration will begin re-imposing those sanctions lifted pursuant to the JCPOA on August 7, 2018 and continuing up until November 4, 2018, at which time all formerly lifted sanctions will be re-imposed on Iran.

Because such U.S. sanctions primarily target foreign parties transacting or otherwise dealing with Iran, the Trump administration will be actively undermining efforts by the international community to act consistent with the JCPOA and ensure its survivability. This includes, most dramatically, undermining efforts by foreign countries and entities to take those measures identified in the JCPOA to reduce or eliminate the risk of nuclear proliferation in Iran. This move is a dangerous gambit that pits the U.S. in opposition to the rest of the world—including the U.S.’s closest partners and allies—and risks re-invigorating nuclear proliferation efforts in Iran.

Considering the dramatic consequences for U.S. national security and foreign policy interests, the Trump administration should not be given free reign to plunge the United States into a confrontation with its closest allies and partners — such as those in Europe — and risk a new war in the Middle East. Congress should assert its own constitutional prerogatives and ensure that the Trump administration acts consistent with long-standing U.S. policy objectives, including those related to nuclear non-proliferation. This could include, for instance, legislative measures to restrain the Trump administration from abrogating the JCPOA or sanctioning foreign parties seeking to comply with the terms of the nuclear accord. At the very least, Congress should hold hearings to adjudicate the potential negative consequences of the Trump administration’s decision to withdraw from the JCPOA and undo the global consensus in favor of the diplomatic agreement aimed at restraining Iran’s nuclear program.

Re-Imposition of U.S. Sanctions Lifted Under the JCPOA

Beginning August 7, 2018, the Trump administration will take steps to re-impose those U.S. sanctions lifted pursuant to the JCPOA. In its initial phase, this will include the immediate re-imposition of sanctions on:

  • The purchase or acquisition of U.S. dollar banknotes by the Government of Iran;
  • Iran’s trade in gold or precious metals;
  • The direct or indirect sale, supply, or transfer to or from Iran of graphite, raw, or semi-finished metals such as aluminum and steel, coal, and software for integrating industrial processes;
  • Significant transactions related to the purchase or sale of Iranian rials or the maintenance of significant funds or accounts outside the territory of Iran denominated in the rial;
  • The purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt; and
  • Iran’s automotive sector.

By November 4, 2018, the United States will re-impose all remaining sanctions targeting Iran that had been lifted pursuant to U.S. commitments under the JCPOA. This will include the re-imposition of sanctions on:

  • Iran’s port operators and shipping and shipbuilding sectors;
  • Petroleum-related transactions with the National Iranian Oil Company, Naftiran Intertrade Company, and the National Iranian Tanker Company, including the purchase of petroleum, petroleum products, and petrochemical products from Iran;
  • Transactions by foreign financial institutions with the Central Bank of Iran and designated Iranian financial institutions;
  • The provision of specialized financial messaging services to the Central Bank of Iran and certain Iranian financial institutions;
  • The provision of underwriting services, insurance, or reinsurance; and
  • Iran’s energy sector.

In addition, the Trump administration intends to re-impose those sanctions that applied to persons removed from OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDN List”) and other U.S. sanctions lists pursuant to U.S. commitments under the JCPOA. This includes, for instance, the re-imposition of sanctions on most of Iran’s financial institutions, including the Central Bank of Iran.

Undermining International Compliance with a Successful Nonproliferation Agreement

The re-imposition of U.S. sanctions will pose immense difficulties for other major world powers’ compliance with the terms of the JCPOA.  Failure by the remaining JCPOA participants to fulfill the terms of the nuclear accord will prompt Iran to abandon some or all of the JCPOA’s limitations on its nuclear program, thus risking renewed proliferation efforts in Iran and threatening a new war in the Middle East.   

Pursuant to the JCPOA, major world powers — including Europe, Russia, and China — agreed to take steps to ensure effectiveness relating to the lifting of national and international sanctions. These commitments were geared towards ensuring that Iran received practical economic benefit from its agreement to maintain long-term restrictions on its own nuclear program. The JCPOA obligated all parties to take adequate measures “to ensure . . . effectiveness with respect to the lifting of sanctions under th[e] JCPOA” and committed JCPOA participants to “agree on steps to ensure Iran’s access in areas of trade, technology, finance, and energy.” The JCPOA was envisioned as an effective quid pro quo, whereby Iran agreed to long-term limitations on its nuclear program in return for practical economic benefits — including the lifting of nuclear-related sanctions — from major world powers.  

The re-imposition of U.S. sanctions, however, will risk the compliance of remaining JCPOA participants, as Europe and other JCPOA parties will have grave difficulties ensuring “effectiveness” with respect to the lifting of sanctions under the JCPOA. For instance, while the European Union and its respective states intend to continue the lifting of national and Union-wide sanctions targeting Iran–consistent with the JCPOA–European companies and persons will nonetheless remain subject to U.S. secondary sanctions targeting their own transactions or dealings with Iran.

The most notable consequences in this respect will be oil and banking transactions. To the extent that Iran is unable to export its oil and repatriate its oil revenues, the JCPOA will become a moot agreement, as Iran is highly unlikely to continue its adherence to limitations on its nuclear program while deriving no practical economic benefit from the nuclear accord. Re-imposed U.S. sanctions expressly target foreign banks — including foreign central banks — and foreign parties engaged in transactions related to the import of Iranian-origin oil. The Trump administration has sent conflicting signals as to whether it will grant exemptions to foreign countries importing Iranian-origin oil — including China, Europe, India, Japan, and South Korea. Similarly, to the extent that Iran’s financial institutions are isolated from the global financial system and unable to reconnect to foreign banks to process trade-related and other transactions, the Iran nuclear deal will not survive. Re-imposed U.S. sanctions will re-designate most Iranian financial institutions for sanctions and render foreign bank dealings with such Iranian financial institutions as sanctionable, thus expressly targeting foreign countries’ compliance with the nuclear accord.

Sanctioning Beneficial Work at Arak and Fordow

Pursuant to the JCPOA, Iran agreed to convert its enrichment facility at Fordow into a research center absent of proliferation risk. To do so, however, Iran required international collaboration, including in the form of scientific joint partnerships in agreed areas of research. In addition, the JCPOA required Iran — as part of an international partnership — to redesign and rebuild a modernized heavy-water reactor in Arak that would drastically reduce its potential output of plutonium.

However, these measures aimed at reducing the risk of nuclear proliferation in Iran are under serious threat, as re-imposed U.S. sanctions render sanctionable conduct by foreign parties with respect to Iran’s nuclear program. For instance, the Trump administration has stated that it will re-impose those sanctions that applied to persons removed from OFAC’s SDN List pursuant to the JCPOA. This appears to include the re-designation of the Atomic Energy Organization of Iran (“AEOI”) — the body responsible for Iran’s nuclear program — pursuant to Executive Order 13382. By designating the AEOI pursuant to E.O. 13382, entities that provide or attempt to provide financial, material, technological, or other support for, or goods or services in support of, the AEOI would be exposed to U.S. sanctions and risk designation under E.O. 13382 themselves. Foreign parties participating in an international partnership with the AEOI — consistent with the JCPOA — to convert the Arak nuclear reactor into a reactor absent of proliferation risk would thus be engaged in sanctionable conduct, as such parties would be prima facie engaged in the provision of material support to the AEOI  — thus meeting the criteria for designation under E.O. 13382.  

In addition, the U.S.’s re-designation of the AEOI pursuant to E.O. 13382 will render foreign financial institutions that facilitate significant transactions for or on behalf of the AEOI — including transactions consistent with the terms of the JCPOA — exposed to U.S. sanctions under § 104(c)(2)(E) of the Comprehensive Iran Sanctions Accountability and Divestment Act (“CISADA”) and § 1247 of the Iran Freedom and Counter-proliferation Act (“IFCA”). Such financial institutions would risk being cut off from the U.S. financial system and would thus be unlikely to facilitate transactions involving the AEOI, even if such transactions are consistent with the JCPOA and reduce the risk of proliferation in Iran.  

In the Trump administration’s zeal to kill the Iran nuclear deal, the administration will perhaps fatally undermine efforts to ensure the conversion of Iran’s nuclear facilities into facilities absent of proliferation risk, thus gravely undermining U.S. and regional security.

The Need for Congressional Intervention

The Trump administration’s withdrawal from the JCPOA and its re-imposition of U.S. sanctions targeting Iran risks splitting the United States irrevocably from its historical allies and partners, including those in Europe; threatens to undermine the future use of economic sanctions to secure national security and foreign policy objectives; and encourages the reinvigoration of nuclear proliferation risks in Iran. Such consequences implicate critical U.S. national security and foreign policy interests and warrant increased oversight over the administration’s actions.

Congress should be involved in any decision implicating U.S. national security and foreign policy interests. In this case, Congress should assert its own prerogatives in the realm of foreign policy and resume U.S. compliance with the JCPOA, including, but not limited to, the continued lifting of U.S. sanctions as obligated under the nuclear accord. Absent such a dramatic measure, however, Congress should seek to restrain the President from re-imposing those U.S. sanctions lifted under the JCPOA and should at least limit the damage re-imposed U.S. sanctions could cause to the transatlantic alliance between the United States and Europe. If the U.S.’s historical allies and partners in Europe believe that their own national security interests demand their continued compliance with the JCPOA, then the Trump administration should be restricted from imposing sanctions on European companies engaged in commercial trade with Iran that is permissible under European law.

Shockingly, Congress — which held numerous hearings on the U.S.’s assent to the JCPOA — has proven unwilling to conduct significant oversight regarding the potential consequences inherent in the Trump administration’s withdrawal from the JCPOA and its re-imposition of U.S. sanctions targeting Iran. In failing to assess the risks and dangers associated with the Trump administration’s actions, Congress has rendered itself incapacitated on an issue of critical import to U.S. national security. Following midterm elections, Congress should reassert its prerogatives in the field of national security and ensure that the Trump administration is not able to undermine long-standing U.S. foreign policy objectives — including the objective of nuclear non-proliferation — through its rash decision to withdraw from the Iran nuclear accord and re-impose those U.S. sanctions lifted under the JCPOA.


¹ Other U.S. sanctions may be applicable to transactions involving the AEOI and incident to the fulfillment of the terms of the JCPOA, including, for instance, menu-based sanctions on foreign parties that sell, supply, or transfer to Iran graphite, raw, or semi-finished metals such as aluminum and steel, coal, and software for integrating industrial processes, if the material is sold, supplied, or transferred for use in connection with Iran’s nuclear program. Section 1245(a)(1)(C) of IFCA does not distinguish between those transactions aimed at converting Iran’s nuclear facilities into facilities absent of nuclear proliferation risk and is thus likely to counteract international efforts to reduce the risk of nuclear proliferation in Iran.  

NIAC Statement on Recent Demonstrations in Iran

Washington, D.C. – Jamal Abdi, President of the National Iranian American Council, issued the following statement on ongoing protests in Iran:

“Like many, we are monitoring the demonstrations reported in parts of Iran. We are particularly disturbed by reports of clashes between protestors and police forces in Isfahan and a heavily securitized atmosphere in Shiraz. We reiterate our call to the Iranian government to uphold its international human rights obligations, including to allow the right to free expression, to respect the dignity and safety of every Iranian and to refrain from violence.

“We stand in solidarity with Iranians who seek a government that prioritizes the economic prosperity of Iranians, respects their human rights, and democratically represents them.

“Ultimately, like any other country, it is up to Iranians living in Iran to decide their country’s destiny. Outside countries or interests who seek to exploit the legitimate grievances of Iranians in order advance their own ulterior agendas only undermine the will of the Iranian people. As outside observers, we will continue our efforts to defend universal human rights and hold the Iranian government accountable to its international human rights obligations.”

Congress ‘Not Aware’ of Authorization for Iran War

Congress will send its annual defense policy bill to the President this week with a caveat that it does not authorize war with Iran and they “are not aware of any information that would justify the use of military force against Iran under any other statutory authority.”

The statement comes after President Trump issued a late-night, all-caps tweet threatening Iran with consequences like no nation has ever seen before in response to a perceived threat from his Iranian counterpart.

While the language is welcome, Congress had the opportunity to go much farther in reining in Trump’s ability to start an Iran war. In May, shortly after the President walked away from the Iran nuclear deal, the House of Representatives passed an amendment from Reps. Keith Ellison (D-MN) and Walter Jones (R-NC) stating that the President does not have the authorization to use military force against Iran. Senate Republicans involved in the final drafting  – including uber-hawks like Sens. Tom Cotton (R-AK) and Lindsey Graham (R-SC) – declined to include the amendment in the final version of the bill, instead agreeing to the compromise clarification language.

The statement from the legislators indicating that they are “not aware” of any legislative authorization for Trump to use force against Iran is helpful. As Trump ratchets up tension and openly threatens war with Iran, his Secretary of State Mike Pompeo has sought to tie Iran to al-Qaeda and has taken an extremely broad view of Executive war powers under the Constitution. Such moves have raised concerns that President Trump could order strikes on Iran without seeking Congressional approval, a key step that could halt an irrational march to war. The language from the NDAA conferees makes it less likely that Trump would point to existing legislation to justify a future Iran war.

Unfortunately, Congressional Republicans have either cheered on or ignored the President’s moves on Iran across the board, and they had the numbers to water down the Ellison-Jones amendment from the final bill. There does not appear to be any Republican lawmaker on record pushing back on the President’s tweet threatening to bomb Iran.

There are certainly many Democratic lawmakers concerned about the direction of Iran policy. Sen. Tim Kaine described Trump’s tweet as “another warning sign that Trump is blundering toward war with Iran.” Likewise, Sen. Ed Markey highlighted the tweet while warning that Trump could launch a nuclear first-strike without approval “for no reason at all.” However, those legislators are not in the majority and thus cannot pass legislation reining in Trump’s war powers without support from their Republican colleagues. That could change if Democrats retake control of one or both houses in the midterm elections this November.

Expert Briefing Sounds Alarm on Trump’s Iran Policy

“Career U.S. officials have told me there’s no policy coherence, no strategy. They’re throwing Jello at the wall to see what will stick,” said Reza Marashi, Research Director at the National Iranian American Council, discussing the Trump administration’s Iran policy. Marashi spoke on a panel hosted on Capitol Hill last week by NIAC regarding the future of the Iran nuclear deal – also known as the Joint Comprehensive Plan of Action (JCPOA). He was joined in dialogue by Kelsey Davenport, Director of Non Proliferation at the Arms Control Association, and John Glaser, Director of Foreign Policy at the CATO Institute.

Jamal Abdi––the panel moderator as well as NIAC’s current Vice President of Policy––kicked off the discussion, asking “There seems to be the open question of: Is America’s policy towards Iran regime change?”

“They want capitulation, they want regime change––plain and simple,” answered Marashi. Throughout the panel, speakers agreed that if the United States is actively seeking regime collapse, its motivations aren’t fueled by an urge to “spread democracy” as they claim. If that was the case, destabilization efforts would not be fueled by Saudi Arabia, who are even less democratic than their Iranian counterpart. Instead, Marashi speculated, “The metric for [invasion and sanctions] is: Do you accept American hegemony?” Since the fall of the Shah, Iran has been one of the only regional power that doesn’t, and as such, tensions have only grown.

Glaser noted on the decision to withdraw from the nuclear deal, “I think [Trump] has an intense hate for the (JCPOA) because it was a success of his predecessor. I’m sure, to this day, he has never read it.” The snapback of sanctions––which according to Glaser will “hurt the Iranian people far more than the government”––can be used as political leverage towards a set objective. As Marashi put it, “What people don’t tell you in this town is you’re either on the path to war or diplomacy––everything else is leverage.” Given that the administration walked away from the diplomatic path, it stands to reason that they’re on the path to war.

While American sanctions are bad enough, panelists were skeptical that the Trump administration could create a sanctions coalition as broad as that which existed under the Obama administration. Davenport expressed that without global support for sanctions, it seems unlikely that Iran will come back to the bargaining table for a better deal. And as such, “The Europeans are going to be more creative––as well as the Russians and the Chinese––to find more secure banking channels, so that transactions can be facilitated without touching American financial systems.”

No matter the amount of economic cushioning Europeans can provide, however, Iran has lost substantial benefits envisioned under the deal. As such, hardliner officials––who were largely skeptical of the deal in the first place––are going to push for retaliation. According to Davenport, if the deal falls apart, Iran will likely build more centrifuge facilities, ramp up research, and even potentially enrich uranium up to 20%––but still short of the threshold where it could be used for a weapon.

Even if he wanted, there is very little Trump can do to remedy the situation. He has effectively scared off investment in the country through both threats and his at-times erratic behavior. “If the Trump administration said tomorrow that they would be back in compliance with the Iran deal, who would believe them?” asked Davenport. “Given his long history of broken promises in the foreign policy space, I just don’t think you would have business entities that would be willing to trust that the Trump administration would stay the course.”

When asked for best and worst case scenarios, the panelists had very similar answers. At best, Iran will have just enough incentive to let the agreement “limp through” in the months ahead. At worst, our nations could go to war, spurring another decades-long conflict where we have nothing to gain but everything to lose.

Stephen Kinzer on Trump’s Iran Policies

We asked Stephen Kinzer, national best-selling author of All The Shah’s Men, about his thoughts on Trump and Pompeo’s Iran policies. Watch what he said below.

Kinzer doesn’t believe that the Trump administration has Iran’s best interests in mind, and neither do we. That’s why we’ve written an open letter, and we’d like you to add your name to it. Read an excerpt of the letter below:

“Iran’s only chance to achieve a sustainable democracy that reflects the wishes of its people comes from a process driven by the people of Iran, for the people of Iran. In short, change must come from inside of Iran – not from Washington or anywhere else. It is also crucial to bear in mind that Iranians have a long history with the United States, one that is alive in the memory of even young Iranians, and would compel them to respond to any American destabilisation with wariness and hostility.  However, efforts to bring about the collapse of the Iranian economy through external pressures and sanctions, or a US-sponsored regime change in Iran (in the image of Iraq) will not bring about democracy in Iran but rather destabilize the country and put democracy out of the reach of the Iranian people. That is what it did in Iraq, where after a decade of devastating instability with more than 500,000 dead, Iraq holds elections but is far from a democracy that reflects the hopes and aspirations of its people.”

Read more and sign our open letter here.

NIAC Welcomes Appointment of New Iran Human Rights Rapporteur

FOR IMMEDIATE RELEASE
Contact: Jamal Abdi
Phone: 202-386-6408
Email: jabdi@niacouncil.org

Washington, D.C. – Jamal Abdi, Vice President for Policy of the National Iranian American Council, issued the following statement welcoming the appointment of Dr. Javaid Rehman as the next UN Special Rapporteur on the Situation of Human Rights in Iran:

“The appointment of Dr. Rehman to serve as the next Special Rapporteur on human rights in Iran will ensure the continuation of important and neutral work aimed at holding Iran’s government accountable to its international human rights obligations. The recent arrest of Nasrin Sotoudeh, a prominent human rights lawyer who had previously been unjustly imprisoned in Iran, underscores the continuing failure of Iran to live up to its international obligations and the need for Dr. Rehman to pick up on the important work of his predecessors. The Special Rapporteur position had been vacant following the tragic passing of the last Special Rapporteur, Asma Jahangir, in February.

“NIAC was a key supporter of the reestablishment of the Special Rapporteur mandate in 2011 and has supported its subsequent extension in recent years. The reports produced by the Special Rapporteurs have helped document human rights abuses, including arbitrary arrests, discriminatory treatment of women and religious minorities, and deeply concerning executions. These balanced reports provide an important opportunity for the Rapporteur, backed by the UN and broader international community, to press Iran to abide by the recommendations of the report and move toward compliance with its human rights obligations.

“It is ironic that the appointment of Dr. Rehman follows the withdrawal of the U.S. from the UN Human Rights Council just last month. Rather than work through multilateral mechanisms that have proven successful at pressuring and engaging Iran, the Trump administration has chosen to isolate itself and reduce its leverage. Fortunately, the work of the Special Rapporteur for human rights in Iran will continue in spite of this administration’s preference for unilateral demands over patient and good-faith multilateral diplomacy.

“We urge Iran to comply with the requests of Dr. Rehman, including any requests for meetings with Iranian officials and visits to the country. Moreover, we urge Iran to fully implement the recommendations of Dr. Rehman and past reports.”

###

NIAC Pushes for Broader Sanctions Exemptions for Humanitarian Relief

Washington, DC – In response to Iran’s deadly 2017 earthquake in Kermanshah province, hundreds of thousands of U.S. citizens donated to humanitarian relief efforts to rebuild devastated areas. Humanitarian relief efforts have long been exempt from U.S. sanctions law, though in practice there continue to be sanctions-related hurdles both in how American citizens contribute to relief efforts and how humanitarian NGO’s are able to finance relief work on the ground. On numerous occasions, NIAC has raised concerns regarding these complications and pushed the administration to ensure that U.S. sanctions were not standing in the way of urgent relief. In November, Sen. Bernie Sanders (I-VT) and four other Senators led a letter urging the administration to broaden its sanctions exemptions to facilitate relief.

On March 22, the Department of Treasury solicited feedback on the effectiveness of its current licensing procedures for humanitarian aid to Iran and Sudan. Given the importance of this issue to both the people of Iran and the Iranian-American community, NIAC submitted comments recommending opportunities for improvements, including by encouraging the Treasury Department to authorize a direct banking channel between the U.S. and Iran to finance relief work. This is of critical importance, as we have heard directly from humanitarian organizations regarding the continued difficulty of finding banks willing to transact with them given the perceived risk of running afoul of U.S. sanctions.

We will continue to work to advance our recommendations and ensure that U.S. sanctions do not inadvertently impede humanitarian relief to the people of Iran. You can see the text of NIAC’s comment below:

ATTN: Request for Comments (TSRA)
Office of Foreign Assets Control
United States Department of the Treasury
Freedman’s Bank Building
1500 Pennsylvania Avenue NW
Washington, D.C. 20220

Re: NIAC’s Comments Regarding OFAC’s TSRA Licensing Procedures

Dear Sir or Madam:

            On March 22, 2018, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced that it was “soliciting comments on the effectiveness of OFAC’s licensing procedures for the exportation of agricultural commodities, medicine, and medical devices to Sudan and Iran.”[1]  OFAC is required to solicit such comments as part of its biennial report to Congress on the operation of the licensing procedures pursuant to § 906 of the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”) and will consider any such comments during the development of its report to Congress.  

By means of this instant submission, the National Iranian American Council (“NIAC”), the largest grassroots organization in the United States representing the interests of Iranian Americans, submits its comments regarding the effectiveness of OFAC’s licensing procedures for the export of agricultural commodities, medicine, and medical devices to Iran for the time period between October 1, 2014 to September 30, 2016. NIAC submits such comments with the sole intent of encouraging the robust facilitation of humanitarian trade between the United States and Iran in order to benefit the Iranian people, as is the purpose of the underlying TSRA legislation.

  1. Factual Background

            The Trade Sanctions Reform and Export Enhancement Act (“TSRA”), 22 U.S.C. § 7201 et seq., terminates any unilateral agricultural sanction or unilateral medical sanction in effect as of October 28, 2000 against a foreign country or foreign entity and prohibits the President from imposing any such unilateral agricultural sanction or unilateral medical sanction unless a proposed sanction is enacted into law by a joint resolution of the Congress.[2]  However, this provision does not direct the termination of, or prohibit the imposition of, any unilateral agricultural sanction or unilateral medical sanction that prohibits, restricts, or conditions the provision or use of any agricultural commodity, medicine, or medical device that is controlled on the United States Munitions List (“USML”), controlled on any control list established by the Export Administration Act of 1979 (“EAA”) or any successor statute, or used to facilitate the development or production of chemical or biological weapons or weapons of mass destruction.[3]

            Moreover, TSRA provides that the export of agricultural commodities, medicine, or medical devices to Cuba or to any U.S.-designated state sponsor of terrorism shall only be made pursuant to one (1) year licenses issued by the U.S. government for contracts entered into during the one (1) year period of the license and shipped within the twelve (12) month period beginning on the date of the signing of the contract.[4]  OFAC applies the licensing procedures required by this latter provision to all exports and re-exports of agricultural commodities, medicine, and medical devices to U.S.-designated state sponsors of terrorism – including Iran and Sudan – that are within the current scope of OFAC’s licensing jurisdiction.[5]

            Iran remains a U.S.-designated state sponsor of terrorism; and, as such, TSRA’s licensing procedures are applicable to the export of agricultural commodities, medicine, or medical devices to Iran.  These licensing procedures are codified in the Iranian Transactions and Sanctions Regulations (“ITSR”), 31 C.F.R. Part 560.  Section 560.530 of the ITSR promulgates a general license and specific licensing procedure for the sale, export, and re-export to Iran of agricultural commodities, medicine, and medical devices, while § 560.532 of the ITSR identifies authorized means of making payment for and financing any such licensed sales, exports, or re-exports of agricultural commodities, medicine, and medical devices to Iran. 

  1. NIAC’s Comments Regarding OFAC’s TSRA Licensing Procedures

            The most significant impediment to U.S. person engagement in humanitarian trade with Iran remains the lack of a financial channel to remit payment for humanitarian goods.  Despite licensing the making of payments and financing for sales, exports, and re-exports of agricultural commodities, medicine, and medical devices to Iran, OFAC’s licensing procedures have failed to provide U.S. persons with reliable options for receiving payment for the provision of permissible humanitarian items to Iran.  Unable to reliably receive payment for their provision of humanitarian goods to Iran or receive financing to permit the sale of such humanitarian items to Iran, a substantial number of U.S. persons that otherwise would have made use of OFAC’s licensing procedures for humanitarian trade with Iran have elected not to pursue such trade.  This undermines U.S. foreign policy interests vis-à-vis Iran, as well as the purposes underlying TSRA’s legislation, by enacting a de facto embargo on the sale, export, or re-export of agricultural commodities, medicine, and medical devices to Iran. 

            Pursuant to 31 C.F.R. § 560.532(a), OFAC provides general license authorization for the following payments terms for sales authorized under § 560.530(a)

(1)       Payment of cash in advance;

(2)       Sales on open account, provided that the account receivable may not be transferred to the person extending the credit;

(3)       Financing by third-country financial institutions that are not U.S. persons, entities owned or controlled by U.S. persons and established or maintained outside the United States, Iranian financial institutions, or the Government of Iran.  Such financing may be confirmed or advised by U.S. financial institutions and by financial institutions that are entities owned or controlled by U.S. persons and established or maintained outside the United States; or

(4)       Letter of credit issued by an Iranian financial institution whose property and interests in property are blocked solely pursuant to 31 C.F.R. Part 560. Such letter of credit must be initially advised, confirmed, or otherwise dealt in by a third-country financial institution that is not a U.S. person, an entity owned or controlled by a U.S. person and established or maintained outside the U.S., an Iranian financial institution, or the Government of Iran before it is advised, confirmed, or dealt in by a U.S. financial institution or a financial institution that is an entity owned or controlled by a U.S. person and established or maintained outside the United States. 

Section 560.532(c)(2) further states that “[n]othing in this section authorizes payment terms or trade financing involving debits or credits to Iranian accounts, as defined in § 560.320.” 

            OFAC’s licensing procedures prohibit direct interaction between U.S. and Iranian financial institutions, as evidenced above.  Indeed, OFAC itself has stated that “it is contrary to U.S. foreign policy to allow U.S. financial institutions to maintain active correspondent relationships with Iranian banks.”  As a result, any financing for or receipt of payment from the licensed export of agricultural commodities, medicine, and medical devices to Iran must involve a third-country financial institution prior to the involvement of a U.S. financial institution, and U.S. person engagement in humanitarian trade involving Iran is contingent on the willingness of third-country financial institutions to issue letters of credit or otherwise process transactions involving the export or re-export of agricultural commodities, medicine, or medical devices from the United States or by a U.S. person, wherever located, to Iran.

            Unfortunately, OFAC has ample precedent at this time demonstrating that third-country financial institutions are generally unwilling to aid U.S. persons seeking to engage in humanitarian trade with Iran authorized pursuant to 31 C.F.R. § 560.530(a).  As a result, U.S. persons have not taken advantage of the permitted trade openings to the extent that would otherwise be possible if there were a reliable, authorized financial channel to remit funds from Iran to the United States.  OFAC has been presented with numerous options to resolve this ongoing problem, including, but not limited to, a direct financial channel between the United States and Iran for licensed dealings between the two countries.  For reasons that remain unclear, OFAC has chosen not to pursue these solutions and has persisted with an authorization that fails to produce the desired outcome.

            It is NIAC’s hope that OFAC will revisit its licensing procedures, including, most especially, its authorization for making payments and financing for the export and re-export of agricultural commodities, medicines, and medical devices to Iran, and will broaden the scope of current license authorizations to ensure that U.S. persons are able to timely and reliably receive payment and financing for humanitarian trade with Iran.

            III.      Conclusion

            NIAC submits this comment pursuant to OFAC’s March 22, 2018 Request for Comment and hopes that the agency will consider this feedback concerning its TSRA licensing procedures.  It is our considered view that while the agency has made important progress expanding the scope of license authorizations relating to the sale, export, and re-export of agricultural commodities, medicine, and medical devices to Iran – including by broadening the scope of medical devices that are generally authorized for export or re-export to Iran – OFAC should ensure that these license authorizations can be fully utilized by ensuring reliable options exist for making payments for and financing the export of such humanitarian items.  For the reasons explained above, NIAC believes that OFAC’s license authorizations have been under-utilized as a result of the lack of a reliable financial channel to facilitate payments for humanitarian items, and only new solutions – including, for example, a direct financial channel between the United States and Iran – can ease this ongoing problem for U.S. exporters and re-exporters.

[1]Effectiveness of Licensing Procedures for Exportation of Agricultural Commodities, Medicine, and Medical Devices to Sudan and Iran; Comment Request, U.S. Dep’t of Treasury, 83 Fed. Reg.12513, March 22, 2018, available athttps://www.gpo.gov/fdsys/pkg/FR-2018-03-22/pdf/2018-05638.pdf.

[2]See 22 U.S.C. § 7201 et seq.

[3]Resource Center: Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) Program, U.S. Dep’t of Treasury, January 13, 2017, https://www.treasury.gov/resource-center/sanctions/programs/pages/tsra_info.aspx. See also22 U.S.C. § 7203.

[4]22 U.S.C. § 7205.

[5]Resource Center: Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) Program, U.S. Dep’t of Treasury, January 13, 2017, https://www.treasury.gov/resource-center/sanctions/programs/pages/tsra_info.aspx.

 

FDD Scholar: War with Iran ‘Is On’

“The war is on”, declared Michael Ledeen, a “Freedom Scholar” with the anti-Iran deal Foundation for Defense of Democracies, at an event to discuss Iran policy following President Trump’s appointment of John Bolton and nomination of Mike Pompeo. “We’re in the war now. So all these people who keep on saying, ‘well if we sign, or if we don’t re-sign, or if we renew or we don’t renew (the Iran nuclear deal) then war,’ that’s all crazy. The war — we are in the war.”

Speaking on a panel at the Hudson Institute last week, Ledeen asserted his belief that the Iranian people had asked the U.S. for help in toppling the regime. His assertion was challenged by an Iranian American supporter of NIAC in the audience who asked Ledeen why he felt Iranians would want the United States’ help. “All they have to do is look at the neighboring countries and see that every country the United States has tried to change the leadership there, it has created a stateless country,” she said. “It’s like asking me to go to a doctor who all of his patients have died in the hospital, and asking ‘could you please operate on me?’ Why would they want the United States to aid them for any sort of help in the regime change?”

Ledeen’s response was to insult and bully rather than to engage in serious debate. Ledeen stated, “the question from this woman right here is not a question, but a provocation. So I am sorry that you’ve wasted your time coming here today to voice the line of your friends in Tehran…The reason why the Iranian people look to us for help, support, guidance in carrying out a revolution against the regime is because they hate the regime.” Ledeen then rudely told her to “sit there quietly” as the moderator moved on to the next question. The tense exchange showed both the stakes of the Iran debate in the months ahead – that Trump’s supporters think “war is on” with Iran – and that so-called “freedom scholars” will go out of their way to stifle debate on the road to confrontation.

Hawkishness and dismissiveness of alternative views was not limited to Ledeen. Richard Goldberg, another FDD adviser who served as a staffer for the hawkish former Senator Mark Kirk (R-IL), predicted that Trump would kill the deal. Goldberg indicated that with negotiations between Trump and the Europeans stalled and Bolton and Pompeo poised to enter the administration, “we have set the stage now for the likely exit of the U.S. from the nuclear deal and the potential for re-imposition of sanctions – at least on the Central Bank on May 12th, and perhaps much more.” Goldberg went on to argue that the reimposition of such sanctions, which he helped to initially pass as a staffer in Congress, would help topple the Iranian regime but avoid harming the Iranian people.

I asked Goldberg how the re-imposition of sanctions on Iran could be designed to be in favor of the Iranian people and avoid causing mass devastation. “With respect to our sanctions policy, the Iranian people are our greatest asset and we do not target the Iranian people, we do not target them, we have no quarrel with them,” Goldberg said. “And so our policy, when it targets the Central Bank of Iran (CBI), when it targets government banks, when it targets the Supreme Leader’s empire, this is about the lifeblood that keeps the Islamic Republic in business of oppressing its people.”

Goldberg’s answer might sound persuasive, yet the reality is that ordinary Iranians themselves are intricately connected to the Iranian economy and banking system – not just the regime. There is absolutely no way a country’s entire banking system can be sanctioned without its people suffering the consequences of the sanctions. We saw this at the height of nuclear sanctions, where the Iranian people suffered from mass unemployment and sanctions while the Islamic Revolutionary Guard Corps (IRGC) expanded its business empire.

Michael Pregent, a fellow with the Hudson Institute, stated that president Trump “has his Iran team in place,” with John Bolton in as National Security Advisor and Mike Pompeo hoping to be confirmed as Secretary of State. If Pompeo and Bolton share the Hudson panelists’ proclivities, it appears that war could be very difficult to avoid.

“Peace is not the opposite of war,” Ledeen ominously concluded. “Peace is the result of war. Peace happens when a war is fought and one side beats the other.”

Don’t Let Trump Turn Iran into North Korea


Thirteen months into Trump’s presidency
, the Iran nuclear deal is alive but wounded. Ironically, while many in the U.S. argued that Iran could not be trusted to abide by its terms, it is the U.S. under Trump that has violated the agreement on multiple occasions. Ominously, Iran has warned that if the status quo does not change, it could withdraw from the accord. Unless the administration changes course and halts its diplomatic sabotage, the JCPOA risks the same fate as another landmark nonproliferation agreement, the Agreed Framework with North Korea, to the profound detriment of U.S. security and the nonproliferation regime.

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