Trump’s Sanctions Will Hurt the Wrong People in Iran

In August 2013, a group of 466 Iranian dissidents, including dozens of political prisoners, wrote a letter to President Barack Obama chastising him for his Iran policy. The unprecedented sanctions Obama had mustered against Iran, they argued, were not only debilitating the Iranian economy but suffocating Iranian civil society and prospects for peaceful democratic change within the country.

“The Iranian people see themselves as victims to tensions between the U.S. and Iranian governments,” the letter proclaimed. “[They] have reached the conclusion that the sanctioning countries don’t care about their human rights and, to compel the Islamic Republic to accept their demands, they target the Iranian people.”

This week, Donald Trump reinstated the first set of those sanctions, which were removed as part of the July 2015 nuclear accord. According to the Congressional Research Service, these sanctions were the “most sweeping sanctions on Iran of virtually any country in the world,” cutting Iran out of most international trade and banking, and slashing its oil exports—the lifeblood of the Iranian economy.

The Obama sanctions plunged the Iranian economy into recession and doubled the rate of Iranian families in poverty. In January 2013, the Guardian wrote that “hundreds of thousands of Iranians with serious illnesses have been put at imminent risk by … sanctions, which have led to dire shortages of life-saving medicines such as chemotherapy drugs for cancer and bloodclotting agents for haemophiliacs.”

The human costs of the sanctions were not only overlooked by many in Washington, but outright defended in some quarters. Congressman Brad Sherman declared at the time: “Critics also argued that these measures will hurt the Iranian people. Quite frankly, we need to do just that.”

Trump may have a similar mindset in re-imposing the sanctions, despite complete Iranian compliance with the nuclear deal that triggered their removal. Despite his expressed desire for talks with Iran, the rhetoric and actions coming from the president and his administration do not reflect an endgame focused on diplomatic compromise.

Rather, they betray an objective to weaken and destabilize Iran. To this end, Trump has embraced the aggressively anti-Iran positions of Israeli, Saudi, and Emirati leaders, who for years have pushed U.S. presidents to bomb Iran. For them, a failed state in Iran is a sufficient objective.

Trump’s “maximum pressure” campaign has been marked by all-out economic warfare, including a stated aim of forcing Iran out of the oil market. Trump and his hawkish officials National Security Advisor John Bolton and Secretary of State Mike Pompeo have also actively tried to sow the flames of unrest in Iran. At a time when economic hardship and political grievances have brought thousands of Iranians to the streets, Pompeo and Bolton have flattered fringe and extremist Iranian opposition groups. According to U.S. officials speaking with Reuters, the Trump administration has “launched an offensive of speeches and online communications meant to foment unrest and help pressure Iran.” The administration has also reportedly teamed up with Israel to form a “joint working group” focused on “internal efforts to encourage protests within Iran.”

The reality is that Trump’s pressure campaign weakens those within Iran who seek more conciliatory foreign relations and a more open political and social domestic landscape. It also empowers Tehran’s most reactionary forces.

The repressive powers in the Islamic Republic are far more threatened by Iran’s integration into the global economy than by a tit-for-tat dispute with the United States. They worry that the lifting of sanctions will undermine the monopolies established by the well connected few who are aligned with the Revolutionary Guards and other government entities. Indeed, after the nuclear deal, the Supreme Leader issued edicts against a broader opening to the United States and hardliners repeatedly warned of “foreign infiltration” in order to obstruct President Hassan Rouhani’s outreach to the West.

The real threats to repressive rule in Iran are a growing middle class, an organized civil society movement, and leaders who have the political capital to push for change against entrenched elements in the system. These trends make a democratic Iran inevitable. But outsiders, often led by the United States, have taken actions to arrest these developments. They have propped up Iran’s repressive rulers with threats of war and invasion, and bailed them out by slapping sanctions and travel bans to isolate Iranians and keep them weak.

Trump’s punishing use of sanctions will wither away Iranian civil society by impoverishing Iran’s middle class. The sanctions will serve to increase control of the Iranian economy by unaccountable and repressive forces. If U.S. policymakers wish to increase room for political dissent and civil society in Iran, they should remove obstacles to improving the standard of living and wellbeing of the Iranian people. Surrounded by advisors who have for years argued for orchestrating a civil war in Iran, Donald Trump unfortunately appears headed in a perilous direction.

Piece originally published in Lobe Log.

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

Experts Weigh in on Iran ‘Snapback’ Sanctions Going Into Effect Today

WASHINGTON, D.C. — Tonight, sanctions that were lifted under the Iran nuclear deal will begin to go into effect. This includes extraterritorial sanctions on the purchase of U.S. dollar banknotes by Iran; Iran’s trade in gold or precious metals; Significant transactions in the Iranian rial; Iran’s civil aviation sector; and Iran’s automotive sector. The decision to violate the Iran nuclear deal and reinstate sanctions has already had a big impact as major European companies that entered the Iranian market – like Peugeot and Total – have already begun pulling out in anticipation of the “snapback.”

Jamal Abdi, President of the National Iranian American Council, issued the following statement on the reimposition of Iran sanctions:

“Today, the United States again violated a successful nuclear nonproliferation agreement endorsed by the UN Security Council that it helped negotiate, doing grievous harm to American leadership abroad and our ability to resolve challenges diplomatically rather than militarily. This weakens the Transatlantic alliance and pushes Iran further into the hands of Russia and China, undermining the security of the United States and its allies.

“These sanctions will threaten Iran’s compliance with the nuclear accord, while also undercutting hopes for Iranian moderation, harming the Iranian middle class and empowering Iranian hardliners and extremists. This is not an erratic tweet, but a collective punishment of 80 million people who are being plunged into economic misery and denied basic necessities such as life-saving medicine and safe civilian aircraft.

“Making matters worse, the Trump administration does not have a viable diplomatic plan to secure additional concessions from Iran. Instead, the administration appears to be joining with Israeli Prime Minister Benjamin Netanyahu and Saudi Crown Prince Mohammad bin-Salman in pushing to destabilize Iran and create another failed state in the region.

“Make no mistake, with Trump listening to warmongers like John Bolton and Mike Pompeo, this puts the United States on the path to yet another costly and dangerous Middle East conflict.”

On November 4, the remaining sanctions that were lifted under the accord will be reinstated into full effect, including those targeting Iran’s energy sector; Purchases of petroleum and related products; Transactions by foreign financial institutions with the Central Bank of Iran and designated Iranian financial institutions; and Persons removed from the Specially Designated Nationals (SDN) list, including most Iranian financial institutions.

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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.  

Pompeo and Trump Plan to Exploit and Silence Iranian Americans

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

Washington, D.C. – Jamal Abdi, the Vice President for Policy of the National Iranian American Council, issued the following statement in response to Secretary of State Mike Pompeo’s announcement that he will address Iranian Americans in Simi Valley later this month:

“The quest for human rights and democracy in Iran can only be owned by the Iranian people. It cannot be owned by the U.S., Israel, or Saudi Arabia. It cannot be decided by Iran’s government or even Iranian exiles.

“What President Trump and Secretary Pompeo want is to exploit Iranian Americans and co-opt the Iranian people to provide legitimacy for the Trump Administration’s Iraq War redux for Iran. Just as the Bush Administration cultivated a few Iraqi exiles and talked about human rights to provide legitimacy for a disastrous invasion of Iraq, the Trump Administration appears intent on using Iranian exiles to advance dangerous policies that will leave the Iranian people as its primary victims.

“If Sec. Pompeo really wants the Iranian-American community to embrace the Trump agenda, he must start with a sincere apology and rescind Trump’s ban that is dividing Iranian Americans from their friends and loved ones in Iran. He should apologize for the Administration’s move to banish the most prominent Iranian-American national security official from policymaking decisions due to her heritage. Moreover, he should apologize for the decision to strip the Iranian people of their hope for relief from sanctions and greater connections with the outside world, instead ensuring they will be crushed between U.S. sanctions and resurgent hardline forces in Iran’s government that have benefited from Trump’s withdrawal from the nuclear accord.

“It should be abundantly clear that Secretary Pompeo, who called for bombing Iran instead of negotiations, is no friend of the Iranian people. Similarly, Trump – whose national security advisor and lawyer have elevated the voices of an undemocratic, human rights abusing cult, the MEK, to become the next leadership of Iran – does not have the Iranian people’s best interests at heart. The Trump Administration’s close coordination with Benjamin Netanyahu and Mohammad Bin Salman, who are motivated by their own political gain and regional power dynamics rather than any love for democracy or the Iranian people, should dispel any notion this campaign is about helping ordinary Iranians.

“As Americans, we have a vital role to play in ensuring our democratically elected government does not start wars on false pretenses or destroy lives in our names. As Iranian Americans, our voices are particularly vital when it comes to the U.S. government’s efforts regarding our ancestral homeland. We will not be exploited or silenced at this critical moment in history.”

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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.”

Think Again: Iran’s Missile Program

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In spite of Iran’s verified implementation of the Joint Comprehensive Plan of Action (JCPOA), which has rolled back Iran’s nuclear program and subjected it to far-reaching inspections, Iran’s periodic testing of ballistic missiles has provoked substantial angst in Washington. Under UN Security Council Resolution 2231, the resolution endorsing the JCPOA, Iran is “called upon not to undertake any activity related to ballistic missiles designed to be capable of delivering nuclear weapons” including tests for a period that will last up to eight years. While that language does not impose a binding legal obligation on Iran, both the U.S. and other parties have criticized Iran’s missile testing as “inconsistent” with UNSC Resolution 2231, though not a formal violation.

Since President Trump entered office, his administration has rolled out eight rounds of new sanctions designations and signed new sanctions legislation into law targeting Iran’s missile program. Moreover, the President in January threatened to terminate the JCPOA unless Congress passes legislation stating “that long-range missile and nuclear weapons programs are inseparable, and that Iran’s development and testing of missiles should be subject to severe sanctions.”

Despite this flurry of activity, there have been subtle shifts in Iran’s missile program that could reduce the program’s threat. In particular, Iran’s articulation of a range limit to its missiles and a shift toward short-range solid fueled missiles signals an interest in conventional, regional deterrence, not long-range nuclear missiles.

Iran is Focusing on Short-Range Missiles Aimed at Conventional Deterrence

The commander of the Islamic Revolutionary Guard Corps (IRGC), Gen. Mohammad Ali Jafari, asserted that Iran’s missile program is limited to a 2,000 kilometer radius around Iran under a policy endorsed by Iranian Supreme Leader Ali Khamenei. Similar statements have been issued in the past, though Jafari’s statement appears to be a firming up of prior policy and a signal to the U.S. and others regarding the relative limits of Iran’s missile ambitions.

Moreover, Iran’s testing since the conclusion of the JCPOA appears consistent with this limit. According to an analysis from the Center for Nonproliferation Studies and Nuclear Threat Initiative, Iran has shifted from seeking longer range systems toward short-range missiles primarily suited for conventional deterrence. According to the study:

“the JCPOA has helped redirect Iran’s priorities for its missile program away from developing an ICBM (whose only purpose would be as a nuclear delivery system), to developing solid-fueled versions of its short-range missiles. While such missiles could also be nuclear-capable, they do not extend Iran’s range or payload capabilities meaningfully, and appear intended to serve a conventional purpose.”

While a 2,000 kilometer range limit would include Israel and Saudi Arabia, in addition to numerous U.S. bases in the region, Iran’s focus on conventional solid-fueled missiles suggests they are indeed aimed at regional deterrence – as opposed to long-range missile development that could threaten Europe or the U.S. mainland. Such a shift also meshes with Iran’s signing of the JCPOA, which ensures Iran’s missile program cannot be fitted with nuclear warheads. This is a positive that could be built upon through deft diplomacy, or undermined via diplomatic sabotage.

Pressure Is Unlikely to Change, and May Even Reinforce, Iran’s Missile Calculus

Director of National Intelligence Daniel Coats stated in the annual Worldwide Threats Report this week that Iran “has the largest inventory of ballistic missiles in the Middle East.” Yet, Iran’s competitors are not without missile inventories that match or exceed Iran’s capabilities. Saudi Arabia reportedly maintains dozens of missiles capable of striking Iran, with a maximum range of 2,650 kilometers. Israel is believed to possess both a sizable nuclear arsenal and ballistic missiles capable of traveling up to 6,500 kilometers. Moreover, Iran lacks a modern air force due to a continuing arms embargo and is outspent militarily by Saudi Arabia at a 5:1 rate.

While Iran may prove willing to negotiate over the range of its missiles or confidence building measures with other states if the JCPOA is adhered to, Iran views its missile program as a regional deterrent that is central to its national defense doctrine. Sanctions have not altered that calculus and major arms buildups among Iran’s neighbors have likely strengthened it.

Much of this doctrine stems from Iran’s experience in the Iran-Iraq war, when Iran was almost completely isolated within the region and globally as the world turned a blind eye and even aided Saddam Hussein’s chemical attacks on Iran. Moreover, while Hussein was able to target missiles at Iranian cities from within Iraq, Iran had no similar deterrence or response capability. Iranian Foreign Minister Javad Zarif has stated that Iran needs its missile program “to prevent another Saddam Hussein around the corner attacking us with chemical weapons because the international community has failed miserably in protecting the Iranian people.” The development of a conventional deterrent and response capability is one that has broad support within Iran across political divides. Unless the U.S. and international community engages on the fundamental issues at the heart of Iran’s missile calculus, no amount of sanctions or regional arms sales will succeed in altering it.

Iran’s Missile Testing Has Remained Sporadic

There were only a handful of confirmed reports of Iranian missile launches in 2017. These include:

  • Iran test-fired a medium-range ballistic missile January 29;
  • Iran test-fired a pair of short-range ballistic missiles in early March;
  • Iran launched eight missiles at ISIS (a U.S. enemy) on June 18 in response to a terror attack in Tehran;

While President Trump took to Twitter to allege another Iranian missile launch September 23, this report was actually based on old video of the January test. Further, while Iran test-fired a Simorgh satellite rocket July 27 amid passage of Congressional sanctions targeting Iran’s missile program, that rocket is not designed to be capable of reentering the atmosphere and thus has limited military applications.

It is noteworthy that the July 27 launch appears to be the last undertaken by Iran – a testing pause of more than six months that has extended into 2018. In roughly the same period, the U.S. Navy has reported a significant lapse in dangerous run-ins with the IRGC in the Persian Gulf. While these trends should be monitored, it appears possible that Iran is attempting to avoid giving the U.S. a pretext to sabotage the JCPOA and turn Europe against Iran.

Iran launched roughly five missile tests per year from 2006 to 2012 before nuclear negotiations involving the U.S. gained traction in 2013, according to Michael Elleman of the International Institute for Strategic Studies. Iran largely abstained from missile tests while the negotiations that led to the JCPOA were underway. Since then, the frequency of Iran’s missile tests has been largely consistent with past practices, and – barring major changes – there remains little reason to expect Iran to dramatically ramp up or seek to field a missile capable of reaching beyond the region.

To put Iran’s missile testing in perspective, the CNS-NTI report notes that North Korea tested 14 missiles capable of traveling more than 3,000 kilometers between the signing of the JCPOA and August of 2017, a feat that has not been replicated by Iran.

Transfers to Yemen?

U.S. Ambassador to the United Nations Nikki Haley has taken the lead for the administration in alleging that Iran transferred missiles to Houthi rebels in Yemen, which were in turn launched against Saudi Arabia. Iran has vociferously denied the claim while indicating that Houthi missile stocks were left over from prior Yemeni governments. While Russia has dismissed the Trump administration’s allegations as inconclusive, a confidential UN report has indicated that Iran “failed to block ballistic missile supplies from being used by Houthi rebels.”

Saudi Arabia’s intervention in Yemen – with substantial military assistance from the U.S – has been heavily focused on rolling back Iran’s alleged influence there. Yet, at least at the outset of the conflict, ties between Iran and the Houthis were tenuous at best, with Houthi rebels ignoring Iran’s warnings against taking the capital Sanaa in 2014. If Iran-Houthi ties have now progressed to the point where Iranian support has enabled the Houthis to nearly strike key targets in Riyadh, it should be a clear signal to policymakers that U.S. backing of Saudi Arabia’s intervention is having the opposite of its intended effect and is endangering Saudi and regional security.

What is needed is what the Trump administration has avoided since it came into office: serious, multilateral diplomacy aimed at ending the conflict in Yemen and ameliorating all the actors’ security concerns. Absent this, the negative trend line of the war in Yemen is likely to continue, with disastrous results for the Yemeni people and regional security.

Trump is Escalating Missile Sanctions without a Serious Diplomatic Plan

Thus far, the Trump administration has continued to designate entities and individuals with ties to Iran’s missile program, while also signing new legislation into law targeting the program. Calls to subject Iran’s program to “severe sanctions” would be largely redundant, as the program is already heavily sanctioned. The administration and Congress’ actions since January 2018 include:

  • February 2, 2017 – The Treasury Department imposes sanctions on 25 individuals and entities following Iran’s January launch;
  • May 17, 2017 – The Treasury Department sanctions seven individuals and entities, including a Chinese network, for supporting Iran’s missile program;
  • July 18, 2017 – The Department of State designates two entities for supporting Iran’s missile program while the Treasury Department designates sixteen entities and individuals for supporting the IRGC;
  • July 28, 2017 – The Treasury Department imposes sanctions on six Iranian entities supporting Iran’s missile program in response to its launch of the Simorgh space rocket;
  • August 2, 2017 – The administration signs the Countering America’s Adversaries Through Sanctions Act (CAATSA) into law, which mandates the imposition of additional sanctions in response to Iran’s missile program;
  • August 14, 2017 – The Treasury Department imposes sanctions on eleven entities and individuals, including one entity for supporting Iran’s missile program;
  • October 13, 2017 – The Treasury Department designates the IRGC as a Specially Designated Global Terrorist (SDGT), while also designating four entities including for ties to Iran’s missile program;
  • October 25, 2017 – The House of Representatives passes H.R. 1698, the Iran Ballistic Missiles and International Sanctions Enforcement Act.
  • January 4, 2017 – The Treasury Department sanctioned “five Iran-based entities subordinate to a key element of Iran’s ballistic missile program.”
  • January 12, 2017 – In addition to sanctioning Iranian persons and entities under human rights sanctions, the Treasury Department designated persons and an entity for ties to entities sanctioned for supporting Iran’s missile program.  

In the absence of serious, direct diplomatic engagement between the U.S. and Iran, there is little possibility of changing Iran’s security calculus and no possibility of trading in sanctions for concessions on Iran’s missile activity or other concerning behavior – ensuring that the status quo remains the same or worsens, but never sustainably improves.

Moreover, while it is fair to be concerned about the potential uses of Iran’s missile program or other Iranian activity that runs counter to U.S. interests, it is important to ensure that economic pressure is calibrated and proportional. Continuing to ramp up sanctions designations and legislation at such a pace risks undermining sanctions relief obligated under the JCPOA and could harden domestic political pressure within Iran to begin hedging on JCPOA-compliance and take a more aggressive stance towards the U.S. across the region.

Instead of replacing nuclear escalation with missile escalation, the Trump administration and Congress should protect the gains of the nuclear accord and seek to build on them through serious diplomatic engagement. Failure to do so will risk the unraveling of the nuclear accord and the U.S. once again facing the threats of a nuclear-armed Iran or war.

Poll of Iranians Punctuates Points Made in Protests

 

Conducted after weeks of sweeping protests across the country, the latest national poll of Iranians by the Center for International and Security Studies at Maryland and IranPoll underscores growing Iranian discontent with the economy, Tehran’s mismanagement and corruption, disillusionment with the JCPOA and the effectiveness of international diplomacy, and increasing disapproval of the policies of the Trump White House.

When asked their opinion regarding “how good or bad our country’s [Iran’s] economic situation” was, 68.9% of Iranians believed the economic situation in Iran was somewhat or very bad, with 40.7% of all Iranians responding the state of the economy was “very bad.” This overwhelming negativity comes as little surprise to most pollsters, given unemployment rates among Iranian youth as high as 40% and the depreciation of the Rial by 25% in the past 6 months. Dr. Ebrahim Mohseni, a research scholar at CISSM, commented on the discontent among many young Iranians at a panel discussion hosted by the Atlantic Council, stating “[I]f the educated segment of the population feels they are not being utilized or are unemployed, then that becomes a severe source of discontent; both for the people who have attained the education and the people who have paid for it.”

When asked what has had the greatest negative effect on the economy, 63.3% of Iranians believed that domestic economic mismanagement and corruption,were the most responsible for Iran’s current economic issues, while only 32.1% of the population believed foreign sanctions and pressures were the most culpable.

This frustration and discontent with domestic economic policy manifested itself in the protests this January. When polled on the issue of price inflation for food products, 81.3% of Iranians strongly agreed the government should do more to prevent this issue. Likewise, 85.2% of Iranians strongly agreed with the statement that “the government should do more to fight financial and bureaucratic corruption in Iran.”

The poll also demonstrated growing disappointment with perceived lack of economic benefits from the JCPOA, and strong sentiments that diplomacy has been ineffective in achieving the country’s interests.  When surveyed on the effect of the JCPOA on people’s living conditions, 74.8% of Iranians responded that their living conditions have not improved. Regarding their opinion of the success of the JCPOA, 67.4% of Iranians supported the statement that the “JCPOA experience shows that it is not worthwhile for Iran to make concessions, because Iran cannot have confidence that if it makes a concession world powers will honor their side of the agreement.”

The poll found growing disapproval of the Trump Administration’s policies toward Iran. 60% of Iranians believe the United States has not complied with all of its promised sanctions removals, and 89% percent lack confidence that the United States will live up to its JCPOA obligations. When asked to rate President Trump’s Iran policies on a scale of 0-10 (0 being completely hostile and 10 being completely friendly), 69% of Iranians found his policies to be completely hostile, and when asked to indicate to what degree [they] held a favorable or unfavorable view of the United States government, 67% had a very unfavorable opinion.  

Also speaking at the Atlantic Council presentation on the survey was Esfandyar Batmanghelidj, founder and publisher of the online platform Bourse & Bazaar which supports Iranian “business diplomacy.” He expressed his concerns that the botched execution of sanctions relief under the nuclear deal –  by the current U.S. administration in particular – devalued the very idea of diplomacy to the Iranian people. “Sanctions, at least in the Iranian context, have been one of the most self-defeating diplomatic tools imaginable; because in their application and flawed removal, they have actually harmed the idea and the prospect of diplomacy moving forward,” stated Batmanghelidj.

When analyzing these findings, it is also vital to bear in mind potential constraints associated with conducting national polls in an authoritarian country. Dr. Mohseni acknowledged the need to phrase polling questions in a manner that those surveyed would not feel compelled to self-censor, particularly with phone interviews.

NIAC Seeks Clarification on Postal Service Rejections of Packages to Iran

Washington, DC – Connections between Iranian Americans and their family members in Iran may have hit another roadblock thanks to the Trump Administration. According to numerous complaints received by NIAC, Iranian Americans have had their shipments of personal items to Iran blocked by the U.S. Postal Service and Customs and Border Protection, apparently on the basis that the items lack sufficient approval.

NIAC is contacting relevant agencies to determine if there has been a change to U.S. policy concerning shipping mail to Iran. The rejections of such packages undercut the long-standing U.S. policy of allowing the shipment of personal gifts, remittances and other permitted items to friends and family in Iran.

In a letter sent to Census Bureau, Customs and Border Protection, and the U.S. Postal Service, we highlight that general licenses issued by the Treasury Department permit the export of gifts to Iran under the value of $100 and thus do not require separate authorization. Moreover, it clarifies that separate regulations do not appear to contradict the general license. The letter requests clarification from the agencies as to the regulatory authority under which these authorized exports to Iran are being rejected. NIAC will seek answers and conduct follow-up to resolve this issue that has affected many members of the Iranian-American community.

The text of the letters is below:

January 25, 2018

We are writing on behalf of the National Iranian American Council (“NIAC”) – the largest grassroots organization in the United States representing the interests of Iranian Americans – regarding apparent policy changes at the United States Census Bureau and/or the United States Customs and Border Protection (“CBP”) concerning licensed exports to Iran.  Recently, we have received contact from a number of Iranian Americans detailing CBP and the U.S. Postal Services’s rejection of intended shipments to Iran on the grounds that such shipments lacked an “electronic export information (EEI) filing or exemption per the U.S. Census Bureau.”  In light of the fact that Iranian Americans have been able to ship licensed items to family in Iran for decades without this issue, we request clarification from the relevant U.S. authorities regarding the applicable laws and/or regulations under which this apparent new policy is being promulgated and enforced.

       As an immigrant community to the United States, many Iranian Americans retain close ties to family members and friends based in Iran.  As a result, Iranian Americans habitually send gifts, personal remittances, and other licensed items to families and friends in Iran.  For decades, U.S. policy has facilitated the shipment of such items to Iran, including via general license and statutory exemptions.  U.S. policy has sought to ensure that familial and personal ties between U.S. and Iranian persons are not undermined by the broader disputes in the U.S.-Iran relationship. Iranian Americans have thus been able to ship permissible items to Iran free from the hassle of requiring specific license authorization or other export-related filings.

       However, it appears that there has been a recent shift in U.S. policy.  Many Iranian Americans have contacted us, noting that their shipments to Iran of personal gifts, etc., have been rejected by CBP and the USPS.  This rejection apparently stems from the fact that such shipments lack a validated export license and/or an Electronic Export Information (“EEI”) filing.  As Iranian Americans whose packages have been rejected note, never before have their shipments to Iran been rejected for these reasons, and the burden of having to make an EEI filing to ship gifts to family and friends in Iran is significant enough to erode their willingness to do so.       

       It is unclear the legal basis for this recent shift in U.S. policy.  Most transactions with or otherwise involving Iran are regulated exclusively by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), which administers and enforces a comprehensive trade and investment embargo with Iran – the prohibitions of which are promulgated via the Iranian Transactions and Sanctions Regulations (“ITSR”), 31 C.F.R. Part 560.  Due to OFAC’s primacy in Iran-related regulatory matters, “if OFAC authorizes an export or re-export [to Iran], such authorization is considered authorization for purposes of the [Export Administration Regulations] as well.”[1]  

       While the ITSR prohibits most transactions with Iran from the United States or by U.S. persons, wherever located, certain categories of transactions are deemed either exempt from the prohibitions as a matter of statute or authorized by OFAC via general license.  For instance, the export from the United States to Iran of certain information and informational materials – including, but not limited to, newspapers, magazines, films, etc. – are exempt from the ITSR’s regulations,[2] while the export from the United States to Iran of goods sent as gifts to persons in Iran are authorized via general license, provided that the value of such gifts is not more than $100 and the gifts are of such type and quantities as normally given as gifts between individuals.[3]  U.S. parties seeking to export items to Iran consistent with applicable exemptions and general licenses promulgated under the ITSR do not require specific authorization from OFAC or any other U.S. regulatory authority prior to the export of such items to Iran.

       It does not appear that regulations promulgated by the U.S. Census Bureau contradict this law.  Indeed, CBP’s own website notes that an EEI filing is required for U.S. exports in two specific cases: (1) where the value of the commodity classified under each individual Schedule B number is over $2,500; and (2) where a validated export license is required to export the commodity.[4]  While we have not received clarification from any of the relevant U.S. agencies regarding the reasoning behind their rejection of lawful U.S. exports to Iran, it appears that such exports are being rejected out of a belief that a validated export license is required to export exempt or licensed goods to Iran.  If true, that would be inconsistent with the plain language of the Census Bureau’s own regulations and would contradict long-standing practice by the relevant agencies permitting Iranian Americans to export licensed goods to Iran absent an EEI filing.

       We thus request clarification as to the regulatory authority under which the Census Bureau, CBP, and the U.S. Postal Service are rejecting authorized exports to Iran.  We trust that this issue can be resolved in a manner that is satisfactory to all relevant parties and that the relevant U.S. agencies can issue a policy statement specific to the Iranian American community regarding the laws and regulations surrounding exports of licensed goods to Iran.  Thank you for your consideration, and we look forward to your response.  

Sincerely,

Jamal Abdi

National Iranian American Council

[1] 15 C.F.R. § 746.7(a)(2).

[2] 31 C.F.R. § 560.210.

[3] 31 C.F.R. § 560.506.

[4]CBP Info Center: When to Apply for an Electronic Export Information (EEI), United States Customs and Border Protection, last updated Sept. 29, 2017, https://help.cbp.gov/app/answers/detail/a_id/292/~/when-to-apply-for-an-electronic-export-information-%28eei%29.

 

NIAC Statement on Trump’s Iran Deal Ultimatum

NIAC President Trita Parsi released the following statement after President Trump coupled a reissuance of sanctions waivers with new sanctions on Iran:

“President Trump’s statement today is little more than a temporary stay of execution. He has once again threatened to kill the Iran nuclear accord outright if Congress and the European Union do not go along with his demands to unilaterally change the terms of the deal in four months, including by expanding it to include Iran’s missile program and by eliminating sunsets on some of Iran’s nuclear activities. This is nothing more than a transparent attempt to seek political cover for his continuing, outrageous efforts to kill an accord that has succeeded in forestalling a nuclear-armed Iran and war with Iran. Trump’s demands are also illogical, as it threatens to expire all nuclear constraints immediately if they aren’t extended forever – a bluff that is likely to be called. Congress and our European partners should denounce Trump’s destabilizing declaration and hold firm in their refusal to negotiate on any legislation that violates the accord including through the unilateral alteration of the agreement’s terms.

“If Trump truly wanted alterations to the deal, he would recommit to the agreement as written and ensure the effective provision of sanctions relief, pledge to renew all sanctions waivers so long as Iran upholds its nuclear commitments and, lastly, engage in serious negotiations with the Iranians and other parties to the nuclear accord on the basis of ‘more for more.’ There has been no indication that Trump intends to do so. In fact, he continues to violate the accord’s commitment to implement the deal in good faith and has discouraged foreign countries from doing business with Iran.

“Targeted sanctioning of human rights violators is a positive step from a human rights standpoint. Yet, these steps  are complicated by Trump’s broader threat to re-impose sanctions in four months that would kill the deal and corresponding economic relief the Iranian people strongly desire as a means to improve their lives. Moreover, as Trump continues to ban the Iranian people from the United States, it is impossible to take Trump’s hollow expressions of support for the Iranian people seriously. You cannot simultaneously stand with the Iranian people while barring them from entering the country on the basis of their religion and national origin and sanctioning them as they protest for their economic dignity.

“Trump’s record is clear: he is no friend to the Iranian people, and he is actively violating the Iran nuclear deal while threatening to kill it outright. Congress and Europe should not provide him political cover by falling for his demands to alter the deal. If Trump wants to fix the deal, let him use the nation’s diplomats. If he wants to kill the deal, as seems likely, let him own the consequences. Congress’ attention would be better focused on demonstrating America’s true friendship for the people of Iran, including via the repeal of the unconscionable Muslim ban.”

###

NIAC Letter to Adobe on End User License Agreement

 
On December 27, 2017, the National Iranian American Council wrote Adobe Systems, Inc. expressing concern that its End User Licensing Agreement requires users of Adobe products to certify they “are not a national of Cuba, Iran, Iraq, Libya, North Korea, Sudan, Syria, or any other country to which the United States embargoes goods.” As stated in the letter, NIAC is concerned that this requirement discriminates against Iranian nationals – including those in the United States – and is not required by U.S. sanctions laws.

NIAC hopes to work with Adobe to ameliorate the concerns of the Iranian-American community while adhering to existing sanctions obligations. You can see the letter as a PDF here or below:

December 27, 2017    

Mr. Jace Johnson

Adobe Systems Incorporated
345 Park Avenue
San Jose, CA 95110-2704

Dear Mr. Johnson:

We are writing on behalf of the National Iranian American Council (“NIAC”) – the largest grassroots organization in the United States representing the interests of Iranian Americans – regarding Adobe’s End User License Agreement, which appears to discriminate against nationals of Iran, including those persons who are lawfully resident in the United States. Specifically, Adobe’s End User License Agreement requires a person – prior to downloading or otherwise using an Adobe software product – to certify that they “are not a national of Cuba, Iran, Iraq, Libya, North Korea, Sudan, Syria, or any other country to which the United States embargoes goods.”[1] It is our view that Adobe has a mistaken view as to the scope of current U.S. trade sanctions targeting Iran, and we hope to work with Adobe to ensure that its End User License Agreement(s) is consistent with U.S. sanctions laws and other trade restrictions and refrains from taking an overbroad view of U.S. law in a manner that discriminates against Iranian Americans.  

It is true that the United States imposes a comprehensive trade embargo with Iran – the provisions of which are codified in the Iranian Transactions and Sanctions Regulations (“ITSR”), 31 C.F.R. Part 560. Pursuant to the ITSR, U.S. persons – including Adobe – are generally prohibited from engaging in the export, re-export, sale, or supply of goods, services, or technology – including software – to Iran or the Government of Iran, absent an applicable exemption or a license authorization.[2] This includes situations where a U.S. person exports goods, services, or technology to third-country parties with knowledge or reason to know that the goods are specifically intended for re-export or transshipment to Iran. 

However, Adobe’s End User License Agreement appears to suggest that the export, re-export, sale, or supply of its software products to nationals of Iran – even if lawfully resident in the United States – is prohibited under U.S. law. That is not a correct statement of U.S. law, but instead risks discriminating against U.S. persons, particularly Iranian Americans, lawfully resident in the United States.[3] More appropriately, Adobe’s End User License Agreement should – subject to the condition outlined below – require persons downloading or otherwise using Adobe’s software products to certify that they are not downloading the product while based in Iran or intent on re-exporting or otherwise transferring the software product to parties based in Iran. 

In addition, we would also urge Adobe to consider the effect of the issuance of General License D-1, “General License with Respect to Certain Services, Software, and Hardware Incident to Personal Communications,” which authorized the export, re-export, sale, or supply of certain services, software, and hardware incident to personal communications to Iran.[4] It is our view that General License D-1 may render permissible the export, re-export, sale, or supply of many, if not all, Adobe software products to Iran and would negate the need for Iran to be included in Adobe’s End-User License Agreement at all. We would welcome the opportunity to discuss this matter with representatives from Adobe to ensure that Adobe acts consistent with current U.S. sanctions laws and trade restrictions without taking an overbroad reading of any potentially applicable sanctions prohibitions.

We look forward to working with Adobe to address the concerns of the Iranian-American community. We appreciate your consideration and look forward to your response.

Most Respectfully,

Jamal Abdi

Policy Director, NIAC

 

[1] Adobe, End User License Agreement, https://www.adobe.com/support/downloads/license.html.

[2] 31 C.F.R. § 560.204.

[3] It is apparent that Adobe’s End User License Agreement is not only incorrect, but also out of date. For example, the United States no longer imposes trade embargoes on Iraq or Sudan – two of the countries identified in the End User License Agreement as embargoed countries. We would thus urge Adobe to revisit and accordingly revise its End User License Agreement to render it consistent with current U.S. sanctions laws and trade restrictions.   

[4] General License D-1, “General License with Respect to Certain Services, Software, and Hardware Incident to Personal Communications,” U.S. Dep’t of Treasury, Feb, 7, 2014, https://www.treasury.gov/resource-center/sanctions/Programs/Documents/iran_gld1.pdf.