United States sanctions against Iran

The US imposed sanction of 1995 bans aviation companies from selling aircraft and repair parts to Iranian airlines directly.

This article outlines economic, trade, scientific and military sanctions against Iran, which have been imposed by the U.S. government, or under U.S. pressure by the international community through the United Nations Security Council. Currently the sanctions include an embargo on dealings with Iran by the United States, and a ban on selling aircraft and repair parts to Iranian aviation companies. One exception is that US-made goods can be supplied to Iran under certain circumstances as long as they are shipped to Iran from another country. This exception was a result of the original Executive Order restricting trade with Iran.

History

Hostage crisis

In 1979, after the U.S. permitted the exiled Shah of Iran to enter the United States for medical treatment, and after rumors of another U.S. backed coup and re-installation of the Shah, a group of radical students took action in Tehran by seizing the American Embassy and taking hostage the people inside. The United States responded by freezing about $12 billion in Iranian assets, including bank deposits, gold and other properties. Some assets — Iranian officials say $10 billion, U.S. officials say much less — still remain frozen pending resolution of legal claims arising from the revolution.

Iran–Iraq War

After the invasion of Iran by Iraq, the United States increased sanctions against Iran. In 1984, sanctions were approved prohibit weapons sales all U.S. assistance to Iran; the U.S. also opposed all loans to Iran from international financial institutions. In 1987, the U.S. further prohibited the importation and exportation of any goods or services from Iran.

Rafsanjani and Khatami governments

Main article: Iran and Libya Sanctions Act

The term of President Rafsanjani, who has said that he had tried to reduce tensions between Iran and the West, was marked by some of the toughest sanctions against Iran. In April 1995, President Bill Clinton issued a total embargo on U.S. dealings with Iran, prohibiting all commercial and financial transactions with Iran. Trade with the U.S., which had been growing following the end of the Iran–Iraq War, ended abruptly. One exception is that US-made goods can be supplied to Iran under certain circumstances as long as they are shipped to Iran from another country. This exception was a result of the original Executive Order restricting trade with Iran.

In 1996, the United States Congress passed the Iran–Libya Sanctions Act (ILSA). Under ILSA, all foreign companies that provide investments over $20 million for the development of petroleum resources in Iran will have imposed against them two out of seven possible penalties by the U.S.:

• denial of Export-Import Bank assistance;
• denial of export licenses for exports to the violating company;
• prohibition on loans or credits from U.S. financial institutions of over $10 million in any 12-month period;
• prohibition on designation as a primary dealer for U.S. government debt instruments;
• prohibition on serving as an agent of the United States or as a repository for U.S. government funds;
• denial of U.S. government procurement opportunities (consistent with WTO obligations); and
• a ban on all or some imports of the violating company.

In response to the election of Iranian reformist President Mohammad Khatami, President Clinton eased sanctions on Iran. A debate in the US Congress on whether to allow the expiration of ILSA, which some legislators argued hindered bilateral relations, and others argued would be seen as a concession on an effective program, ended on August 5, 2001, with its renewal by the Congress and signing into law by President George W. Bush.

In 2000 the Khatami government managed to reduce the sanctions for some items like pharmaceuticals, medical equipment, caviar or Persian rugs. In February 2004, during the final year of Khatami's presidency, the U.S. Department of the Treasury ruled against editing or publishing scientific manuscripts from Iran, and stated that U.S. scientists collaborating with Iranians could be prosecuted. In response, the Institute of Electrical and Electronics Engineers (IEEE) stopped accepting manuscripts from researchers. On the other hand, the American Institute of Physics (AIP), the American Physical Society and the American Association for the Advancement of Science, which publishes Science, refused to comply, saying that the prohibition on publishing goes against freedom of speech.

Ahmadinejad government

See also: United Nations Security Council Resolution 1737, United Nations Security Council Resolution 1747, and UN Security Council Resolution 1803

In December 2008 the U.S. government sought 40 percent interest in 650 Fifth Avenue on the edge of Rockefeller Center which it said was co-owned by Bank Melli.

After being elected president in 2005 Ahmadinejad reversed the retroactive nuclear policy and lifted the suspension of uranium enrichment, that had been put in place by the reformists. This raised red flags in the United States government, which began pushing for international sanctions against Iran over its atomic ambitions.

Iranian financial institutions are barred from directly accessing the U.S. financial system, but they are permitted to do so indirectly through banks in other countries. In September 2006, the U.S. government imposed sanctions on Bank Saderat Iran, barring it from dealing with U.S. financial institutions, even indirectly. The move was announced by Stuart Levey, the undersecretary for treasury, who accused the major state-owned bank in Iran of transferring funds for certain groups, including Hezbollah. Levey said that since 2001 a Hezbollah-controlled organization had received 50 million U.S. dollars directly from Iran through Bank Saderat. He said the U.S. government will also persuade European banks and financial institutions not to deal with Iran.

In June 2007, the U.S. state of Florida enacted a boycott on companies trading with Iran and Sudan, while New Jersey's state legislature was considering similar action.

As of November 2007, the following Iranian banks were prohibited from transferring money to or from United States banks:

• Bank Sepah
• Bank Saderat Iran
• Bank Melli Iran
• Bank Kargoshaee (aka Kargosa’i Bank)
• Arian Bank (aka Aryan Bank)
• Bank Mellat
• Persia International Bank PLC

For individuals and small businesses, these banking restrictions have created a large opportunity for the hawala market, which allows Iranians to transfer money to and from foreign countries using an underground unregulated exchange system.

As of early 2008, the targeted banks, such as Bank Mellat, had been able to replace banking relationships with a few large sanction-compliant banks with relationships with a larger number of smaller non-compliant banks. The total assets frozen in Britain under the EU (European Union) and UN sanctions against Iran are approximately 976,110,000 pounds ($1.64 billion). In 2008, the US Treasury ordered Citigroup Inc. to freeze over $2 billion allegedly held for Iran in Citigroup accounts.

Effects and criticism

According to a Iranian journalist, the effects of sanctions in Iran include expensive basic goods and an aging and increasingly unsafe aircraft fleet. "According to reports from Iranian news agencies, 17 planes have crashed over the past 25 years, killing approximately 1,500 people."

The U.S. forbids aircraft manufacturer Boeing to sell aircraft to Iranian aviation companies.

A 2005 report, presented at the 36th session of the International Civil Aviation Organization, reported that the U.S. sanctions had endangered the safety of civil aviation in Iran because it prevented Iran from acquiring parts and support essential for aviation safety. It also stated that the sanctions were contrary to the Chicago convention (to which the US is a member). The ICAO report said aviation safety affects human lives and human rights, stands above political differences, and that the assembly should bring international public pressure on the United States to lift the sanctions against Iran.

The European Union has been critical of most of the U.S. trade sanctions against Iran. Some EU Member States have criticized ILSA as a "double standard" in U.S. foreign policy, in which the United States vigorously worked against the Arab League boycott of Israel while at the same time promoted a worldwide boycott of Iran. The EU Member States have threatened formal counter-action in the World Trade Organization.

According to a study by Akbar E. Torbat, "overall, the sanctions' economic effect" on Iran "has been significant, while its political effect has been minimal."

According to the U.S. National Foreign Trade Council, in the medium-term, lifting US sanctions and liberalizing Iran’s economic regime would increase Iran's total trade annually by as much as $61 billion (at the 2005 world oil price of $50/bbl), adding 32 percent to Iran’s GDP. In the oil-and-gas sector, output and exports would expand by 25-to-50 percent (adding 3 percent to world crude oil production).

Iran could reduce the world price of crude petroleum by 10 percent, saving the United States annually between $38 billion (at the 2005 world oil price of $50/bbl) and $76 billion (at the proximate 2008 world oil price of $100/bbl). Opening Iran’s market place to foreign investment could also be a boon to competitive US multinational firms operating in a variety of manufacturing and service sectors.

In 2009, there was discussion in the U.S. of implementing "crippling sanctions" against Iran, such as the Iran Refined Petroleum Sanctions Act of 2009, "if diplomatic overture did not show signs of success by the autumn". Professor Hamid Dabashi, of Columbia University, said in August 2009 that this was likely to bring "catastrophic humanitarian consequences", while enriching and strengthening the "security and military apparatus" of "the Pasdaran and the Basij," and having absolutely no support from "any major or even minor opposition leader" in Iran.

In April 2010 Russia has made a small step towards the West in the issue of Iranian nuclear problem, having admitted a possibility of introducing of new sanctions against the Islamic Republic. At the latest negotiations between Dmitry Medvedev and Barack Obama during the meeting in Prague, where a Strategic Arms Reduction Treaty was signed on the 8th of April, Russian President stated: "Of course, we could not overlook the Iranian nuclear program. Unfortunately, Iran does not react on the variety of constructive compromising proposals given to this country. Therefore, it is not ruled out that the Security Council would have to discuss this issue again". However, at the same meeting the limitations on Iran were mentioned which Russia can not accept even in theory. For example, the deputy Minister of Foreign Affairs of the Russian Federation Sergey Ryabkov claimed that Moscow can not agree, for example, to a fuel embargo imposed on Iran, because such a sanction would shock the whole Iranian society.

See also

• Economy of Iran
• United States-Iran relations
• Sanctions against Iranian scientists
• Anti-Iranian sentiments
• Chicago's Persian heritage crisis
• Foreign Direct Investment in Iran
• The Iran Sanctions Enhancement Act of 2007
• House Resolution 362
• United States Visa Embargo against Iran
• Iran and weapons of mass destruction

External links

• REALITE-EU - International community contemplates strong anti-Iran sanctions
• ILSA - CRS Report for Congress
• Global Energy Sanctions
• US Treasury - Iran Sanctions
• What sanctions mean for Iran's economy - CFR
• Iran Sanctions - Factbox (Summary and list of all sanctions on Iran since 1979)
• Iran Trade Debates
• US sanctions on Iran (Documentary) - Part I Part II Part III