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US sanctions against Iran refer to 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.
In 1979, after the U.S. permitted the exiled Shah of Iran to enter the United States for medical treatment, a group of radical students took action in Tehran by seizing the American Embassy and taking hostage the people inside. The United States responded and President Carter issued Executive Order 12170 in November 1979 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.
After the invasion of Iran by Iraq, the United States increased sanctions against Iran. In 1984, sanctions were approved that prohibit weapons sales and all U.S. assistance to Iran. The United States also opposed all loans to Iran from international financial institutions. In October 1987, President Ronald Reagan issued Executive Order 12613 prohibiting the importation and exportation of any goods or services from Iran.
The Iran Sanctions Act (ISA) that is the basis of the current sanctions against Iran is a revised version of the Iran and Libya Sanctions Act (ILSA) that was signed on 5 August 1996 (H.R. 3107, P.L. 104-172). The act was renamed in 2006 when the sanctions against Libya were terminated.
Despite 131 of its 435 members writing to President Barack Obama on July 19, 2013 urging that he “reinvigorate” nuclear talks with Iran, the United States House of Representatives,voted by 400 to 20 on July 31, 2013 to toughen sanctions.
The term of President Akbar Hashemi Rafsanjani was marked by some of the toughest sanctions against Iran. In March 1995, President Bill Clinton issued Executive Order 12957 prohibiting U.S. trade in Iran's oil industry. In May 1995, President Clinton issued Executive Order 12959 prohibiting any U.S. trade with Iran. Trade with the United States, which had been growing following the end of the Iran–Iraq War, ended abruptly.
In 1995, 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.:
In response to the election of Iranian reformist President Mohammad Khatami, President Clinton eased sanctions on Iran. A debate in the U.S. 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 5 August 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) temporarily stopped editing manuscripts from Iranian researchers and took steps to clarify the OFAC guidelines concerning its publishing and editing activities. In April 2004 IEEE received a response from OFAC which fully resolved that no licenses were needed for publishing works from Iran and that the entire IEEE publication process including peer review and editing was exempt from restrictions. 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.
After being elected president in 2005, President Ahmadinejad lifted the suspension of uranium enrichment that had been agreed with the EU3, and the International Atomic Energy Agency reported Iran's non-compliance with its safeguards agreement to the UN Security Council. The U.S. government then began pushing for UN sanctions against Iran over its nuclear program.
In June 2005, President George W. Bush issued Executive Order 13382 freezing the assets of individuals connected with Iran's nuclear program. 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.
On June 24, 2010, the United States Senate and House of Representatives passed the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA), which President Obama signed into law July 1, 2010. The CISADA greatly enhanced restrictions in Iran. Such restrictions included the rescission of the authorization for Iranian-origin imports for articles such as rugs, pistachios, and caviar. In response, President Obama issued Executive Order 13553 in September 2010 and Executive Order 13574 in May 2011, and Executive Order 13590 in November 2011.
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. As of November 2007, the following Iranian banks were prohibited from transferring money to or from United States banks:
In other words, these banks were placed on the Office of Foreign Assets Control (OFAC) Specially Designated Nationals List (SDN List). The SDN List is a directory of entities and individuals who have been prohibited from accessing the U.S. financial system. Although difficult there are ways to carry out an OFAC SDN List removal.
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 held for Iran in Citigroup accounts.
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. In June, 2010 in the case United States v. Banki, the use of the hawala method of currency transfer led to a criminal conviction against a U.S. citizen of Iranian origin. Banki was sentenced to two and a half years in federal prison, however, on the Federal Sentencing Guidelines, this type of offense could result in imprisonment of up to 20 years.
The United States imposed additional financial sanctions against Iran, effective 1 July 2013. An administration official explained that according to the new Executive Order “significant transactions in the rial will expose anyone to sanctions,” and predicted “it should cause banks and exchanges to dump their rial holdings.” This took place as Iran's president-elect Hassan Rouhani was scheduled to take office from August 3, 2013.
Many of the Iran sanctions programs are administered by the United States of the Treasury Office of Foreign Assets Control (OFAC).
According to an 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."[dead link]
The U.S. forbids aircraft manufacturer Boeing to sell aircraft to Iranian aviation companies. However, there are some authorizations for the export of civil aviation parts to Iran when those items are required for the safety of commercial aircraft.
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 article 44 of 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 had 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 had 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. According to Bloomberg News, Boeing and Exxon have said that new Iran sanctions would cost $25 billion in U.S. exports.
It has also been argued the sanctions have had the counter effect of protecting Iran in some ways, for example the 2007 imposition of U.S. sanctions against Iranian financial institutions to a high degree made Iran immune to the then emerging global recession. Iranian officials argued that the sanctions created new business opportunities for Iranian companies to develop in order to fill the gap left by foreign contractors. According to U.S. officials, Iran may lose up to $60 billion in energy investments due to global sanctions.
On 18 January 2012 Russian Foreign Minister Sergey Lavrov warned that sanctions are aimed at strangling the economy of Iran and would create much discontent toward Western nations, and potentially provoke a negative recourse.
In December 2010 it was reported that the U.S. Treasury Department's Office of Foreign Assets Control had approved nearly 10,000 exceptions to U.S. sanctions rules worldwide over the preceding decade by issuing special licenses for American companies.
European and U.S. sanctions do not affect Iran's electricity exports, which creates a loophole for Iran's natural gas reserves.