Nov

22

New U.S. Sanctions on Foreign Companies Doing Business in Iran


Posted by at 11:23 pm on November 22, 2011
Category: Iran SanctionsOFAC

Iranian oil fieldThe White House signed, on November 19, Executive Order 13590, which increased the sanctions on foreign firms doing business in Iran. An official copy of the executive order has not been released but it is described in this “Fact Sheet” released by the Treasury Department. A State Department briefing held yesterday provides further background on the new sanctions.

The new sanctions expand on the sanctions on foreign persons dealing with the Iranian energy sector that started with the Iran Sanctions Act of 1996 and continued with last year’s Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (“CISADA”).

Under CISADA, foreign persons can be sanctioned if they make investments that contribute to the development of petroleum resources in Iran. Investment is defined to exclude the simple sale of goods to Iranian petroleum companies. Under the new sanctions, the transactional amounts are reduced to $1,000,000 per transaction or $5,000,000 in a twelve-month period. Additionally, the new sanctions will cover the simple sale of goods in excess of these amounts.

The new sanctions now go beyond the petroleum industry in Iran and will include the petrochemical industry. Foreign companies will face sanctions if they provide goods, services, or technology to Iran that could “directly and significantly facilitate the maintenance or expansion of its domestic production of petrochemical products.” The triggers for these petrochemical sales are even lower than the triggers for petroleum investments and cover a single transaction that has a fair market value of $250,000 or more or a series of transactions valued at $1 million or more over a 12-month period.

This blog has pointed out before that secondary boycotts of this sort violate U.S. obligations under GATT. The European Union filed a complaint with the WTO against the secondary boycotts contained in the Iran Sanctions Act, a complaint that was withdrawn when the Clinton administration agreed to use the national security exception in the Act to permit certain European investments in Iran. However, given all the accumulating evidence that Iran is in fact attempting to develop a nuclear bomb, it seems unlikely that the E.U. will seek a WTO remedy with respect to these new sanctions.

(For an excellent summary of Iran sanctions legislation, take a look at this excellent CRS study from October.)

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5 Comments:


There is no “accumulating evidence that Iran is in fact attempting to acquire a nuclear bomb” – you really should look into this some more before making such blanket declarations. The latest IAEA report simply reproduced allegations from the past, which the previous IAEA head had refused to endorse.

Comment by hass on November 23rd, 2011 @ 1:31 pm

Clif – a very helpful post. Thanks.

Comment by John Liebman on November 23rd, 2011 @ 1:52 pm

Thank you Cliff but the IAEA report is in fact merely repeating allegations that were already made public in Sept 2009,

http://www.csmonitor.com/World/Middle-East/2011/1109/Iran-nuclear-report-Why-it-may-not-be-a-game-changer-after-all

The IAEA at the time had refused to release these allegations because the IAEA judged it insufficiently verified. The material was leaked nonetheless, and this is what the IAEA had to say about it:

“With respect to a recent media report, the IAEA reiterates that it has no concrete proof that there is or has been a nuclear weapon programme in Iran.”
(See http://www.iaea.org/newscenter/mediaadvisory/2009/ma200919.html )

In fact the latest IAEA report has come under significant criticism too. You really need to keep up.

http://www.iranaffairs.com/iran_affairs/2011/11/weapons-inspector-robert-kelley-misleading-iaea-iran-report.html

Comment by hass on November 26th, 2011 @ 11:07 pm

    Gee, Amina, I am more than a little surprised that you would, after being embarrased by having incorrectly called Kelley the “previous head” of the IAEA, skulk back here and try to prove your point with three links which do nothing but cite the Kelley statement that you touted in your first comment. And then that after such an enormous gaffe you, of all people, think you need to tell me to “keep up.”. But, of course, since you don’t have the courage to post your comment under your real name, it’s easy for you to be both careless and insulting

    As I said, the report itself says that the IAEA has received new information, and my readers here are smart enough to follow the link, read the report and draw their own conclusions without being blinded, as you are apparently, by personal ties to Iran.

    Comment by Clif Burns on November 28th, 2011 @ 8:10 am