Sanctions against Iran - AbsoluteAstronomy.com

This article outlines economic, trade, scientific and military sanctions against Iran

Iran

Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...

, which have been imposed by the U.S. government, or under U.S. pressure by the international community through the United Nations Security Council

United Nations Security Council

The United Nations Security Council is one of the principal organs of the United Nations and is charged with the maintenance of international peace and security. Its powers, outlined in the United Nations Charter, include the establishment of peacekeeping operations, the establishment of...

. Currently the sanctions include an embargo on dealings with Iran by the United States

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

, and a ban on selling aircraft and repair parts to Iranian aviation companies.

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

Muslim Student Followers of the Imam's Line

Muslim Student Followers of the Imam's Line , also translated as Muslim Students of the Imam Khomeini Line, was an Iranian student group that occupied the U.S. embassy in Tehran on 4 November 1979...

took action in Tehran

Tehran

Tehran , sometimes spelled Teheran, is the capital of Iran and Tehran Province. With an estimated population of 8,429,807; it is also Iran's largest urban area and city, one of the largest cities in Western Asia, and is the world's 19th largest city.In the 20th century, Tehran was subject to...

by seizing the American Embassy and taking hostage the people inside

Iran hostage crisis

The Iran hostage crisis was a diplomatic crisis between Iran and the United States where 52 Americans were held hostage for 444 days from November 4, 1979 to January 20, 1981, after a group of Islamist students and militants took over the American Embassy in Tehran in support of the Iranian...

. 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 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 1987, the United States further prohibited the importation and exportation of any goods or services from Iran.

Rafsanjani and Khatami governments

The term of President Rafsanjani was marked by some of the toughest sanctions against Iran. In April 1995, President Bill Clinton

Bill Clinton

William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...

issued a total embargo on U.S. dealings with Iran, prohibiting all commercial and financial transactions with Iran. Trade with the United States, which had been growing following the end of the Iran–Iraq War, ended abruptly.

In 1996, the United States Congress

United States Congress

The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....

passed the Iran–Libya Sanctions Act (ILSA). Under ILSA, all foreign companies that provide investments over $20 million for the development of petroleum

Petroleum

Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

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

Iranian reformists

The Iranian reform movement , or the Reforms Front also known as 2nd of Khordad Front is a political movement by a group of political parties and organizations in Iran who supported Mohammad Khatami's plans to change the system to include more freedom and...

President Mohammad Khatami

Mohammad Khatami

Sayyid Mohammad Khātamī is an Iranian scholar, philosopher, Shiite theologian and Reformist politician. He served as the fifth President of Iran from August 2, 1997 to August 3, 2005. He also served as Iran's Minister of Culture in both the 1980s and 1990s...

, 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 August 5, 2001, with its renewal by the Congress and signing into law by President George W. Bush

George W. Bush

George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....

.

In 2000 the Khatami government managed to reduce the sanctions for some items like pharmaceuticals, medical equipment, caviar

Caviar

Caviar, sometimes called black caviar, is a luxury delicacy, consisting of processed, salted, non-fertilized sturgeon roe. The roe can be "fresh" or pasteurized, the latter having much less culinary and economic value....

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

Institute of Electrical and Electronics Engineers

The Institute of Electrical and Electronics Engineers is a non-profit professional association headquartered in New York City that is dedicated to advancing technological innovation and excellence...

(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

American Institute of Physics

The American Institute of Physics promotes science, the profession of physics, publishes physics journals, and produces publications for scientific and engineering societies. The AIP is made up of various member societies...

(AIP), the American Physical Society

American Physical Society

The American Physical Society is the world's second largest organization of physicists, behind the Deutsche Physikalische Gesellschaft. The Society publishes more than a dozen scientific journals, including the world renowned Physical Review and Physical Review Letters, and organizes more than 20...

and the American Association for the Advancement of Science

American Association for the Advancement of Science

The American Association for the Advancement of Science is an international non-profit organization with the stated goals of promoting cooperation among scientists, defending scientific freedom, encouraging scientific responsibility, and supporting scientific education and science outreach for the...

, which publishes Science
Science (journal)
Science is the academic journal of the American Association for the Advancement of Science and is one of the world's top scientific journals....

, refused to comply, saying that the prohibition on publishing goes against freedom of speech

Freedom of speech

Freedom of speech is the freedom to speak freely without censorship. The term freedom of expression is sometimes used synonymously, but includes any act of seeking, receiving and imparting information or ideas, regardless of the medium used...

Ahmadinejad government

After being elected president

Iranian presidential election, 2005

Iran's ninth presidential election took place in two rounds, the first on June 17, 2005, the run-off on June 24. Mohammad Khatami, the previous President of Iran, stepped down on August 2, 2005, after serving his maximum two consecutive four-year terms according to the Islamic Republic's constitution...

in 2005 Ahmadinejad lifted the suspension of uranium enrichment that had been agreed with the EU3

EU three

The EU 3 refers to France, Germany and the United Kingdom, with relation to the status, power and influence of these three nations within the European Union...

, and the International Atomic Energy Agency

International Atomic Energy Agency

The International Atomic Energy Agency is an international organization that seeks to promote the peaceful use of nuclear energy, and to inhibit its use for any military purpose, including nuclear weapons. The IAEA was established as an autonomous organization on 29 July 1957...

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

Nuclear program of Iran

The nuclear program of Iran was launched in the 1950s with the help of the United States as part of the Atoms for Peace program. The support, encouragement and participation of the United States and Western European governments in Iran's nuclear program continued until the 1979 Iranian Revolution...

.

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

U-turn (banking)

A U-turn transaction, generally speaking, is a banned financial transaction done by a bank in country A for the benefit of a bank in country B through offshore banks . This loophole is used by Iranian banks to avoid U.S. sanctions for their US dollar based transactions...

. In September 2006, the U.S. government imposed sanctions on Bank Saderat Iran

Bank Saderat Iran

Bank Saderat Iran is an Iranian Bank. Its name means "the Export Bank of Iran". Bank Saderat Iran was founded by the prominent Mofarrah and Bolurfrushan families, commenced operation on 13 November 1952 with a board of three directors and 20 employees...

, 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 Europe

Europe

Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

an banks and financial institutions not to deal with Iran.

In June 2007, the U.S. state of Florida

Florida

Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...

enacted a boycott on companies trading with Iran and Sudan, while New Jersey

New Jersey

New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...

'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 Sepah
-History:The first Iranian bank, Bank Sepah was established in 1925 ; its first branch, in Rasht, opened that year. The bank also has branches in Frankfurt, Paris and Rome as well as a wholly owned subsidiary, Bank Sepah International plc which operates in London. "Sepah" is the poetic Persian...
Bank Saderat Iran
Bank Saderat Iran
Bank Saderat Iran is an Iranian Bank. Its name means "the Export Bank of Iran". Bank Saderat Iran was founded by the prominent Mofarrah and Bolurfrushan families, commenced operation on 13 November 1952 with a board of three directors and 20 employees...
Bank Melli Iran
Bank Melli Iran
Bank Melli Iran , also called the National Bank of Iran, is the first national Iranian bank. The bank was established in 1927 by the order of the Majlis and since then has consistently been one of the most influential Iranian banks.In 1931 the Iranian Majlis authorized the bank to print and...
Bank Kargoshaee (aka Kargosa’i Bank)
Arian Bank (aka Aryan Bank)

In other words, these banks were placed on the OFAC's Specially Designated Nationals#Specially Designated Nationals 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.

For individuals and small businesses, these banking restrictions have created a large opportunity for the hawala

Hawala

Hawala is an informal value transfer system based on the performance and honor of a huge network of money brokers, which are primarily located in the Middle East, North Africa, the Horn of Africa, and South Asia...

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

Bank Mellat

Bank Mellat is a Private Iranian bank. Its name means "Bank of the Nation". Bank Mellat was established in 1980, with a paid of capital of Rials 33.5bn as a merger of ten pre-revolution private banks comprising: Tehran, Dariush, Pars, Etebarat Taavoni & Tozie, Iran & Arab, Bein-al-melalie-Iran,...

, 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

United Kingdom

The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

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.

In June, 2010 in the case United States v. Banki

United States v. Banki

On January 7, 2010, the U.S. Attorney for the Southern District of New York announced that naturalized U.S. citizen Mahmoud Reza Banki, born in Iran, had been arrested for criminal violations of the Iran Trade Embargo. On March 17, 2010, the US Attorney filed an indictment in United States...

, the use of the Hawala

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 twenty (20) years.

On June 9, 2010, the United Nations Security council passed 12-2 a resolution to impose new sanctions on Iran for the continued disagreement over its nuclear portfolio.

On June 24, 2010, the United States Senate

United States Senate

The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...

and House of Representatives

United States House of Representatives

The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...

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.

Effects and criticism

Many of the Iran sanctions programs are administered by the United States of the Treasury Office of Foreign Assets Control

Office of Foreign Assets Control

The Office of Foreign Assets Control is an agency of the United States Department of the Treasury under the auspices of the Under Secretary of the Treasury for Terrorism and Financial Intelligence. OFAC administers and enforces economic and trade sanctions based on U.S...

(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."

The U.S. forbids aircraft manufacturer Boeing

Boeing

The Boeing Company is an American multinational aerospace and defense corporation, founded in 1916 by William E. Boeing in Seattle, Washington. Boeing has expanded over the years, merging with McDonnell Douglas in 1997. Boeing Corporate headquarters has been in Chicago, Illinois since 2001...

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

International Civil Aviation Organization

The International Civil Aviation Organization , pronounced , , is a specialized agency of the United Nations. It codifies the principles and techniques of international air navigation and fosters the planning and development of international air transport to ensure safe and orderly growth...

, 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

Convention on International Civil Aviation

The Convention on International Civil Aviation, also known as the Chicago Convention, established the International Civil Aviation Organization , a specialized agency of the United Nations charged with coordinating and regulating international air travel...

(to which the US is a member). The ICAO report said aviation safety affects human lives and human rights

Human rights

Human rights are "commonly understood as inalienable fundamental rights to which a person is inherently entitled simply because she or he is a human being." Human rights are thus conceived as universal and egalitarian . These rights may exist as natural rights or as legal rights, in both national...

, stands above political differences, and that the assembly should bring international public pressure

Public opinion

Public opinion is the aggregate of individual attitudes or beliefs held by the adult population. Public opinion can also be defined as the complex collection of opinions of many different people and the sum of all their views....

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

Arab League boycott of Israel

The Arab League boycott of Israel is a systematic effort by Arab League member states to isolate Israel economically to prevent Arab states and discourage non-Arabs from providing support to Israel and adding to Israel's economic and military strength...

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

World Trade Organization

The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...

.

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

Iran Refined Petroleum Sanctions Act of 2009

The Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 is a bill passed by the U.S. Congress that would apply further sanctions on the government of Iran. A previous iteration of the bill, the Iran Refined Petroleum Sanctions Act of 2009 , would extend U.S...

, "if diplomatic overture did not show signs of success by the autumn". Professor Hamid Dabashi, of Columbia University

Columbia University

Columbia University in the City of New York is a private, Ivy League university in Manhattan, New York City. Columbia is the oldest institution of higher learning in the state of New York, the fifth oldest in the United States, and one of the country's nine Colonial Colleges founded before the...

, 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

Basij

The Basij is a paramilitary volunteer militia established in 1979 by order of the Islamic Revolution's leader Ayatollah Khomeini. The force consists of young Iranians who have volunteered, often in exchange for official benefits...

," and having absolutely no support from "any major or even minor opposition leader" in Iran. According to Bloomberg News, Boeing

Boeing

and Exxon

Exxon

Exxon is a chain of gas stations as well as a brand of motor fuel and related products by ExxonMobil. From 1972 to 1999, Exxon was the corporate name of the company previously known as Standard Oil Company of New Jersey or Jersey Standard....

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

Petroleum industry in Iran

In 2004 Iran produced 5.1 percent of the world’s total crude oil , which generated revenues of US$25 billion to US$30 billion and was the country’s primary source of foreign currency. At 2006 levels of production, oil proceeds represented about 18.7 percent of gross domestic product . However, the...

due to global sanctions

Sanctions against Iran

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...

Exceptions

In December 2010 it was reported that the U.S. Treasury Department's Office of Foreign Assets Control

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. For Iran, most of these exceptions were required by a law creating a broad humanitarian exception intended to avoid hurting the Iranian people.

External links

Iran Sanctions - Factbox (Summary and list of all sanctions on Iran since 1979)
Iran's Economy and sanctions - US Congressional Research Service
Congressional Research Service
The Congressional Research Service , known as "Congress's think tank", is the public policy research arm of the United States Congress. As a legislative branch agency within the Library of Congress, CRS works exclusively and directly for Members of Congress, their Committees and staff on a...

(June 2008)
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 Primer: U.S. Sanctions - PBS website

Videos

Sanctions against Iran - Part I Part II Part III (free PressTV 2010 documentary)

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