The Obama administration began softening sanctions on Iran after the election of Iran's new president in June, months before the current round of nuclear talks in Geneva or the historic phone call between the two leaders in September.
If you'll recall we at the Burg have been running the occasional story about Iran trade and exports these last few months. Oil, NG, steel, cars, etc. We've had other stories about Iranian imports. Now understand all this was on a backdrop of what was supposed to be "tough" sanctions on Iran for its refusal to submit its nuclear weapons program to international inspection. At the time a reasonable person would have assumed that this was all about those crafty Persians finding ways to get around the sanctions.
But of course we should have considered the other possibility: that Champ simply waved his hands and cancelled the sanctions, the way he has done to so many other American laws. From this story in the Daily Beast (and all credit to them for pursuing it) it seems that he's been non-enforcing the sanctions for some months as a come-on to the Iranians so that they'll sign a deal that gives them the nuclear weapons they want and the fig leaf that Champ wants. Boy howdy what a tough deal for the Iranians, huh? |
While those negotiations now appear on the verge of a breakthrough the key condition for Iran--relief from crippling sanctions--began quietly and modestly five months ago.
A review of Treasury Department notices reveals that the U.S. government has all but stopped the financial blacklisting of entities and people that help Iran evade international sanctions since the election of its president, Hassan Rouhani, in June.
| The threat to blacklist an American bank compels said bank to stop doing business not just with the entities that are on the sanction list, but to stop doing business with the banks who are doing business with the banks who hold the money of the entities on the sanctions list. So having the Treasury Department say "no worries, we won't blacklist you" means full speed ahead in doing business. |
On Wednesday Obama said in an interview with NBC News the negotiations in Geneva "are not about easing sanctions." "The negotiations taking place are about how Iran begins to meet its international obligations and provide assurances not just to us but to the entire world," the president said.
But it has also long been Obama's strategy to squeeze Iran's economy until Iran would be willing to trade relief from sanctions for abandoning key elements of its nuclear program.
| No, that was George Bush's strategy. Champ has been looking for a couple years how to get a "deal" with Iran, and apparently he's found a way. |
One way Obama has pressured Iran is through isolating the country's banks from the global financial sector, the networks that make modern international commerce possible. This in turn has led Iran to seek out front companies and cutouts to conduct routine international business, such as selling its crude oil.
In this cat and mouse game, the Treasury Department in recent years has routinely designated new entities as violators of sanctions, forcing Iran to adjust in turn. In the six weeks prior to the Iranian elections in June, the Treasury Department issued seven notices of designations of sanctions violators that included more than 100 new people, companies, aircraft, and sea vessels.
Since June 14, however, when Rouhani was elected, the Treasury Department has only issued two designation notices that have identified six people and four companies as violating the Iran sanctions.
| Rouhani is seen by Champ and his people as a "moderate": this is nonsense of course. The Mad Mullahs™ do not believe in moderation and will not have such a person leading the country. Rouhani has blood on his hands. This is a case of Iranian public relations being swallowed by a gullible U.S. administration that desperately wants to believe what it hears so that it can cut a deal. |
When an entity is designated as a sanctions violator it can be catastrophic. Banks and other investors almost never take the risk of doing business with the people and companies on a Treasury blacklist because of the potential reputational harm and the prospect they could lose access to U.S. financial markets.
A Treasury spokesman contacted by The Daily Beast said the effectiveness of sanctions should be measured by their results and not the number of entities designated. The Treasury spokesman also said that the significant financial pressure on Iran in recent years changed the calculus of the country's leaders and led to the election of Rouhani, who is a former nuclear negotiator and is considered more moderate than his predecessor.
| Anyone who considers that is considering wrongly... |
"In the months since the Iranian election we have continued to pursue our unwavering goal of preventing Iran from obtaining a nuclear weapon," the spokesman said. "We have not let up on vigorous sanctions enforcement one iota. This includes new designations of sanctions evaders as well as other steps to address potential sanctions evasion."
But the enforcement of sanctions, experts said, is very different than the process of designating new violators. To start, sanctions enforcement means the levying of fines or other legal measures against those people and entities already designated by the Treasury Department as a violator.
The designation process is more proactive. "The designations are important because they identify illicit actors that are abusing the international financial sector in addition to signaling the U.S. intention to isolate Iran's economy," said Avi Jorisch, a former U.S. Treasury official who has worked closely on Iran sanctions and has advocated for toughening these sanctions since leaving government.
| Whereas now we see that it's going in the opposite direction. |
Advocates of sanctions relief also acknowledge that the administration has pursued a policy of quietly lessening financial pressure on Iran. They argue that was a logical policy when married to the process of renewing diplomatic negotiations with Iran, which according to the Wall Street Journal this week, has been going on for several months.
| The alternative, of course, is to maintain sanctions and tell the Iranians that the sanctions will only be loosened IF and ONLY IF a satisfactory deal is made on the nuclear issue. That would allow us to have considerable leverage. Champ has thrown that away. Of course. |
"Before the election there were a lot of these designations," said Trita Parsi, the executive director of the National Iranian American Council, a group that has advocated for ending sanctions on Iran since. "Their impact was probably not decisive, but it was a way for the White House to signal to the Iranians and Congress they were going forward with the sanctions train." Parsi continued: "After the election [the Obama administration] wanted to give the opposite signal, a pause. The last thing you would want to do is let the sanctions train go forward and potentially scuttle an opportunity that could have been there."
| Why? If the Iranians want a deal after their election, let THEM come to US. Let them open with a suggestion for a deal rather than have us loosen sanctions. They're the ones who are supposedly hurting. |
Following the Iranian elections, there were also a lot of changes inside the Iranian government, making the task of designating officials and entities a bit more tricky, Parsi said. But a significant part of the administration's decision, in Parsi's opinion, was the belief that continuing a high pace of designations would "undermine the signal that they were trying to send, that there was an opening."
Mark Dubowitz, the executive director of the Foundation for the Defense of Democracies, an organization that has worked closely with Congress and the administration on devising the current Iranian sanctions, said the slow pace of designations was only one kind of sanctions relief Obama has been offering Iran.
"For five months, since Rouhani's election, the United States has offered Iran two major forms of sanctions relief," Dubowitz said. "First there's been a significant slowdown in the pace of designations while the Iranians are proliferating the number of front companies and cutouts to bust sanctions."
The second kind of relief Dubowitz said the White House had offered Iran was through its opposition to new Iran sanctions legislation supported by both parties in Congress.
By Dubowitz's estimates, Iran is now selling between 150,000 and 200,000 barrels of oil per day on the black market, meaning that Iran has profited from the illicit sale of over 35 million barrels of oil since Rouhani took office, with little additional measures taken by the United States to counter it.
| Not just oil. Look at the cushy relationship it now has with al-Maliki in Iraq: Iran could easily ship through Iraq, or "sell" Iraq electricity, etc. |
"Sounds like Obama decided to enter the Persian nuclear bazaar to haggle with the masters of negotiation and has had his head handed to him," Dubowitz said. |