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Iran Sanctions Iran Sanctions (name redacted) Specialist in Middle Eastern Affairs September 21, 2016 Congressional Research Service 7-.... www.crs.gov RS20871 Iran Sanctions Summary The comprehensive nuclear accord (Joint Comprehensive Plan of Action, or JCPOA), finalized on July 14, 2015, provides Iran broad relief from U.S., U.N., and multilateral sanctions on Iran’s energy, financial, shipping, automotive, and other sectors. Sanctions were suspended or lifted upon the International Atomic Energy Agency (IAEA) certification on January 16, 2016, that Iran had complied with the stipulated nuclear dismantlement commitments under the agreement (“Implementation Day”). On Implementation Day, Administration waivers of relevant sanctions laws took effect and relevant Executive Orders (E.O.s) were revoked by E.O. 13716. Remaining in place are those secondary sanctions (sanctions on foreign firms) that have been imposed because of Iran’s support for terrorism, its human rights abuses, its interference in specified countries in the region, and its missile and advanced conventional weapons programs. Most sanctions that apply to U.S. companies, including regulations barring transactions between U.S. and Iranian banks, remain in place. Under U.N. Security Council Resolution 2231 (July 2015, most U.N. sanctions terminated as of Implementation Day, but U.N. restrictions on Iran’s development of nuclear-capable ballistic missiles and its importation or exportation of arms remain in place for several years. During 2010-2013, sanctions significantly harmed Iran’s economy and contributed to Iran’s decision to accept the JCPOA. The sanctions and related diplomatic pressure caused or contributed to the following: Iran’s crude oil exports fell from about 2.5 million barrels per day (mbd) in 2011 to about 1.1 mbd by mid-2013. The effect of that export volume reduction was further compounded by a fall in oil prices since mid-2014. Sanctions also made inaccessible about $120 billion in Iranian reserves held in banks abroad. Iran’s economy shrank by 9% in the two years that ended in March 2014, before stabilizing since 2015 as a result of modest sanctions relief under an interim nuclear agreement that went into effect on January 20, 2014. Growth of about 4% is expected for 2016 largely because of the sanctions relief. Sanctions and sanctions relief have contributed to the electoral success of Iran’s President, Hassan Rouhani. Sanctions relief gives Iran the option of resurrecting its civilian economy as well as expanding its regional influence. Iran is able to freely export crude oil and to be paid directly for it and for other goods with hard currency. Iran’s banks are being reintegrated into the international financial system and Iran has full access to its hard currency reserves held abroad. The JCPOA contains no restrictions on how Iran can utilize its funds. Iran’s ability to procure equipment for its nuclear and missile programs and to import advanced conventional weaponry remains constricted by sanctions, but Iran has been able to develop its nuclear and missile programs and to assist pro- Iranian movements and governments in the region even when sanctions had maximum effect. Some in Congress have proposed legislation to sanction Iran’s continued missile development and Iran’s Islamic Revolutionary Guard Corps (IRGC), which supports pro-Iranian movements and governments as well as helps secure the regime, as well as to extend the Iran Sanctions Act, which expires on December 31, 2016. Other legislation seeks to prevent finalization of a major U.S. sale of passenger aircraft to Iran Air. However, some sanctions legislation that might affect Iran’s behavior might also be inconsistent with the JCPOA. See also CRS Report R43333, Iran Nuclear Agreement, by (name redacted) and (name redacted); CRS Report R43311, Iran: U.S. Economic Sanctions and the Authority to Lift Restrictions, by (name redacted) ; and CRS Report RL32048, Iran: Politics, Gulf Security, and U.S. Policy, by (name redacted) . Congressional Research Service Iran Sanctions Contents Overview and Objectives ................................................................................................................ 1 Blocked Iranian Property and Assets ............................................................................................... 1 Executive Order 13599 Impounding Iran-Owned Assets .......................................................... 3 Sanctions for Iran’s Support for Terrorism and Destabilizing Regional Activities ......................... 3 Sanctions Triggered by Terrorism List Designation: Ban on U.S. Aid, Arms Sales, Dual-Use Exports, and Certain Programs for Iran ................................................................. 3 Exception for U.S. Humanitarian Aid ................................................................................. 4 Executive Order 13224 Sanctioning Terrorism-Supporting Entities ......................................... 5 Executive Orders Sanctioning Iran’s Involvement in Iraq and Syria ........................................ 5 Ban on U.S. Trade and Investment with Iran .................................................................................. 6 What U.S.-Iran Trade Is Allowed or Prohibited? ................................................................ 6 Application to Foreign Subsidiaries of U.S. Firms ............................................................. 8 Sanctions on Iran’s Energy Sector ................................................................................................... 9 The Iran Sanctions Act, Amendments, and Its Applications ..................................................... 9 Key Sanctions “Triggers” Under ISA ............................................................................... 10 Mandate and Time Frame to Investigate ISA Violations .................................................. 14 Interpretations and Administration of ISA and Related Laws .......................................... 16 Oil Export Sanctions: Section 1245 of the FY2012 NDAA Sanctioning Transactions with Iran’s Central Bank ...................................................................................................... 19 Implementation: Exemptions Issued ................................................................................. 20 Foreign Exchange Reserves “Lock Up” Provision of ITRSHRA ..................................... 20 Weapons of Mass Destruction, Missile, and Conventional Arms Sanctions ................................. 21 Iran-Iraq Arms Nonproliferation Act and Iraq Sanctions Act ................................................. 22 Anti-Terrorism and Effective Death Penalty Act of 1996 ....................................................... 23 Provision of the Iran Sanctions Act ......................................................................................... 23 Iran-North Korea-Syria Nonproliferation Act ......................................................................... 23 Executive Order 13382 on Proliferation-Supporting Entities ................................................. 24 Foreign Aid Restrictions for Suppliers of Iran ........................................................................ 25 Sanctions on “Countries of Diversion Concern” ..................................................................... 26 Financial/Banking Sanctions ......................................................................................................... 26 Targeted Financial Measures ................................................................................................... 26 Settlements Paid by Banks for Illicit Iran-Related Transactions ...................................... 26 Ban on Iranian Access to the U.S. Financial System ........................................................ 27 CISADA: Sanctioning Foreign Banks That Conduct Transactions with Sanctioned Iranian Banks ....................................................................................................................... 28 Implementation of Section 104: Sanctions Imposed ......................................................... 28 Iran Designated a Money-Laundering Jurisdiction/FATF ....................................................... 29 Divestment/State-Level Sanctions ................................................................................................. 29 Sanctions and Sanctions Exemptions to Support Democratic Change/Civil Society in Iran ........ 30 Expanding Internet and Communications Freedoms .............................................................. 30 Countering Censorship of the Internet: CISADA, E.O. 13606, and E.O. 13628 .............. 30 Laws and Actions to Promote Internet Communications by Iranians ............................... 31 Measures to Sanction Human Rights Abuses and Promote the Opposition ............................ 32 U.N. Sanctions ............................................................................................................................... 33 Congressional Research Service Iran Sanctions Sanctions Relief since 2014 .................................................................................................... 34 Sanctions Eased by the JPA .............................................................................................. 35 Sanctions Easing Under the JCPOA ................................................................................. 36 International Implementation and Compliance ............................................................................
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