Posted by: mulrickillion | January 4, 2012

CRS Report for Congress — Iran Sanctions

January 3, 2012 —

by Kenneth Katzman, Congressional Research Service (CRS),

Iran Sanctions (PDF), Dec 2, 2011 —

CRS Report for Congress

Source: Congressional Research Service (via U.S. Department of State Foreign Press Center)

[Summary]:

There is broad international support for imposing progressively strict economic sanctions on Iran to try to compel it to verifiably confine its nuclear program to purely peaceful uses. Many U.S. and international officials appear to agree that the sanctions have not, to date, hurt Iran’s economy to the point at which the Iranian leadership feels pressured to accommodate core Western goals on Iran’s nuclear program. As of September 2011, Iran’s leaders have stated interest in new proposals that could form the basis of revived nuclear talks, although prospects for new talks have been set back by diplomatic rifts between Iran and several European countries in November 2011.

Whether or not core goals have yet been accomplished, the United States and its allies appear to agree that sanctions might yet succeed and that pressure should be added to further weaken Iran’s energy sector and isolate Iran from the international financial system. The energy sector provides nearly 70% of government revenues. Iran’s large trading community needs financing to buy goods from the West and sell them inside Iran. There have been a stream of announcements by major international firms since early 2010 that they are exiting or declining to undertake further work in the Iranian market, particularly the energy sector, taking with them often irreplaceable expertise. Partly as a result, Iran’s oil production has remained relatively steady at about 4.1 million barrels per day, defying Iranian efforts to increase production. Iran has small amounts of natural gas exports; it had none at all before Iran opened its fields to foreign investment in 1996. Several countries, particularly India, have delayed billions of dollars in oil payments for Iran because payments mechanisms have been disrupted by sanctions. However, Iran’s overall ability to limit the effects of sanctions has been aided by relatively high oil prices in 2011.

What has generated U.S. optimism about the eventual success of sanctions has been the broadening of international support for and compliance with them. Using the authorities of U.N. Security Council Resolution 1929, adopted June 9, 2010, measures adopted since mid-2010 by the United Nations Security Council, the European Union, and several other countries target the key energy and financial sectors of Iran. These measures complement the numerous U.S. laws and regulations that have long sought to try to pressure Iran, particularly the Iran Sanctions Act (ISA)—a 1996 U.S. law that mandates U.S. penalties against foreign companies that invest in Iran’s energy sector. The application of that law was broadened by the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA, P.L. 111-195) as well as by Executive Order 13590 issued November 21, 2011. The issuing of that Order was accompanied by a Treasury Department warning, under Section 311 of the USA Patriot Act, that conducting transactions with the Iranian financial system constitutes a risk of facilitating Iranian proliferation and terrorism financing activity.

The prospects for additional international sanctions have been heightened in late 2011 by U.S. revelations in October 2011 of a purported Iranian plot to assassinate the Saudi Ambassador to the United States, an International Atomic Energy Agency (IAEA) report on Iran’s possible efforts to design a nuclear explosive device, and diplomatic and financial rifts with Britain, which caused the storming of the British Embassy in Tehran on November 30, 2011. In the 112th Congress, legislation, such as S. 1048 and H.R. 1905, would enhance both the economic sanctions and human rights-related provisions of CISADA and other laws. An amendment to a Senate FY2012 defense authorization bill would sanction foreign banks that do business with Iran’s Central Bank. Some countries and experts also seek a broad or partial embargo on Iran’s sale of oil, to reinforce the sanctions effects discussed above. For a broader analysis of policy on Iran, see CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman.

CRS — Iran Sanctions (12/2/11) « Full Text Reports…

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