Search Penny Hill Press

Friday, July 9, 2010

Iran Sanctions

Kenneth Katzman
Specialist in Middle Eastern Affairs

Numerous U.S. laws and regulations have been adopted to try to slow Iran's weapons of mass destruction (WMD) programs and curb its support for militant groups. The U.S. belief is that sanctions, particularly those targeting Iran's energy sector, which provides about 80% of government revenues, can reduce Iran's ability to support its WMD programs and generate domestic pressure within Iran to adopt policies more acceptable to the international community. Some United Nations sanctions have been imposed since 2006, with many of those same objectives, although more narrowly targeted to avoid harming the civilian population of Iran. The wide range of U.S. sanctions restrict U.S. trade with and investment in Iran, prohibit U.S. foreign aid to Iran, and require the United States to vote against international lending to Iran. Several laws and executive orders authorize the imposition of U.S. penalties against foreign companies that do business with Iran, as part of an effort to persuade foreign firms to choose between the Iranian market and the much larger U.S. market. U.S. efforts to curb international energy investment in Iran's energy sector began in 1996 with the Iran Sanctions Act (ISA), but no firms have been sanctioned under it. Still, ISA, when coupled with broader factors, may have influenced some international firms' decisions to refrain from investing in energy projects in Iran.

In an effort to exploit Iran's dependence on imports of gasoline, in the 111th Congress, H.R. 2194 (which awaits action on a conference report submitted June 23, 2010), would add as ISA violations selling refined gasoline to Iran; providing shipping insurance or other services to deliver gasoline to Iran; or supplying equipment to or performing the construction of oil refineries in Iran. The conference report adds a broad range of other measures further restricting the already limited amount of U.S. trade with Iran. The June 22, 2010, conference agreement on H.R. 2194 follows the June 9, 2010, adoption of U.N. Security Council Resolution 1929, which imposes a ban on sales of heavy weapons to Iran and sanctions many additional Iranian entities affiliated with its Revolutionary Guard, but does not mandate the stronger measures sought by the United States such as sanctions on Iran's energy or broad financial sector.

The effectiveness of U.S. and international sanctions on Iran, by most accounts, is unclear. Iran's oil production has fallen to about 3.8 million barrels per day, from over 4 million barrels per day several years ago, although Iran now has a gas export sector that it did not have before Iran opened its fields to foreign investment in 1996. Some Iranian economic sectors have clearly been harmed by sanctions, but any such effects have not, to date, caused a demonstrable shift in Iran's commitment to its nuclear program. The sanctions have, to some extent, fostered a growing perception that Iran is an international outcast, demonstrated by the announcement over the past two years by several major international firms that they are ending their business pursuits in Iran. To try to further Iran's isolation and strengthen the domestic opposition, the Obama Administration and Congress appear to be increasingly emphasizing further measures that would sanction Iranian officials who are human rights abusers, facilitate the democracy movement's access to information, and express outright U.S. support for the opposition. For a broader analysis of policy on Iran, see CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman.

Date of Report: June 23, 2010
Number of Pages: 47
Order Number: RS20871
Price: $29.95

Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.