Search Penny Hill Press

Thursday, July 22, 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. view is that sanctions, particularly those targeting Iran's energy sector that provides about 80% of government revenues, might reduce Iran's ability to support its WMD and terrorism support activities. 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. U.S. sanctions are broader than those imposed by the United Nations - restricting U.S. trade with and investment in Iran, prohibiting U.S. foreign aid to Iran, and requiring 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).

In an effort to exploit Iran's dependence on imports of gasoline, in the 111th Congress, H.R. 2194 (signed into law on July 1 – P.L. 111-195) adds 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 new law also adds a broad range of other measures further restricting the already limited amount of U.S. trade with Iran and restricting some trade with countries that allow WMD-useful technology to reach Iran. The enactment of this law 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 sanctions on Iran's energy or broad financial sector.

The effectiveness of U.S. and international sanctions on Iran, by most accounts, is unclear. Nor is there certainty about the degree to which the new U.N. and U.S. sanctions enacted in 2010 will affect Iran's economy and decisionmaking process. Even though no firms have been sanctioned under ISA, that law, when coupled with broader factors, appears to have caused some international firms to refrain from investing in energy projects in Iran. Partly as a consequence, Iran's oil production has fallen slightly to about 3.9 million barrels per day, from over 4.1 million barrels per day several years ago, although Iran now has small natural gas exports that it did not have before Iran opened its fields to foreign investment in 1996. And, U.S. and international sanctions have contributed to recent decisions by numerous major international firms to end their business pursuits in Iran. However, when measured against the overall strategic objectives of the sanctions, there is a consensus that U.S. and U.N. sanctions have not, to date, caused a demonstrable shift in Iran's commitment to its nuclear program. Possibly in an effort to accomplish the separate objective of promoting the cause of the domestic opposition in Iran, the Obama Administration and Congress are increasingly emphasizing 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: July 12, 2010
Number of Pages: 50
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.