Search Penny Hill Press

Thursday, June 30, 2011

Iran Sanctions

Kenneth Katzman
Specialist in Middle Eastern Affairs

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. However, there is not a consensus on how effective the sanctions are on core Western goals. In January 2011, Secretary of State Clinton claimed that sanctions have accomplished a core objective of slowing Iran’s nuclear program. But, nuclear talks in December 2010 and in January 2011 made virtually no progress, suggesting that Iran’s leaders do not feel sufficiently pressured by sanctions to offer major concessions to obtain a nuclear deal.

Because so many major economic powers have imposed sanctions on Iran, the sanctions are, by all accounts, harming key sectors of Iran’s economy by reinforcing the effects of Iran’s economic mismanagement. Among other indicators, there have been a stream of announcements by major international firms since early 2010 that they are exiting the Iranian market. 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. In addition, Iran’s overall ability to limit the effects of sanctions has been aided by relatively high oil prices in mid-2011.

The United States and its allies appear to agree that sanctions should continue to target Iran’s energy sector and should try to isolate Iran from the international financial system. The energy sector provides about 80% of government revenues. Iran’s large trading community depends on financing to buy goods from the West and sell them inside Iran. 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 those sectors. These national 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 mandated U.S. penalties against foreign companies that invest in Iran’s energy sector. In the 111
th Congress, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA, P.L. 111-195) expanded ISA to sanction Iran’s ability to obtain or make gasoline, for which Iran depends heavily on imports. Sales to Iran of gasoline have fallen dramatically since.

CISADA also contained a broad range of other measures further restricting the already limited amount of U.S. trade with Iran. It also contained provisions to promote the cause of the domestic opposition in Iran by sanctioning Iranian officials who are human rights abusers and facilitating the democracy movement’s access to information technology—a trend that is increasingly taking hold in the Obama Administration and in partner countries. The increasing emphasis on human rights-related laws and sanctions reflect a growing belief that there are few new economic sanctions that can be successfully agreed on or imposed. In the 112
th Congress, legislation has been introduced to enhance both the economic sanctions and human rights-related provisions of CISADA and other laws. 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 22, 2011
Number of Pages: 70
Order Number: RS20871
Price: $29.95

Follow us on TWITTER at or #CRSreports

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.