Iran Sanctions

Kenneth Katzman
Specialist in Middle Eastern Affairs

Increasingly strict sanctions on Iran—which target primarily Iran’s key energy sector as well as its ability to access the international financial system—have harmed Iran’s economy, but not to the point where key Iran leaders have been compelled to reach a compromise with the international community on Iran’s nuclear program. And, the strategic effects of sanctions might be abating as Iran adjusts to them economically and advertises the adverse humanitarian effects.

• Oil exports fund nearly half of Iran’s government expenditures, and Iran’s oil exports have declined to about 1.25 million barrels—a halving from the 2.5 million barrels per day Iran exported during 2011. The causes of the drop have been a European Union embargo on purchases of Iranian crude oil and decisions by several other Iranian oil customers to avoid U.S. sanctions by substantially reducing purchases of Iranian oil. To date, 20 of Iran’s oil customers have received and maintained an exemption from U.S. sanctions for doing so. 
• The loss of revenues from oil, coupled with the cut-off of Iran from the international banking system, has caused a sharp drop in the value of Iran’s currency, the rial, and caused inflation to increase to over 50%, according to many experts. Iran’s economy shrank slightly from 2012-2013 and will likely shrink again during 2013. There have also been unintended consequences including a shortage of some advanced Western-made medicines. 
• Iran has found some ways to mitigate the economic and political effects of sanctions. Government-linked entities are creating front companies and making increased use of barter trade. Iranian traders are using informal banking exchange mechanisms and, benefitting from the fall in the value of Iran’s currency, increasing non-oil exports such as agricultural goods, minerals, and industrial goods. Affluent Iranians are investing in hard assets such as real estate. 

Sanctions have not compelled Iran to change its position on its nuclear program, but sanctions may be slowing Iran’s nuclear and missile programs by hampering Iran’s ability to obtain needed foreign technology. However, Department of Defense and other assessments indicate that sanctions have not stopped Iran from developing some new weaponry indigenously. Iran is also judged not complying with U.N. requirements that it halt any weapons shipments outside its borders, particularly for providing arms to the embattled Assad government in Syria. And, sanctions do not appear to have altered Iran’s repression of dissent or its efforts to monitor public use of the Internet.

Some in Congress believe that economic pressure on Iran needs to increase. In the 112th Congress, the Iran Threat Reduction and Syria Human Rights Act of 2012 (P.L. 112-158) made sanctionable the shipping of Iranian crude oil, and it enhanced human rights-related provisions of previous Iran-related laws. A provision of the FY2013 National Defense Authorization Act (P.L. 112-239) sanctions transactions with several key sectors of Iran’s economy. A bill in the 113th Congress, H.R. 850, ordered to be reported out of the House Foreign Affairs Committee on May 22, 2013, expands the range of Iranian economic sectors subject to sanctions, and would sanction banks that exchange Iran’s hard currency abroad. 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 13, 2013
Number of Pages: 82
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Armed Conflict in Syria: U.S. and International Response

Jeremy M. Sharp
Specialist in Middle Eastern Affairs

Christopher M. Blanchard
Specialist in Middle Eastern Affairs

The popular-uprising-turned-armed-rebellion in Syria is in its third year, and seems poised to continue, with the government and a bewildering array of militias locked in a bloody struggle of attrition. The Obama Administration has signaled a pending expansion of U.S. civilian and military assistance to the opposition in the wake of the U.S. intelligence community’s conclusion that President Bashar al Asad’s forces used chemical weapons in limited attacks in recent months. U.S. officials and many analysts have asserted that President Asad and his supporters will be forced from power, but few offer specific, credible timetables for a resolution to the crisis. Further escalation in fighting or swift regime change could jeopardize the security of chemical and conventional weapons stockpiles, threaten minority groups, or lead to wider regional conflict.

Opposition forces are formidable, but regime forces, backed by Hezbollah fighters and Iranian and Russian material support, have initiated successful tactical counteroffensives in recent weeks. The Syrian military continues to use air strikes, artillery, and pro-government militias in punishing attacks on areas where rebels operate. Some members of Syria’s Sunni Arab majority and of ethnic and sectarian minority groups view the conflict in communal, zero-sum terms. U.S. officials believe that fighting would likely continue even if Asad were toppled.

Amid extensive damage to major urban areas and reports attributing war crimes to government and opposition forces, the fighting has created a regional humanitarian emergency. Some estimates suggest more than 90,000 Syrians have been killed since unrest began in March 2011. As of June 14, more than 1,638,102 refugees had fled Syria amid United Nations projections the total may reach 3.5 million by years end. According to U.N. estimates, as many as 4.25 million Syrians may be internally displaced. U.N. agencies have launched their largest ever humanitarian assistance appeal– seeking $4.4 billion for the Syria crisis in 2013. The United States has provided more than $513 million in humanitarian assistance to date.

President Obama and his Administration have been calling for Asad’s resignation since August 2011, and have pressed the United Nations Security Council to condemn the Syrian government. The United States has recognized the National Coalition of Revolution and Opposition Forces (SC) as the legitimate representative of the Syrian people and has provided nonlethal assistance to the Coalition and an affiliated Supreme Military Council (SMC). The Obama Administration believes that a negotiated political settlement is required and has prepared military plans to secure Syria’s stockpiles of chemical weapons, if necessary.

Some observers advocate for more robust civil and military aid to the SC and SMC as a means of forcing the Asad regime to the negotiating table. Opponents of this approach argue that making opposition groups more formidable could intensify the fighting and risks empowering extremists. Some armed opposition factions, including powerful Islamist coalitions, reject negotiation.

After two years of unrest and violence, the central question for policy makers remains how best to bring the conflict in Syria to a close before the crisis consigns the region to one of several destructive and destabilizing scenarios. The human toll of the fighting, and the resulting political, ethnic, and sectarian polarization, all but guarantee that political, security, humanitarian, and economic challenges will outlast Asad and keep Syria on the U.S. agenda for years to come.


Date of Report: June 14, 2013
Number of Pages: 59
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Israel: Background and U.S. Relations

Jim Zanotti 
Specialist in Middle Eastern Affairs

Since Israel’s founding in 1948, successive U.S. Presidents and many Members of Congress have demonstrated a commitment to Israel’s security and to maintaining close U.S.-Israel defense, diplomatic, and economic cooperation. U.S. and Israeli leaders have developed close relations based on common perceptions of shared democratic values and religious affinities. U.S. policymakers often seek to determine how regional events and U.S. policy choices may affect Israel’s security, and Congress provides active oversight of executive branch dealings with Israel and the broader Middle East. Some Members of Congress and some analysts criticize what they perceive as U.S. support for Israel without sufficient scrutiny of its actions. Israel is a leading recipient of U.S. foreign aid and is a frequent purchaser of major U.S. weapons systems. The United States and Israel maintain close security cooperation—predicated on a U.S. commitment to maintain Israel’s “qualitative military edge” over other countries in its region. The two countries signed a free trade agreement in 1985, and the United States is Israel’s largest trading partner. For more information, see CRS Report RL33222, U.S. Foreign Aid to Israel, by Jeremy M. Sharp.

Israel has many regional security concerns. Israeli leaders calling for urgent international action against Iran’s nuclear program hint at the possibility of a unilateral military strike against Iran’s nuclear facilities. In addition to concerns over Iran, Israel’s perceptions of security around its borders have changed since early 2011 as several surrounding Arab countries—including Egypt and Syria—have experienced political upheaval. Israel has shown particular concern about threats from Hezbollah and other non-state groups in ungoverned or minimally governed areas in Syria, Lebanon, and Egypt’s Sinai Peninsula, as well as from Hamas and other Palestinian militants in the Gaza Strip.

Israel’s political impasse with the Palestinians on core issues in their longstanding conflict shows little or no sign of abating. Since the end of the 1967 Arab-Israeli War, Israel has militarily occupied and administered the West Bank, with the Palestinian Authority exercising limited selfrule in some areas since 1995. Israeli settlement of that area, facilitated by successive Israeli governments, has resulted in a population of approximately 500,000 Israelis living in residential neighborhoods or settlements in the West Bank (including East Jerusalem). These settlements are of disputed legality under international law. Israel considers all of Jerusalem to be the “eternal, undivided capital of Israel,” but Palestinians claim a capital in East Jerusalem and some international actors’ advocate special political classification for the city or specific Muslim and Christian holy sites. Although Israel withdrew its permanent military presence and its settlers from the Gaza Strip in 2005, it still controls most access points and legal commerce to and from the territory.

Despite its unstable regional environment, Israel has developed a robust diversified economy and a vibrant democracy. Recent discoveries and exploitation of offshore natural gas raise the prospect of a more energy-independent future, while economic debates focus largely on cost-ofliving and income and labor distribution issues. Israel’s demographic profile has evolved in a way that appears to be affecting its political orientation. Along with secular and nationalist Jews from various ethnic backgrounds, Jewish ultra-Orthodox, Russian-speaking, and Arab citizens significantly influence societal debates. The government formed by Prime Minister Binyamin Netanyahu in March 2013 features a set of coalition partners that is different from the previous government, largely due to electoral gains on socioeconomic issues by new national leaders and possible future prime ministerial candidates Yair Lapid and Naftali Bennett.


Date of Report: June 12, 2013
Number of Pages: 44
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Iraq: Politics, Governance, and Human Rights

Kenneth Katzman
Specialist in Middle Eastern Affairs

Ten years after the March 19, 2003 U.S. military intervention to oust Saddam Hussein’s regime in Iraq, increasingly violent sectarian divisions are undermining the fragile stability left in place after the U.S. withdrawal from Iraq. Sunni Arab Muslims, who resent Shiite political domination and perceived discrimination, are escalating their political opposition to the government of Prime Minister Nuri al-Maliki through demonstrations as well as violence. Iraq’s Kurds are increasingly aligned with the Sunnis, based on separate disputes with Maliki over territorial, political, and economic issues. The Shiite faction of Moqtada Al Sadr has been leaning to the Sunnis and Kurds, and could hold the key to Maliki’s political survival. Adding to the schisms is the physical incapacity of President Jalal Talabani, a Kurd who has served as a key mediator but who suffered a stroke in mid-December 2012 and remains outside Iraq. The rifts impinged on provincial elections on April 20, 2013 and could affect national elections for a new parliament and government scheduled for in 2014. Maliki is expected to seek to retain his post in that vote.

The violent component of Sunni unrest is spearheaded by the Sunni insurgent group Al Qaeda in Iraq (AQ-I) as well as groups linked to the former regime of Saddam Hussein. These groups, emboldened by the Sunni-led uprising in Syria, are conducting attacks against Shiite neighborhoods and Iraqi Security Force (ISF) members with increasing frequency and lethality. The attacks appear intended to reignite all-out sectarian conflict and provoke the fall of the government. As violence escalates, there are concerns whether the 700,000 person ISF can counter it without U.S. troops to provide direct support.

U.S. forces left in December 2011 in line with a November 2008 bilateral U.S.-Iraq Security Agreement. Iraq refused to extend the presence of U.S. troops in Iraq, seeking to put behind it the period of U.S. political and military control and arguing that the ISF could handle violence on its own. Since the U.S. pullout, many observers and some in Congress have asserted that U.S. influence over Iraq has ebbed significantly—squandering the legacy of U.S. combat deaths and funds spent on the intervention. Program components of what were to be enduring, close security relations—U.S. training for Iraq’s security forces through an Office of Security Cooperation— Iraq (OSC-I) and a State Department police development program—have languished in part because Iraqi officials perceive the programs as indicators of residual U.S. tutelage. The U.S. civilian presence in Iraq has declined from about 17,000 to about 10,500 and is expected to fall to 5,500 by the end of 2013.

Although recognizing that Iraq wants to rebuild its relations in its immediate neighborhood, the Administration and Congress seek to prevent Iraq from falling under the sway of Iran, with which the Maliki government has built close relations. Apparently fearing that a change of regime in Syria will further embolden the Iraqi Sunni opposition, Maliki has joined Iran in opposing U.S. and other country calls for Syrian President Bashar Al Assad to leave office. However, the legacy of Iran-Iraq hostilities, and Arab and Persian differences, limit Iranian influence among the Iraqi population. Another limitation on Iranian influence is Iraq’s effort to reestablish its historic role as a major player in the Arab world. Iraq took a large step toward returning to the Arab fold by hosting an Arab League summit on March 27-29, 2012, and has substantially repaired relations with Kuwait, the state that Saddam Hussein invaded and occupied in 1990.


Date of Report: June 3, 2013
Number of Pages: 53
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