Sanctions

What are sanctions?

  • Sanctions are “policies of an economic nature adopted by one government to induce policy changes by another government,” including “boycotts, embargos, subsidies, imposition of tariffs, quotas, or other import and export controls, denial of licenses, most-favored-nation treatment, national treatment, membership in a trade agreement, suspension of aid or loans, freezing or seizure of assets, and blacklisting.” (Globalization: Encyclopedia of Trade, Labor, and Politics)

What is the history of sanctions against Iran?

  • The United States has imposed economic sanctions on Iran since the 1979 hostage crisis and completely banned the import of Iranian goods in 1987.
  • The U.S., EU, and UN have been imposing escalating rounds of sanctions against Iran since the mid-2000s to coerce the Iranian government to live up to its obligations under the Nuclear Nonproliferation Treaty, IAEA safeguards agreements, and UN Security Council Resolutions—and to prevent the country from acquiring a nuclear weapon.
  • Sanctions imposed since 2010 target Iran’s ability to sell crude oil on the world market, to import refined petroleum products, and make it more difficult for Iran’s Central Bank and other financial institutions to engage in transactions abroad.

What impact have sanctions had?

  • Sanctions have caused significant harm to Iran’s economy. In particular:
    • They contributed to a significant drop in Iranian oil exports, from 2.5 million barrels per day in 2011 to about 1 million barrels per day in 2013. As a result, Iran’s revenue from oil exports has declined 55% from its peak in 2011.
    • They played a role in the steep drop in the value of Iran’s currency against the dollar and in the steep increase in consumer prices.
    • However, since the election of President Rouhani in June, the Iranian rial has strengthened by 20% against the dollar and Tehran’s stock market is up 65%.

What sanctions relief did the P5+1 agree to provide in the Nov. 24 interim agreement?

  • According to U.S. estimates, the P5+1 agreed to provide $6­–7 billion in total sanctions relief—$4.2 billion by giving Iran access to oil revenue frozen in foreign banks, plus $1.8–2.8 billion by temporarily pausing other sanctions measures.

Specifically, over the next six months the P5+1 has agreed to:

  • Pause efforts to further reduce Iran’s crude oil sales, enabling Iran’s current customers to purchase their current average amounts of crude oil;
  • Suspend sanctions on Iran’s petrochemical exports, auto industry, gold and precious metals, and on associated services;
  • License the supply and installation of spare parts for the Iranian civil aviation industry;
  • Impose no new nuclear-related UN Security Council, EU, or U.S. sanctions (provided the U.S. Congress does not override a presidential veto);
  • Give Iran access to oil revenues held in foreign bank accounts if those funds are used to pay the UN, to pay tuition fees for Iranian students studying abroad, or to facilitate humanitarian trade in food and medicine for the Iranian people.

Has Rouhani's election made an impact on the Iranian economy?

Yes. While the most stringent sanctions remain in place, Rouhani's election and subsequent actions have generally provided a new sense of optimism in Iran. As economist Djavad Salehi-Isfahani notes, Iran's new economic team in Rouhani's government is "much more competent" than its predecessors. This new team has already pursued an ambitious agenda, including addressing the country's ballooning deficit and extensive subsidies. The impact, perhaps best demonstrated in the graph below, has been significant--the value of Iran's stock exchange has nearly doubled since Rouhani's election.

Iran Stock Exchange

What do the Iranian people think about sanctions?

  • Over 85% of Iranians say that sanctions have hurt their personal livelihoods, including 50% who say that sanctions have hurt them personally great deal. (Gallup, 11/6/13).
  • Nonetheless, 68% of Iranians still believe that Iran should develop nuclear power; 56% say for non-military purposes, while 34% say for military purposes. (Gallup, 10/14/13)
  • 46% of Iranians blame the U.S. for the sanctions, while 13% believe that their own government is primarily responsible. (Gallup, 11/6/13).
  • Half of Iranians have not had enough money to pay for adequate food or shelter within the past year; 34% say that their standard of living is deteriorating. (Gallup, 7/1/13)

What types of sanctions have the U.S. imposed against Iran?

 

US sanctions by Category

Legal authority

Ban on US trade and investment

Executive Order 12959 (1995)

Sanctions on foreign firms that do business with Iran’s energy sector or that provide it with refined petroleum products

Iran Sanctions Act (1996), CISASA (2010), and other laws and executive orders

Ban on foreign assistance

Prohibited under Foreign Assistance Act, §620A (1961)

Ban on arms exports

Ineligible under several laws

Restriction on exports of “dual-use items”

Export Administration Act, §6(j) (1979);

Arms Export Control Act (1976)

Sanctions against international lending

International Financial Institutions Act, §1621 (1977)  

Sanctions against foreign firms that sell WMD-related technology to Iran

Several laws and regulations

Ban on transactions with terrorism-supporting entities

Executive Order 13224 (2001)

Travel ban on certain named Iranians

CISADA (2010)

Restrictions on Iranian shipping

Executive Order 13382 (2005)

Banking sanctions

CISADA, Executive Orders

13224 and 13382, FY2012 Defense Authorization Act

Timeline of U.S., EU, and UN sanctions since 2005

Date

Authority

Description

June 29, 2005

U.S. Executive Order 13382

Granted president authority to freeze assets of WMD proliferators and their supporters. Sanctioned individuals connected to Iranian nuclear program.

Sep. 30, 2006

Renewal of Iran Sanctions Act (ISA) of 1996

Extended ISA for five years (replaced by CISADA in 2010). Prohibited U.S. companies from investing more than $20 million/year in Iran’s energy sector.

Dec. 28, 2006

UNSCR 1737

Prohibited supply of nuclear technology or related equipment to Iran. Froze assets of select individuals involved in nuclear program.

Mar. 24, 2007

UNSCR 1747

Embargoed Iranian weapons exports. Barred future bank loans to Iran and froze assets of select IRGC members.

Oct. 25, 2007

U.S. Executive Order 13382 (expansion)

Sanctioned Bank Mellat, Bank Melli, and IRGC. Dubbed IRGC “proliferator of WMD.”

Mar. 3, 2008

UNSCR 1803

Banned sale of dual-use items to Iran and authorized inspections of Iran-bound shipments. Sanctioned 12 additional companies and 13 individuals.

June 9, 2010

UNSCR 1929

Imposed arms embargo on Iran. Expanded sanctions on nuclear and banking sectors and individuals connected to nuclear program.

June 17, 2010

EU energy sanctions (1)

Banned European investment in or assistance with Iranian oil or gas industry. Prohibited providing insurance and re-insurance to government entities.

July 1, 2010

U.S. Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA)

Consolidated previous sanctions. Added sanctions on U.S. companies or individuals that provide gasoline, or associated equipment/services (including pipelines), to Iran’s energy sector.

Nov. 10, 2010

U.S. ban on “U-turn” transactions

Banned US companies from conducting transactions with Iran through third-parties.

Dec. 31, 2011

Section 1245, US National Defense Authorization Act (NDAA)

Sanctioned financial institutions conducting transactions with Central Bank or other previously blocked Iranian banks. Came into force 6/28/2012.

Feb. 6, 2012

US Executive Order 13599

Seized property of Iranian government and Central Bank in the United States.

Mar. 17, 2012

SWIFT sanctions

Global financial messaging system essential for bank transfers shut off access to Iranian banks, including Central Bank.

April 23, 2012

Executive Order

EO freezed the assets of persons who facilitate Iran’s ability to commit human rights abuses by disrupting computers and networks.

May 1, 2012

Executive Order

EO targets persons engaging in deceptive practices to obscure or withhold information about Iranian links to financial transactions.

July 1, 2012

EU energy sanctions (2)

Implemented oil embargo and froze Central Bank assets within the EU. Barred companies from insuring Iranian oil shipments.

July 12, 2012

NITC  and “front” company sanctions

U.S. sanctioned National Iranian Tanker Co., including 27 of its entities and 58 tankers, and 11 front companies in Europe, SE Asia, and UAE.

July 30, 2012

U.S. Executive Order; additional sanctions under CISADA

EO banned foreign entities, using any payment mechanism, from transactions facilitating purchase of Iranian oil, petroleum products or petrochemicals. CISADA sanctions targeted one Chinese and one Iraqi bank for conducting transactions with previously-sanctioned Iranian banks.

October 9, 2012

U.S. Executive Order

EO banned non-U.S. entities owned or controlled by U.S. persons from engaging in economic activity with Iran to the same extent that U.S. persons are so prohibited from doing so under US law and regulation.

July 1, 2013

U.S. Executive Order

EO discourages non-U.S. persons from doing business in Iran, particularly with Iran’s governing elite and critical industrial sectors, by enabling the government to freeze that person’s US-based assets.

 

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