News : Sanctions
- Published: Saturday, 28 May 2016
By INU Staff
INU - On Friday, Agence-France Presse reported that the International Atomic Energy agency had issued a report on the implementation of the Joint Comprehensive Plan of Action and had declared Iran to be in compliance with its obligations under the deal. If IAEA inspectors are to be believed, the Islamic Republic has undertaken no new construction at the Arak heavy water plant, which was previously capable of producing weapons-grade plutonium, and has not enriched uranium beyond the threshold set by the seven-nation agreement.
While the former conclusion is verifiable, the latter cannot be assumed to be free of controversy, considering the inadequacies that some critics of the deal see in its provisions for inspector access. Many of these critics believe that Iran has been left with the ability to pursue illicit nuclear activities in secret, at sites that have not been made known to inspectors. In fact, during the late stages of nuclear negotiations, the National Council of Resistance of Iran claimed to have uncovered evidence of an entirely separate uranium enrichment program at one such undisclosed site.
But the main controversy to be expected in the wake of the IAEA report deals not with its findings but with its possible consequences. The announcement of Iran’s compliance is sure to reinforce the Obama administration’s claims that it must continue to take extensive measures to prove US compliance with the financial aspects of the deal, and to help Iran to receive economic benefits from it, in order to preserve the deal over the long term.
On Wednesday, National Public Radio issued a report explaining how many members of Congress have come to the conclusion that the administration is going much too far in these endeavors. The report quoted Ed Royce, the chairman of the House Foreign Affairs Committee, as saying during that day’s committee hearing that the administration has been telling European business leaders that investment in Iran is not only permitted, but actually encouraged.
This apparent position has raised the ire of Royce and other congressmen who see such encouragement as indirect US financing of the world’s leading state sponsor of terrorism. Such critics are eager to not that Iran’s behavior has not changed in the wake of the nuclear deal’s implementation, and certainly not in a way that would justify expanded investment by the US or its allies.
Indeed, many recent reports have emphasized that European investors and the international banking system have largely remained wary of reentering the Iranian market. The Iranians themselves have tended to blame the US for this situation, with Supreme Leader Ali Khamenei saying that the slow pace of Iran’s recovery is evidence that the US is upholding the JCPOA “only on paper.” But while it is true that European banks and companies are responding to ongoing US sanctions and restrictions on the Islamic Republic, many of those restrictions are related to criteria that are universally imposed on nations that seek access to the US financial system.
This fact was discussed in a Senate Banking Committee hearing on Tuesday. In it, Massachusetts Senator Elizabeth Warren, who supports the nuclear deal, pointed out that potential investors are rightly concerned about Iran’s long history of money-laundering, corruption, and other trends that violate the aforementioned criteria. She went on to ask a former Treasury Department official what Iran could do to regain a place in the international banking system, instead of “blaming the United States” for the slow pace of its economic recovery. Elizabeth Rosenberg, now with the Center for a New American Security, responded by saying that first and foremost, “they could stop funding terrorism.”
But on Thursday, Townhall reported that far from stopping such terrorist financing, Iran recently resumed sending money to the Palestinian terrorist organization Islamic Jihad. After two years of strained relations, Islamic Jihad is now poised to receive 70 million dollars directly from the Iranian Revolutionary Guard Corps. Townhall attributes this to Iran’s “cash-flush” position following the nuclear deal and the Obama administration’s investment drive. It also notes that that drive has been ongoing despite the fact that the White House previously acknowledged the possibility of some unfrozen Iranian assets ending up in the hands of terrorist groups. The State Department subsequently acknowledged that Iran’s terrorist-financing activities have indeed remained “undiminished” in the wake of JCPOA implementation.
Congress Pushing Back Against the Administration
In light of these observations, it is no wonder that according to CNN, Wednesday’s Foreign Affairs Committee hearing focused mainly on committee members’ skepticism about the Obama administration’s approach to implementation and preservation of the nuclear agreement. That approach is widely believed to have a strong influence over the administration’s general Iran policy, including aspects that the administration itself had promised would remain unchanged by the JCPOA.
Those promises technically remain in place and have been reiterated by administration officials, who told the hearing that the US is still fully enforcing non-nuclear sanctions. But many congressmen feel that that insistence is undermined by Secretary of State John Kerry’s extensive communications with European investors over trade with Iran, as well as by the lack of new sanctions or executive action in response to Iranian provocations, including several post-JCPOA launches of nuclear-capable ballistic missiles.
Consequently, congressmen and other non-administration experts who participated in the hearing tended to insist upon measures that the administration claims to already be maintaining, such as barring Iran from the US financial system and from dollarized transactions. In recent weeks, a number of congressmen have accused the administration of angling to provide surreptitious access in order to improve Iran’s financial outcomes and help preserve the nuclear deal.
Critics of the Obama administration’s policies have apparently used these concerns to justify advocating for unilateral congressional action that would increase pressure on Iran and counteract any contrary efforts by the White House. This trend was highlighted once again in the Foreign Affairs Committee hearing, when Mark Dubowitz of the Foundation for Defense of Democracies said that Congress could target US dollar transactions with Iran that took place outside of the US financial system, without violating the nuclear deal.
While such measures remain theoretical, there are other places where Congress has already taken steps to push back against the administration’s Iran policy, although few if any of these efforts have ultimately been successful. Earlier in May, Arkansas Senator Tom Cotton attached an amendment to a US Energy Department budgetary bill, which would have prevented the US from repeating a recent agreement to purchase several tons of Iranian heavy water produced by the Arak facility.
Cotton characterized such an agreement as direct financing of the Iranian nuclear program, using US taxpayer money. But detractors described the amendment as a “poison pill,” which would have forced a presidential veto of the Energy Department budget, and Cotton’s effort was defeated by the Democratic minority. However, ABC News reported on Thursday that the effort had been repeated in the House, where the amendment passed by a vote of 251 to 168.
The veto threat makes it fairly likely that this amendment will be removed in final negotiations between the House and the Senate, but it is nonetheless indicative of the ongoing congressional efforts that are being made to compensate for what is perceived as a conciliatory executive policy on Iran.
Foreign and Non-Governmental Support
Naturally, Congress has support in this overall endeavor from entities outside of the US government. And while Congress is working to counteract the White House’s encouragement of European investment, some of these outside organizations are targeting those potential investors directly, to convey their concerns about both the financial and the moral risks of adding to Iran’s wealth.
On Friday, Trend reported that Iranian Foreign Minister Javad Zarif would be shortly embarking on a five-day tour of Europe, during which he would lead a trade delegation to Switzerland, Poland, Sweden, Latvia, and Finland. In response to this announcement, the organization United Against a Nuclear Iran sent a message directly to Finnish President Sauli Niinisto insisting that he avoid expanded economic relations with the Islamic Republic until such time as its behavior changes for the better.
Business Wire points out that UANI is headed by a number of former leading democrats and lawmakers, with Senator Joseph Lieberman acting as its president and ambassador Mark D. Wallace as its CEO. Both men attached their names to the message that said of Zarif’s visit and associated interchanges between Europe and the Islamic Republic, “This charm offensive cannot hide the fact that Iran remains the world’s leading state sponsor of terrorism, matched only by its deplorable human rights record.”
The various recent reports of sluggish foreign investment in Iran may indicate that these sorts of communications are having some effect. If so, they are presumably aided by the effects of what the Chicago Tribune described on Friday as a “rearguard action” by Saudi Arabia and other traditional adversaries of Iran, to make the latter’s recovery more difficult. The Tribune anticipates that this “clear cut” Saudi policy will likely result in a contest that lasts for some years. At the same time, it observes that the strength of that policy may be limited by the apparent fact that the Gulf Cooperation Council and other Saudi allies are not entirely on board with the strategy.
It is possible that this relative lack of commitment is partly attributable to the fact that the Saudi efforts contradict those of the Obama administration, which has been periodically urging reconciliation between the two bitter adversaries. President Obama himself has said that the Saudis and Iranians will need to “share the region.” But Iran’s critics generally do not see this as a realistic possibility, in light of what Al Arabiya described on Friday as the Iranian supreme leader’s self-perception as the savior of all Muslims.
The associated pursuit of Muslim unity under an Iranian banner is the driving force behind Iran’s various interventions in regions like Syria, Yemen, and Iraq. Al Arabiya explains that in addition to urging investment in the Islamic Republic, the Obama administration is deliberately looking the other way on these interventions and other activities, because it views Iran as a possible counterbalance to the Islamic State of Iraq and Syria and also to China and Russia. But this would seem to depend upon realistic prospects for Iran moderating its attitudes and behavior toward the west – something that critics have categorically rejected.
On Friday, The Conversation published an article explaining that even if the supposedly moderate Iranian presidency of Hassan Rouhani did want to pursue a policy of reconciliation with Western powers, it would simply not be able to do so. This is to say that despite the claim that moderate and reformist factions now constitute a 60 percent majority of the Iranian parliament, neither that body nor the presidency has sufficient power to override the enrichened hardline ideologies of the supreme leader and the Iranian Revolutionary Guard Corps/
According to The Conversation, this entities retail full control over foreign policy and also dominate the country’s economic structures, thereby making it extremely unlikely that foreign investment will be made mora palatable by economic reforms.