via Sanctions Law

There is a lot of stuff going on in the world of sanctions today. First, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued guidance both on the impact of Section 504 of the Iran Threat Reduction and Syria Human Rights [...]]]> by Erich Ferrari

via Sanctions Law

There is a lot of stuff going on in the world of sanctions today. First, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued guidance both on the impact of Section 504 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (“TRA”) as well as on the ability of foreign financial institutions to process certain transactions in relation to Iran without fear of exposure to U.S. secondary sanctions. While those topics are both incredibly important and germane to the subject matter of this blog, I will focus on another breaking story today: the finding by the EU General Court that Bank Saderat should be removed from the EU Sanctions List.

In making its decision the EU General Court found that the EU had failed to provide sufficient evidence that Bank Saderat was involved in Iran’s nuclear program. Just last week the court issued a similar ruling in respect to about Bank Mellat, which is also designated pursuant to EU sanctions. There are still numerous cases pending before the General Court in relation to EU sanctions which have been imposed against Iranian institutions, financial and otherwise. EU countries have two (2) months to appeal the decision, and walk a thin line in providing sufficient justification for their designation without compromising their intelligence sources on these banks.

When the EU General Court said that sanctions against Bank Mellat should be lifted I found it to be interesting. Now with the same recommendation being made in regards to the EU sanctions against Bank Saderat I am fascinated. Will the potential removals of EU sanctions portend a similar trend in the United States? Probably not. I don’t see OFAC or any other agency in the U.S. government doing anything but shrugging off the decision by the EU General Court. However, perhaps that is because there is no litigation pending before U.S. courts in relation to either Bank Mellat’s or Bank Saderat’s designation pursuant to U.S. sanctions.

While it is uncertain whether or not these two Iranian banks are contesting their designations pursuant to the administrative reconsideration process at 31 C.F.R. 501.807, a simple search on the PACER database reveals that neither of those banks are a party to litigation in any U.S. District Court. What would be interesting to see is whether these banks will seek their reconsideration under OFAC’s administrative reconsideration process. If they do, they almost certainly will be denied reconsideration, however, at that point they can file suit against the U.S. Department of the Treasury under the Administrative Procedure Act (“APA”). The APA allows final decisions of federal administrative agencies, like OFAC, to be reviewed at the U.S. District Court level to determine whether or not the agency’s ruling was arbitrary and capricious.

This would give an opportunity for the U.S. courts to review the designation in a similar fashion as the EU General Court has. It would be interesting to see how a U.S. court would rule on the issue of whether sufficient basis exists for these Iranian financial institutions’ designations, and if they did rule in the favor of the Iranian financial institutions, if the U.S. government would follow the ruling of the court or appeal the decision. In theory, these latest decisions by the EU General Court could lead to a domino effect in which sanctions on Iranian banks are called into question by courts of law both in the EU as well as the U.S. leading to the ultimate removal of those sanctions as a result of those decisions. While it may seem very unlikely, these decisions in theory could prove to be the beginning of a change in the way sanctions are imposed, or at a minimum in how evidence regarding designations is offered. Of course, all of that would depend on whether or not these banks would contest their designations in the U.S., a step we haven’t publicly seen yet. Again, this scenario is unlikely, however, the EU General Court’s recent decisions make it more probable.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrariassociatespc.com.

In last night’s vice presidential debate moderated by ABC News’s Martha Raddatz, Vice President Joe Biden and GOP nominee Paul Ryan (R-WI) focused extensively on the Iranian nuclear program and the US-Israeli response to it. Ryan sought to portray Obama Administration’s public disagreements with Israeli Prime Minister Benjamin Netanyahu as [...]]]> via Lobe Log

In last night’s vice presidential debate moderated by ABC News’s Martha Raddatz, Vice President Joe Biden and GOP nominee Paul Ryan (R-WI) focused extensively on the Iranian nuclear program and the US-Israeli response to it. Ryan sought to portray Obama Administration’s public disagreements with Israeli Prime Minister Benjamin Netanyahu as sending “mixed messages” to Tehran that would only encourage Iran to develop nuclear weapons, while Biden moved to attack the Congressman’s lack of foreign policy experience.

Ryan started off by reiterating the new Romney campaign red line: no nuclear weapons capability, a position endorsed by Congress and the Government of Israel:

RYAN: We cannot allow Iran to gain a nuclear weapons capability. Now, let’s take a look at where we’ve gone — come from. When Barack Obama was elected, they had enough fissile material — nuclear material to make one bomb. Now they have enough for five. They’re racing toward a nuclear weapon. They’re four years closer toward a nuclear weapons capability.

Ryan asserted that it has been the Republican Party, and not the White House, that has been the primary driver on the sanctions:

RYAN: Mitt Romney proposed these sanctions in 2007. In Congress, I’ve been fighting for these sanctions since 2009. The administration was blocking us every step of the way. Only because we had strong bipartisan support for these tough sanctions were we able to overrule their objections and put them in spite of the administration.

Imagine what would have happened if we had these sanctions in place earlier. You think Iran’s not brazen? Look at what they’re doing. They’re stepping up their terrorist attacks. They tried a terrorist attack in the United States last year when they tried to blow up the Saudi ambassador at a restaurant in Washington, D.C.

And talk about credibility? When this administration says that all options are on the table, they send out senior administration officials that send all these mixed signals.

The Vice President countered that the Republicans have been pushing too hard on sanctions that the rest of the world would refuse to support them:

BIDEN: It’s incredible. Look, imagine had we let the Republican Congress work out the sanctions. You think there’s any possibility the entire world would have joined us, Russia and China, all of our allies? These are the most crippling sanctions in the history of sanctions, period. Period.

When Governor Romney’s asked about it, he said, “We gotta keep these sanctions.” When he said, “Well, you’re talking about doing more,” what are you — you’re going to go to war? Is that what you want to do?

Biden also rounded on Ryan for the Romney campaign’s repeated suggestions that Obama is not serious about preventing Iran from acquiring a nuclear weapon should it choose to do so:

RYAN: We want to prevent war.

BIDEN: And the interesting thing is, how are they going to prevent war? How are they going to prevent war if they say there’s nothing more that we — that they say we should do than what we’ve already done, number one.

BIDEN: When my friend talks about fissile material, they have to take this highly enriched uranium, get it from 20 percent up, then they have to be able to have something to put it in. There is no weapon that the Iranians have at this point. Both the Israelis and we know — we’ll know if they start the process of building a weapon.

So all this bluster I keep hearing, all this loose talk, what are they talking about? Are you talking about, to be more credible — what more can the president do, stand before the United Nations, tell the whole world, directly communicate to the ayatollah, we will not let them acquire a nuclear weapon, period, unless he’s talking about going to war.

The two then clashed over Ryan’s (unsubstantiated) assertion that Iran is now “four years closer to a nuclear weapon”:

BIDEN: … they are not four years closer to a nuclear weapon.

RYAN: Of course they are.

BIDEN: They’re — they’re closer to being able to get enough fissile material to put in a weapon if they had a weapon.

RADDATZ: You [Biden] are acting a little bit like they [the Iranians] don’t want one.

BIDEN: Oh, I didn’t say — no, I’m not saying that. But facts matter, Martha. You’re a foreign policy expert. Facts matter. All this loose talk about them, “All they have to do is get to enrich uranium in a certain amount and they have a weapon,” not true. Not true.

They are more — and if we ever have to take action, unlike when we took office, we will have the world behind us, and that matters. That matters.

RADDATZ: What about [former Secretary of Defense] Bob Gates’ statement? Let me read that again, “could prove catastrophic, haunting us for generations.”

BIDEN: He is right. It could prove catastrophic, if we didn’t do it with precision.

In a wide-ranging interview, MSNBC’s Andrea Mitchell discussed Mitt Romney’s foreign policy speech with neoconservative Romney-adviser Dan Senor, challenging him over his intimation that the Obama administration lacked the will to increase sanctions on Iran two years ago:

SENOR: They talk about all these tough sanctions that they [...]]]> via Lobe Log

In a wide-ranging interview, MSNBC’s Andrea Mitchell discussed Mitt Romney’s foreign policy speech with neoconservative Romney-adviser Dan Senor, challenging him over his intimation that the Obama administration lacked the will to increase sanctions on Iran two years ago:

SENOR: They talk about all these tough sanctions that they put in place. The question is, why did they wait until 2011 and 2012 to put those sanctions in place in Iran? When Congress was pushing for tough sanctions on Iran in 2009 and 2010 –

MITCHELL: Dan, on that — on that, you know very well that –

SENOR: — the administration was fighting them every step of the way.

MITCHELL: Sir, you know very well –

SENOR: I’m sorry?

MITCHELL: That those were the unilateral — you know those were the unilateral sanctions on the central bank and the reason given by the [T]reasury officials, right or wrong; was that to do that level of sanctions would create an energy crisis at that time because there wasn`t enough other oil –

SENOR: So why — no, Andrea, come on.

MITCHELL: Let me finish the question.

SENOR: Andrea.

MITCHELL: Because I was reporting this in real time.

SENOR: OK. Fair enough.

MITCHELL: What about the multilateral sanctions that this administration achieved with the help of finally getting Russia and China on board from the United Nations which the Bush administration was never able to achieve because there was no understanding or no agreement from the U.N. that diplomacy was being given some time to work.

SENOR: It’s great that we got multilateral sanctions through the U.N. Security Council. Unfortunately the price we paid for getting those sanctions, for getting China and Russia to buy into those sanctions was that the central bank sanctions would not be included. Everyone agrees across the political divide in the United States who follow this issue closely that the central bank sanctions are the ones that have had the real bite.

The administration resisted efforts in Congress repeatedly to get those sanctions in place. Now you can cite, as they often do, the economic implications. It’s not clear to me why there were economic implications in 2009-2010 but there weren’t in 2011-2012, but they also said that it would undermine their diplomatic strategy. Their diplomatic strategy was reaching out to the ayatollahs in Iran with an outstretched hand, unconditional — unconditionally trying to get unconditional talks.

They were silent when there was a genuine protest movement in Iran that would have given political pressure on the regime. All these moments where those economic pressure or political pressure in 2009 and 2010 the administration did nothing because they believed there was this direct deal that they could get done with the — with the regime. It failed. It did not happen.

So it is important that today we have some sanctions in place that are having an impact. We’re simply saying imagine if those sanctions and the kind of political pressure that could be waged had been put in place earlier on, and to say that things are going fine just because the Iranian economy is in bad shape is just a sad statement of the state of affairs.

The goal is not to weaken the Iranian economy. The goal is to stop Iran’s nuclear program. Weakening its economy and weakening the regime politically are means.

MITCHELL: Dan –

SENOR: They are not results. There`s only one measurement that matters. And whether or not Iran is closer to the nuclear weapons program and today they are.

Presently, Senator Mark Kirk (R-IL), whose policies are closely associated with the neoconservative Foundation for the Defense of Democracies, is in fact now seeking a “broader ban [Congressional] for Iran central bank deals and “to blacklist entire energy sector of Iran,” Reuters reports.

Foreign Policy: Despite the treasury’s letter to the Senate expressing “the Administration’s strong opposition” to the proposed Menendez-Kirk amendment to a new Iran sanctions bill, it was passed in senate on Thursday with a unanimous vote. Included [...]]]> News and views related to U.S.-Iran relations from Nov. 29 – Dec. 2

Foreign Policy: Despite the treasury’s letter to the Senate expressing “the Administration’s strong opposition” to the proposed Menendez-Kirk amendment to a new Iran sanctions bill, it was passed in senate on Thursday with a unanimous vote. Included in this post by Josh Rogin is a “best-guess timeline” of the implementation of the Kirk-Menendez sanctions. Robert Mendendez also expressed his anger yesterday over the Obama administration’s criticism of measures which he claims he was encouraged to make.

Huffington Post: According to Trita Parsi, the attack against the British embassy in Tehran was not only an explicit message from the Iranians that they will not respond positively to pressure. It also signals the rise of hardline conservatives in the government who see no boundaries in their quest to undermine President Mahmoud Ahmadinejad:

The attack on the British embassy was not only illegal and disgraceful, it was also a sign of how statecraft in Iran has deteriorated over the past years as a result of internal bickering within the political elite. Key actors within the regime are willing to be take excessive risks on the international stage through reckless actions in order to score points in their petty domestic rivalries.

TIME: The former director of Israel’s national security council, retired Maj. Gen. Giora Eiland, tells an army radio station that the mysterious blast in Isfahan this week was “no accident”:

“There aren’t many coincidences,” he said,  ”and when there are so many events there is probably some sort of guiding hand, though perhaps it’s the hand of God.”

So given all those factors, with which many nonpartisan and military analysts agree, as well as concerns about an unintended slide from heated rhetoric to confrontation and war, why would a sober, thoughtful defense secretary go so far out of the way to insist that force is not ruled out?  Panetta said that the Administration’s goal is to force Iran to choose between a nuclear weapon and re-integration in the region and the world.  He knows that diplomacy and economics are the way to achieve that goal — and said so. The Secretary also knows that what he called Israel’s increasing isolation makes things easier for Iran.  Hence the invitation to Israel to reach out in its region and alter the dynamic. Panetta, who has developed since arriving at the Pentagon a reputation for speaking off the cuff from time to time, seemed highly calibrated throughout, which made the curtness of his last response, to the question of what Israel should do now, all the more striking: “just get to the damn table.”

Arms Control Association: The U.S. should make the “first move” to prevent a nuclear-armed Iran from becoming a reality since it is still not “imminent nor inevitable” and impose reasonable pressure while offering confidence-building measures:

Rather than being permanently discouraged by Iran’s unhelpful behavior at Istanbul, the United States and its “P5+1” partners—China, France, Germany, Russia, and the United Kingdom—should prepare for additional talks with Iran and continue to highlight constructive proposals they are prepared to discuss. This includes outlining the confidence-building steps required to ease the current sanctions regime and end Tehran’s diplomatic isolation.

Al Jazeera English: A timeline of developments surrounding Iran’s nuclear program beginning in 2002.

Senate Minority Leader Mitch McConnell (R-KY) introduced an amendment today to the National Defense Authorization act, or the defense budget, that would sanction Iran’s central bank. The amendment was designed by Sen. Mark Kirk (R-IL) to collapse Iran’s currency and, therefore, economy. Asked about the [...]]]> Reposted by arrangement with Think Progress

Senate Minority Leader Mitch McConnell (R-KY) introduced an amendment today to the National Defense Authorization act, or the defense budget, that would sanction Iran’s central bank. The amendment was designed by Sen. Mark Kirk (R-IL) to collapse Iran’s currency and, therefore, economy. Asked about the sanctions last month, he said in an interview that he thought it was “okay to take food from the mouths” of ordinary Iranians because of the actions of their government.

The Obama administration flirted with the idea of sanctioning the Iranian Central Bank, with Treasury Undersecretary David Cohen saying that they were “looking very actively” at imposing such measures. But officials have since warned against the broad sanctions.

Director of the Treasury’s Office of Foreign Assets Control Adam Szubin said this week at a House of Representatives hearing that the Central Bank sanctions could actually benefit Iran and hurt the U.S. and global economies by causing oil prices to spike:

There are very real scenarios in which an oil spike might hit. [...]

If there is a hike in the price of oil, Iran gains. If there is a spike in the price of oil…there could be profound harm to the global economic recovery and a windfall to Iran.

The amendment also constricts the administration’s ability to conduct its foreign policy. In most matters, the president is afforded a foreign policy waiver to free his hand to make policy and maintain relations with other countries. But the Kirk amendment “require(s) the President to impose sanctions on foreign financial institutions that conduct transactions with the Central Bank of Iran.” The waiver, in this case, lasts only 60 days and must be renewed and certified to Congress, and only in the case that allowing the financial transactions is “necessary to the national security interest of the United States.”

The sanctions, however, could be difficult to implement. “[F]oreign financial institutions that conduct transactions with the Central Bank of Iran” might include entities such as European central banks that are conducting what, according to their own and international laws, are completely legal business in and with Iran that is routed through the central bank.

This summer, more than 90 senators signed onto a letter to Obama, led by Kirk and Sen. Chuck Schumer (D-NY) supporting the notion of sanctioning Iran’s central bank.