by Jamal Abdi

The notion that U.S. sanctions on Iran are supposed to act as diplomatic leverage to get a nuclear deal may be dispelled once and for all by a new Congressional action now in the works.

The House is poised to move ahead with a new round of [...]]]> via Lobe Log

by Jamal Abdi

The notion that U.S. sanctions on Iran are supposed to act as diplomatic leverage to get a nuclear deal may be dispelled once and for all by a new Congressional action now in the works.

The House is poised to move ahead with a new round of Iran sanctions, and a slew of new sanctions proposals are set to be introduced in the Senate, even as a host of current and former senior U.S. officials — including Secretary of State John Kerry – have warned the body to hold off on new sanctions at the risk of imperiling a diplomatic resolution to the nuclear standoff.

For some in Congress, this seems to be precisely the point.

 Senator Mark Kirk (R-IL) is circulating a draft measure that would make regime change, not a negotiated solution, the official U.S. policy. Kirk promises to introduce that measure shortly, but first will introduce two smaller sanction measures to cut off Iran’s foreign exchange and block its natural gas deals, all building up to the grand finale. The first was introduced this week, S.892, which is designed to cut off Iranian access to euros. It would sanction any foreign entity that converts currency held by Iran’s Central Bank or other sanctioned Iranian entities into non-local currency. Blocking off Iranian access to euros will of course make it more difficult for Iran to purchase Western medicines and exacerbate the reported sanctions-induced medicine shortage now plaguing Iran.

Sen. Kirk hopes to attach these smaller bills to another sanctions package in the House before formally introducing his regime change bill. That bill will mandate that sanctions be kept in place until Iran transitions to a democratic government — a preposterous notion given the disastrous effect sanctions are having on Iran’s civil society and democracy movement. The bill would echo the Iraq Liberation Act, which was passed and signed by President Clinton in 1998 and cemented regime change as the official policy toward Saddam Hussein. That measure all but guaranteed Saddam would not comply with sanctions — what was the point if they would never be lifted? — and was cited by Congress as the basis for authorizing war with Iraq four years later.

In the meantime, the House is considering H.R.850, a measure that would sanction U.S. allies that conduct commercial transactions with Iran. Despite existing humanitarian waivers, this could affect transactions that include food and medicine as commercial entities and banks are becoming increasingly fearful of conducting any business transaction with Iran for fear of being penalized by the United States. Congress attempted to pass a similar measure last year as part of a previous sanctions package, but removed it at the last minute after intervention by the Obama Administration. A Congressional aide told Congressional Quarterly at the time that the measure “would be impossible to enforce and only make our allies really angry. They would have endangered their cooperation with the sanctions we have now.”

Nevertheless, the House Foreign Affairs Committee is looking to move H.R.850 in a matter of weeks. Next Wednesday, the committee will hold a hearing with Under Secretary of State for Political Affairs Wendy Sherman, the top U.S. negotiator conducting multilateral talks with Iran, and Treasury Under Secretary for Financial Intelligence and Terrorism David Cohen, who is in charge of implementing the Iran sanctions. Committee Chairman Ed Royce  ominously said the hearing was “a chance to press the Administration on critical questions surrounding U.S. participation in the P5+1 negotiations and its implications for the enforcement of sanctions.” The implication being that the U.S. could be implementing more sanctions if pesky diplomacy wasn’t getting in the way. The next step would be to move the sanctions bill.

Regardless of what Sherman and Cohen tell the chamber, it may make no difference. Secretary of State John Kerry implored the Senate Foreign Relations Committee in April to hold off on further sanctions and to not interfere with diplomatic efforts to little effect. Congress has become increasingly bold in dismissing the White House’s requests when it comes to Iran. Congress has also thus far ignored reports from senior former officials like Tom Pickering, Dick Lugar, Ann Marie Slaughter warning that sanctions were outpacing negotiations and threatening to upend the diplomatic process.

The Kirk measure on foreign exchange introduced this week, in fact, circumvents the White House and doesn’t even require the President’s signature. It pronounces that, regardless of when the bill would actually be passed, the sanctions on foreign exchange would go into effect starting May 9. This means the U.S. will retroactively issue sanctions against any bank conducting a transaction after this date, so long as the bill passes at some point. It is essentially sanctions by Congressional decree. The threat of sanctions from the Hill is now so great that they do not even need to be passed to have a chilling effect. It is a stunning display of impunity by Iran hawks in Congress and groups like AIPAC and the Foundation for Defense of Democracies that are supporting these measures.

It’s little wonder, then, that the narrative in Tehran is that even if Iran complies with U.S. demands on its nuclear program, the sanctions will continue and the President can’t do a thing about it. While Kirk’s Iraq Liberation Act for Iran may not yet be introduced, he may not have to get his final bill passed in order to lock in the sanctions as regime change policy.

The dominant narrative in Tehran is already that, much like with Saddam’s Iraq, the sanctions on Iran will never be lifted. The President has no mechanism to formally lift many of the hardest hitting sanctions — he is dependent on Congress. And Congressional hawks have indicated that if Iran compromises, it will be proof the sanctions are working and instead of easing them in a quid pro quo, more sanctions should be passed. Tehran’s narrative is being reinforced by Congress, and unless the U.S. can convey that there is an offramp from sanctions, Iran’s nuclear program will likely continue apace.

– Jamal Abdi is the Policy Director of the National Iranian American Council, the largest grassroots organization representing the Iranian-American community in the US. He previously worked in Congress as a Policy Advisor on foreign affairs issues. Follow Jamal on Twitter: @jabdi

Photo: The Central Bank building in Tehran, Iran.

by Siamak Namazi

The United States Treasury has issued a new explanation for the shortage of medical drugs and equipment in Iran. They claim the Iranian government is intentionally trying to exploit the problem for political purposes. A senior US Treasury official recently pointed to just-released US International Trade Statistics (USITS) [...]]]> via Lobe Log

by Siamak Namazi

The United States Treasury has issued a new explanation for the shortage of medical drugs and equipment in Iran. They claim the Iranian government is intentionally trying to exploit the problem for political purposes. A senior US Treasury official recently pointed to just-released US International Trade Statistics (USITS) to support this claim, arguing that while these figures show falling medicine exports to Iran, the export of wheat has gone up, therefore, Iran could use whatever banking it used for the wheat to procure medicine.

Not really. At least the data that’s being referred to proves no such thing.

The USITS data showed a drop from $31.2 million to $14.8 million in US pharma exports from the US to Iran between 2011 and 2012. These figures are highly misleading and seriously discount the scale of the problem. I checked the sales figures of a single large US pharmaceutical company (on the conditional of anonymity) with the person in charge of them out of Dubai. Well, this American company alone experienced a drop of sales to Iran from around $50 million to $20 million during the same time period.

The USITS data simply shows what goods left the US directly for Iran. This is while the US pharma company is likely to have supplied Iran with drugs from a manufacturing or storage facility in Europe, Dubai or Singapore.

The food figures are just as inconclusive. Sure, they went up because of an $89 million sale of wheat in 2012. Keep in mind that $89 million is nothing; it’s peanuts for a country that often imports over $1 billion of wheat. Such a figure probably amounts to one or two single orders at best. When did that take place? Early 2012, before the tightening of sanctions? Was it part of the $1.4 billion Shell-Cargill deal allowing Shell to pay its debts to Iran by crediting Iran’s account with Cargill (if that actually went through?).

All in all, the trade figures of the USITS are irrelevant to the debate at hand.

There are many arguments among pundits when it comes to the overall effectiveness of sanctions against Iran and whether or not they will ultimately persuade decision-makers in Tehran to change their nuclear policies.

But the effect of sanctions on the shortages of medical equipment and drugs in Iran is much easier to assess. Talk to the people in charge of the Iran account among the American and European pharma companies and ask them where the problem is. It’s not that hard to understand: these companies need to get paid and banking channels are very limited while Iran has a shortage of hard currency (I mean Euros and Dollars, not Rupees and Yuan); therefore, the amount of trade is curtailed. Perhaps the fact that only one international bank remains willing to brave the wrath of US sanctions — even though we are talking about fully legal trade under humanitarian exemptions — lends further testimony to where the main problem exists.

Let me be perfectly clear: sanctions are not the sole problem here. The Iranian government deserves stern criticism for its maladroit handling of the shortages of medicine and medical products. It must dramatically improve its foreign currency allocation competence and transparency, as well as governance of the sector, and it must crackdown on corrupt practices.

However, the Iranian government alone cannot solve the issue of Western medicinal shortages. Sanctions are a major impediment and unless Washington and Brussels rethink the humanitarian waivers — specifically by removing the banking bottleneck and allowing Iran to convert some of the money it earns from oil sales to Euros and Dollars for the narrow purpose of clearing trade debt related to medical drugs and equipment — this problem is going to get worse, not better.

A recent study that a group of independent consultants conducted for the Wilson Center explains this issue’s various complications and their solutions in more detail.

– Siamak Namazi is a Dubai-based consultant and a former Public Policy Fellow at the Woodrow Wilson Center for International Scholars.