October 14, 2016
by Warren L. Nelson
The Obama Administration made three adjustments to its sanctions rules last week that appear to go a long way to meeting Iran’s complaints that the US rules have inhibited foreign investment in Iran.
The changes went far enough that Republicans in Congress swiftly moved into attack mode, charging that Obama was caving to Iran.
US Treasury officials denied that any change whatsoever had been made. And that was technically true. There was no change in the text of any sanctions, but the Treasury Department made changes in the text of its “Frequently Asked Questions Relating to the Lifting of Certain US Sanctions Under the Joint Comprehensive Plan of Action on Implementation Day.”
That is a 45-page-long document posted on its website. As a note atop the FAQs says, “This document is explanatory only and does not have the force of law.” But it is where lawyers go when they are interpreting the sanctions rules.
The three changes made last Friday state:
The first response from Iran came from Deputy Economy Minister Hossain Ghazavi, who said the changes do not satisfy the Islamic Republic.
“The problems that existed before are still there,” Ghazavi said, according to the Iranian Students News Agency (ISNA). “Previously,… non-American financial institutions could not have 100 percent confidence that, while providing brokerage services, creating accounts or maintaining US dollars for Iranian banks and customers, they wouldn’t face unpredictable risk. This ambiguity has still not been resolved.”
That is likely to be accurate, though it will take a few weeks to be certain.
Eric Lorber, a senior associate at the Washington, DC-based Financial Integrity Network, which advises banks on sanctions, told Reuters that, despite the new guidance, major European banks are still unlikely to do business with Iran soon. “Among the largest banks there is still a serious reluctance to do any of that business,” Lorber said.
The new guidance sparked criticism from Republicans in Congress.
Sen. Tom Cotton, Republican of Arkansas, said, “The new guidance overturns the long-running understanding that the US dollar cannot be used to facilitate international trade with any Iranian entities, let alone sanctioned entities.”
Sen. Mark Kirk, Republican of Illinois, said the new guidelines amounted to the White House granting Tehran new concessions.
And Rep. Mile Pompeo, Republican of Kansas, said the new guidance “green-lights business with terrorists. The updated FAQs remove barriers for foreigners to engage with firms the Islamic Revolutionary Guard Corps controls. From this and other appeasements, it appears the Obama Administration has given up on any democratic or pro-Western future for Iran.”