Tyler Cullis practices U.S. economic sanctions at a boutique law firm in Washington D.C. His writings on sanctions have been published in The New York Times, the Washington Post, and CNN, amongst others.
Amir Handjani is Senior Fellow at the Atlantic Council and a Fellow with the Truman National Security Project. His work has focused on Iran-U.S. relations, Persian Gulf energy security and the Iran nuclear deal.
... The Iranian economy is heavily state run. Many aspects of it are controlled by the Iranian Revolutionary Guard Corps (IRGC), which has recently been designated a Foreign Terrorist Organization (FTO) by the State Department. Some estimates conclude that up to 40 percent of the Iranian economy is run by the IRGC and IRGC front companies—and, ostensibly, any individual or foreign company that has any dealings with those entities would be subject to U.S. secondary sanctions and possible criminal prosecution. What’s more, the Iranian banking sector has effectively been cut off from the international financial system for the better part of a decade since the international community started leveling sanctions on Iran to restrain its nuclear program. Both these factors handicap Iran’s economy to a degree that makes basic international transactions, of the type that would be routine, virtually impossible.
In addition to sanctions, Iran also faces self-inflicted regulatory challenges that create barriers to humanitarian transactions. The Rouhani administration has been pushing the unelected branches of the Iranian government to implement the Financial Action Task Force (FATF) guidelines on money laundering and terrorist financing, which form the bedrock of the international banking sector. The fact that Iran is still trying to adopt these guidelines is evidence of a financial services industry that is out of step with the rest of the world.
Opponents of sanctions have argued that reimposition of secondary sanctions by the Trump administration on huge swaths of the Iranian economy has a chilling effect on humanitarian trade with Iran. Even though OFAC guidelines allow for trade in medicine and food with Iran, the uncertainty and rhetoric surrounding U.S. policy on sanctions—along with the technical sophistication required to understand what is and isn’t permitted—forces most firms to give up entirely on all business with Iran. The risk of being excluded from the American market, or facing crippling fines from U.S. regulators, leads multinational corporations to conclude that the risk of doing business with Iran isn’t worth the reward. And the few firms that decide to engage in humanitarian trade with Iran face myriad challenges not easily discernible to policy makers.
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