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Treasury's New Iran Sanctions

The ins and outs.

3:05 PM, Jun 18, 2010 • By JONATHAN SCHANZER
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On Wednesday, the U.S. Treasury announced targeted financial sanctions on a formidable list of Iranian companies, persons, and entities. Some of the designations specifically target Iran’s nuclear and missile programs, while others target the country’s energy sector, which has kept its economy on life support. Others target the Iranian Revolutionary Guard Corps (IRGC), a terrorist organization tied to both the nuclear program and the energy sector.

Treasury's New Iran Sanctions

The Department of Treasury

I’ve outlined (below) a summary of what’s behind Treasury’s actions and what sort of impact can be expected. In the end, Treasury’s actions are well timed and strategic. Unfortunately, these designations will not, by themselves, derail the Iranian nuclear program. However, they expose much more of the Iranian nuclear network, impede Iran’s existing supply chain, lay the groundwork for future domestic and international sanctions, and even provide new targets for the U.S. military, should this standoff ultimately come to blows.

Strategic Timing: The designations come on the heels of U.N. Security Council Resolution 1929, which lacked teeth, but demonstrated a sincere desire to prevent Iran from going nuclear. The UNSC resolution established the necessary preconditions for the European Union sanctions, which were announced yesterday. The Treasury designations now indicate that the White House may be finally prepared to assume leadership on the Iran crisis. Indeed, Treasury Secretary Timothy Geithner unveiled them personally, marking the first time he has assumed an overtly public role in the Iran sanctions saga. When the U.S. takes the lead, others follow.

The timing of Treasury’s designations will appear even more strategic if Congress finally passes the energy sanctions bill that has languished in conference committee since April. Some of these Treasury designations provide definitive targets for Congressional sanctions.

Exposing Nodes of Iran’s Nuclear Program: Treasury designated Javedan Mehr Toos, a procurement broker for the Atomic Energy Organization of Iran (AEOI), and Javad Karimi Sabet, a company that carried out activities on behalf of the AEOI. Don’t expect Treasury to capture any funds here, but don’t discount the impact of the “name and shame” factor, either. Iran now knows that U.S. intelligence is on to its secret procurement network. More importantly, the Department of Defense has now added a few military targets to its growing list.

In a bold step, the Treasury also designated Ahmad Vahidi, Iran’s minister of defense, for his role in the nuclear program. Vahidi might now think twice about traveling abroad.

Focusing on Iran’s Missile Program: Treasury also targeted the IRGC Air Force and IRGC Missile Command. These are two key elements in the development of Iran’s ballistic missile capability. Treasury also hit the Naval Defense Missile Industry Group (a.k.a. the Cruise Missile Industry Group). This designation was a long time coming; the U.N. had already imposed its own sanctions against the group in 2007 for developing and producing Iranian cruise missiles. Here, Treasury has effectively warned the IRGC and the Iranian military-industrial complex that the White House views them as equal partners in the nuclear program.

Weakening Iran’s “Gestapo”: The IRGC component of this designation list is particularly noteworthy. In October 2007, Treasury designated the IRGC for engaging in international terrorist activities, and illicit nuclear proliferation. Treasury has now put faces to the organization by designating Mohammed Ali Jafari and Mohammad Reza Naqdi. It’s a fair bet that Treasury will go after other high level officials of the IRGC, which is commonly identified as the “Gestapo” of the Iranian regime.

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