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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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Treasury also went after Rah Sahel and Sepanir Oil and Gas Engineering Co., two subsidiaries of Khatam al-Anbiya, an IRGC construction company that generates income and funds Revolutionary Guard operations. Unfortunately, these are only two of many companies that generate billions of dollars in business for the IRGC.

Squeezing the Iranian Financial Sector: The designation of the Post Bank of Iran should come as an immediate body blow to Iran’s illicit financial dealings. A number of the mullahs’ state-owned banks are already facing hardships, thanks to U.S. and international sanctions. Treasury identified this bank as the key instrument the Iranians had been using to sidestep these sanctions. As Treasury stated, “Post Bank facilitated business on behalf of Bank Sepah [designated in 2007] between Iran’s defense industries and overseas beneficiaries.” This included numerous transactions with North Korean arms dealers.

Don’t expect checks from Post Bank to clear anywhere now (except maybe Syria, Sudan, or North Korea).

Making Waves on the High Seas: Treasury designated five front companies of the Islamic Republic of Iran Shipping Lines (IRISL), designated in 2008 for acting on behalf of the Iranian military. In addition to the front companies, Treasury banned 27 ships connected to IRISL. Treasury also provided updated information on 71 IRISL ships that have already been blocked, but were renamed in an attempt to skirt international sanctions. This will hopefully hinder Iran’s supply chain, particularly if cooperating countries block these Iranian vessels from docking at their ports. It could even lead to a few seized cargoes.

Deferred Gratification on the Energy Sector: It’s important to note that 22 energy sector listings were not actually designations. Treasury added these insurance, petroleum and petrochemicals companies to the Iranian Transactions Regulations (ITR), a list of entities with which American businesses are barred from doing business. They include dominant players in the Iranian energy sector, operating both inside and outside of Iran.

This may not have the immediate impact of blocking Iranian assets, but it will undoubtedly have a chilling effect on publicly traded multinational companies that don’t want to be fingered as financial enablers of the Iranian regime. Once the U.S. Congress passes its own energy sanctions (expected later this month), multinational companies will likely be forced to choose between working with these companies and doing business here in the United States.

The Transatlantic Relationship: The designation of the energy sector companies may also demonstrate a high degree of cooperation between the U.S. and the United Kingdom. From Kala Naft London to the Iranian Oil Company, Treasury listed about one dozen UK-based companies. Treasury could not have listed these entities without the full cooperation of Her Majesty’s Treasury and British intelligence. Whether these entities are ultimately banned in the UK remains to be seen, but the listings suggest a high degree of intelligence cooperation.

Jonathan Schanzer, a former intelligence analyst for the United States Department of the Treasury, is vice president for research at the Foundation for Defense of Democracies. 

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