How to Keep the Financial Pressure on Iran and Its Proxies

“…Our concerns will remain with respect to Iranian behavior so long as Iran continues its sponsorship of terrorism, its support for proxies who destabilize the Middle East, its threats against America's friends and allies — like Israel,” President Barack Obama said, immediately after lauding Washington's new nuclear framework agreement with Iran.

“So make no mistake,” he added. “We will remain vigilant in countering those actions and standing with our allies.”

But as the debate over the deal has unfolded, the president has been rather vague about what it means to be vigilant or to stand with our jittery regional allies. Instead, he stated that signing the deal “is the right thing to do for the United States, for our allies in the region and for world peace regardless of the nature of the Iranian regime.”

Similarly, Secretary of State John Kerry stated, “We remain deeply concerned about Iran's destabilizing actions in the region. But it is precisely because we are so concerned about these issues — and about the region's security — that we believe this deal is critical.”

In other words, the Administration acknowledges that Iran's regional behavior is abhorrent, but they believe there is little to be done about it.

But this is not the case. The United States has many sanctions tools at its disposal to punish Iran for its ongoing terrorism support and regional meddling, even as nuclear-related sanctions begin to evaporate.

For example, there is Executive Order 13224, Washington's terrorism sanctions regime. It includes thousands of names of people, companies, and charities flagged by the Treasury for bankrolling terrorism. Many of the names in this list belong to Iranian terrorist proxies or the Islamic Revolutionary Guard Corps (IRGC), which manages Iran's terror operations worldwide. But there are many more than have gone unlisted. The president could easily task the Treasury to find new targets.

There is also Executive Order 12947, issued in 1995, which prohibits transactions with those who “threaten to disrupt the peace process” between Israel and the Palestinians. This means that the United States government can sanction any Iranian individual or entity that finances Hamas, Palestinian Islamic Jihad, and any of the other groups that target Israel.

Similarly, don't forget Executive Order 13438, issued in 2007, which slaps sanctions on “Persons Who Threaten Stabilization Efforts in Iraq.” This could target the Shi'ite militias that purportedly seek to reclaim territory for the Iraqi army in the battle against the Islamic State, but are now, according to Ali Khedery of Dragoman Partners, “eclipsing official Iraqi institutions, and sowing the seeds of conflict for decades to come.”

The Obama administration does not need to only rely on past executive orders, either. It is well within the president's power to create new ones, in order to sanction actors that threaten or destabilize American interests, such as Yemen, where Iranian proxies have gained ground and elicited a military response from the Sunni Arab states. With Iranian warships on the way, a wider conflagration could soon develop.

The United States has issued numerous executive orders in the past to prevent such destabilization. Executive Order 13338, issued in 2004, sanctioned entities in Syria for “directing or otherwise significantly contributing to the Government of Syria's military or security presence in Lebanon.” Executive Order 13413, issued 2005, sanctions “Persons Contributing to the Conflict in the Democratic Republic of Congo.” In 2014, the U.S. government issued Executive Order 13667 to sanction individuals and entities contributing to the conflict in the Central African Republic. And, of course, President Obama issued Executive Order 13660 last year in response to Russia's assault on the sovereignty and territorial integrity of Ukraine.

While issuing new executive orders or adding weigh to old ones won't immediately restore confidence in American leadership, particularly as doubts linger over the wisdom of the looming nuclear deal, they could serve to reassure the Gulf Arab states and Israel that Washington is still taking the Iranian threat seriously, as both President Obama and Secretary of State Kerry profess.

Such moves could also prove crucial as the United States and its P5+1 partners prepare for the ill-advised move of dismantling the sanctions architecture that has restrained Iran's nuclear program until now. As Mark Dubowitz and Richard Goldberg correctly note, the current architecture is not based on nuclear sanctions but on hybrid sanctions that target a full range of Iran's rogue conduct, including ballistic missiles, terrorism, support for the Assad regime in Syria, money laundering, and human rights violations, to name a few.

The Houthis, Hezbollah, Hamas, and other dangerous Iranian proxies have spent the last several years tightening their belts because these sanctions impeded the flow of Iranian cash. They are now awaiting a massive windfall after a nuclear deal is signed.

Washington is nevertheless prepared to begin repeal the Iran sanctions. Whether that happens hinges on the success or failure of the final round of talks. But between now and the June 30 deadline, the administration has an opportunity to mitigate the damage by enforcing existing executive orders and creating new ones. Some might argue that such a move would anger the Iranians and complicate the nuclear deal. But such a move is well within the administration's legal authorities, and it would help slow the deluge of cash that Iran's proxy armies are now eagerly anticipating. 

Jonathan Schanzer is the Vice President for Research at the Foundation for Defense of Democracies. Follow him on Twitter @JSchanzer