U.S. Should Use Sector-Based Economic Sanctions to Thwart Iran’s Illicit Ballistic Missile Program

Washington, DC – The United States should deploy a series of sector-based economic sanctions to counter the Iranian ballistic missile program that threatens the Middle East and U.S. interests there, according to a new Foundation for Defense of Democracies research memo issued today.

Author Saeed Ghasseminejad finds that the United States and its allies should target sanctions on specific sectors of the Iranian economy largely controlled by the Islamic Revolutionary Guard Corps (IRGC): metallurgy and mining; chemicals, petrochemicals and energy; construction; automotive; universities and research institutions; and electronic, telecommunication and computer science sectors.

“Iran’s Ballistic Missile Program and Economic Sanctions,” comes just days after Iran violated the United Nations resolution endorsing the Joint Comprehensive Plan of Action (JCPOA) when it conducted its third ballistic missile test since last summer’s nuclear agreement.

Ghasseminejad writes that the IRGC and the Ministry of Defense and Armed Forces Logistics (MODAFL) use commercial entities in these sectors to procure, produce and manufacture ballistic missile technology.

As a result, the IRGC and MODAFL have acquired firms that give them access to the raw and processed materials, technical expertise, and foreign procurement networks to support a sophisticated and technologically intensive ballistic missile program.

“Tehran, which already has the largest inventory of ballistic missiles in the Middle East, is conducting ballistic missile tests for a specific reason – it intends to develop an intercontinental ballistic missile program,” said Mark Dubowitz, executive director of FDD and head of FDD’s Center on Sanctions and Illicit Finance. “Iran’s missiles already threaten America’s Middle East allies, U.S. forces in the region, and parts of Europe. An Iranian ICBM will threaten the American homeland.”

The IRGC, the primary driver of Iran’s ballistic missile program, has become a dominant force in the Iranian economy, controlling as much as 20 to 30 percent.

“In January the administration imposed sanctions with very limited teeth because they targeted individuals and companies – procurement networks that Tehran can easily reconstitute,” Dubowitz said. “Only severe new sanctions on those sectors of Iran's economy that support its missile program can change Iran’s strategic calculus.”

Among the report’s key recommendations:

• The United States should impose sanctions on Iran’s metallurgy and mining, chemicals, petrochemicals and energy, construction, automotive, electronic, telecommunication and computer science, and automotive industries. Additionally, sanctions should be placed on companies that conduct significant business with these industries.
• The United States should conduct a comprehensive study of the individuals and entities involved in Iran’s ballistic missile development and add them to the Specially Designated Nationals list under its counter-proliferation authorities.
• Congress should require the administration to report on which sectors of Iran’s economy are contributing directly or indirectly to the development of the country’s ballistic missile program. Also, Congress should require the Government Accountability Office to list all foreign investors and companies involved in the identified sectors connected to Iran’s ballistic missile program.
• Congress should require publicly traded foreign companies that have conducted transactions with the identified sectors to report their related transactions to the Securities and Exchange Commission.
• The administration should work closely with U.S. allies to strengthen export controls on dual-use goods, technology, materials, and equipment for those sectors involved in Iran’s ballistic missile development.

“Iran is on a patient pathway to having what it needs for a deliverable nuclear weapon – fissile material, warheads and missiles – as restrictions on its nuclear program and the ballistic missile embargo will expire over time,” Dubowitz said. “Iranian defiance today on missile tests needs to be met with punitive action as a sign that Washington is serious about enforcement.”

About the Foundation for Defense of Democracies: 

The Foundation for Defense of Democracies (FDD) is a non-profit, non-partisan 501(c)3 policy institute focusing on foreign policy and national security. Founded in 2001, FDD combines policy research, democracy and counterterrorism education, strategic communications and investigative journalism in support of its mission to promote pluralism, defend democratic values and fight the ideologies that drive terrorism. Visit our website at www.defenddemocracy.org and connect with us on Twitter, Facebook and YouTube.

About FDD’s Center on Sanctions and Illicit Finance (CSIF):

FDD’s Center on Sanctions and Illicit Finance is a project designed to illuminate the critical intersection between illicit finance and national security. The Center relies on regional and sanctions expertise within FDD, including a core cadre of financial, economic, and area experts and analysts, to promote a greater understanding of illicit financing and economic threats. The Center also designs creative and effective strategies, doctrines, and uses of financial and economic power to attack and protect against priority threats and vulnerabilities. More information on CSIF is available at http://www.defenddemocracy.org/csif.

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