October 3, 2016 | Policy Brief

Washington Dismantles the Ballistic Missile Embargo

October 3, 2016 | Policy Brief

Washington Dismantles the Ballistic Missile Embargo

In January, the Obama administration reportedly signed a secret agreement with Iran to support the lifting of UN sanctions against Bank Sepah and its London branch in exchange for the release of U.S. hostages held in Iran. The ramifications of Washington’s latest concession to Tehran extend far beyond banking: It represents a unilateral dismantling of the international ballistic missile embargo against the Islamic Republic.

The secret agreement was part of a package of concessions that included the transfer of $1.7 billion in cash, according to a senior administration official quoted by The Wall Street Journal. The package also included pardoning or commuting the sentences of seven Iranians and dropping charges against 14 others, including two officials associated with Mahan Air – the airline responsible for ferrying weapons and fighters to Syria. The timing and choreography of the concessions lends credence to the argument that Washington paid ransom for the hostages’ release.

And yet the most significant concern related to lifting sanctions on Bank Sepah is the long-term implications for the international ballistic missile embargo. Treasury sanctioned the bank in 2007 for supporting Iran’s ballistic missile procurement – not strictly because it financed Tehran’s nuclear program. Still, the Obama administration agreed to lift sanctions on the bank as part of last summer’s nuclear agreement. The Iranian negotiating team thereby scored a triple play: It convinced the P5+1 negotiators not to include ballistic missile restrictions in the nuclear agreement and at the same time to lift sanctions on entities – including Bank Sepah – involved in ballistic missile procurement. And, Tehran successfully weakened United Nations restrictions on its ballistic missile development.

Under the nuclear agreement, the UN and European Union were not slated to lift sanctions on Bank Sepah until 2023. Now, the “financial linchpin of Iran’s missile procurement network” – as Treasury has dubbed Bank Sepah – can operate freely in Europe, bolstering an already thriving illicit procurement network. Last year, Iran’s efforts to illegally acquire nuclear and unconventional weapons technology were robust, according to Germany’s domestic intelligence agency, and its “already considerable procurement efforts” for its “ambitious missile technology program” increased further. Now that Iran’s preferred missile-financing bank is back in business, these efforts are likely to multiply.

The Obama administration has repeatedly pledged to maintain and “fully enforce” non-nuclear sanctions against Iran regardless of the nuclear agreement. Instead, however, Treasury has issued a minuscule number of ineffective new designations against procurement networks – designations that allow sanction-busters to rapidly close and re-open shell companies.

Meanwhile, Washington has begun to license aircraft sales to Iran despite ongoing suspicious flights from Revolutionary Guard facilities to Syria; supports Tehran’s rehabilitation in the premier global body against money laundering and terror finance (despite Iran’s insistence that groups like Hezbollah are not terrorists); urges foreign companies to invest in the Islamic Republic; and even considers providing it access to dollarized transactions. U.S. officials appear prepared to grant ever-more sanctions relief beyond the terms of the nuclear agreement, even though President Obama and UN Secretary-General Ban Ki-moon have both criticized Iran for breaking the spirit of the agreement.

The steady drip of Washington’s concessions comes even while Iran’s “major export [is] malign influence,” according to Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford. Drop by drop, the Obama administration has eroded restrictions on Iran’s missile activities and lifted sanctions on entities involved in those activities. The international ballistic missile embargo was intended to last eight years after the nuclear agreement. Instead, it has crumbled in less than one.

Mark Dubowitz is executive director of the Foundation for Defense of Democracies, where he focuses on Iran and directs its Center on Sanctions and Illicit Finance. Follow him on Twitter @mdubowitz.

Annie Fixler is a policy analyst at FDD’s Center on Sanctions and Illicit Finance. Find her on Twitter: @afixler.