April 5, 2017 | Policy Brief

New Legislation Fixes Critical Flaw in Iran Sanctions

April 5, 2017 | Policy Brief

New Legislation Fixes Critical Flaw in Iran Sanctions

A group of former Obama administration officials raised concerns last week over new Senate legislation targeting Iran’s ongoing non-nuclear misbehavior. The officials claim the bill is harmful because it requires the president to certify that the relevant Iranian entities do not support or facilitate ballistic missile activity prior to lifting “nuclear” sanctions on them. Their argument, however, glosses over a key flaw in how the nuclear accord interacts with the U.S. sanctions architecture: Even as the agreement lifts “nuclear” sanctions, there is no such thing as an exclusively “nuclear” sanction in U.S. law.

Beginning in 2005, the Bush and Obama administrations sanctioned hundreds of Iranian individuals and entities under Executive Order 13382, which targets the “proliferation of weapons of mass destruction or their means of delivery.” However, under the nuclear deal – formally known as the Joint Comprehensive Plan of Action (JCPOA) – Washington agreed to remove sanctions on numerous entities, including some designated for illicit activities beyond just nuclear proliferation.

In this context, the certification requirement in the new Senate bill, the Countering Iran’s Destabilizing Activities Act (S. 722), makes sense: If an entity wants to receive a reprieve from a 13382 designation, it must not be engaged in any illicit activities that would warrant designation under the order.

In their article last week, however, the former Obama administration officials – many of whom played a role in negotiating, advocating for, or implementing the JCPOA – argue that this provision is unnecessary, as the deal does not prevent Washington from imposing new sanctions for Iran’s ballistic missile development. While technically correct, Tehran has repeatedly stated that it may walk away from the agreement if any new sanctions are imposed. So far, this may only be a bluff, but if U.S. actions look like the re-imposition of nuclear sanctions, Tehran may be able to convince the rest of the international community that the new sanctions violate the deal.

Consider the scenario the authors envision: The White House lifts the “nuclear” designations, and in the same breath, re-designates certain entities under “ballistic missile” sanctions because while they have ceased their illicit nuclear activities, they continue to be involved in the development of ballistic missiles. In short, the U.S. will remove a 13382 designation and then re-impose the exact same designation, under the exact same executive order.

At that point, it strains credulity to believe that Iran would not immediately cry foul, asserting that the U.S. is re-imposing nuclear sanctions and violating the JCPOA. Because Washington will have used the same executive order to lift “nuclear” sanctions and impose “non-nuclear” sanctions, Iran’s argument may hold water in some European capitals.

Ultimately, this is a failure of the U.S. sanctions architecture, which conflates the proliferation of all forms of weapons of mass destruction as well as their delivery systems. If the Trump administration were to issue a new executive order exclusively targeting nuclear-delivery systems, it could update its designation list to shift those responsible for Iran’s ballistic missile program over to this new designation. Washington could then lift “nuclear” sanctions per the JCPOA (without touching ballistic missile sanctions) and simultaneously impose new sanctions, which Iran could not claim violate the nuclear agreement.

In this case, perhaps the Senate legislation would be superfluous. But until the White House and Treasury Department address this flaw in the sanctions architecture, congressional leadership is necessary to ensure that rogue actors do not benefit from the nuclear deal.

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