Iran is the epicenter of the coronavirus outbreak in the Middle East. The Islamic Republic’s leadership has engaged in a massive campaign aimed at lifting sanctions imposed on it for its malign activities, claiming sanctions hinder efforts to address the COVID-19 public health crisis. This memo, however, assesses that lifting sanctions would be ill-advised. The Iranian population suffering from COVID-19 deserves much needed medical assistance but that should be funded though reliable NGOs, bypassing the regime and not through the transfer of funds to the regime, which has ample financial resources estimated at over $300 billion for economic stimulus and humanitarian aid.
On April 2, 2020, Iran’s President Hassan Rouhani admitted that the regime’s public relations campaign ultimately aims to convince the world to lift sanctions on Iran using coronavirus as a pretext. Speaking at his cabinet’s economic meeting, Rouhani said U.S. sanctions have not curbed Iran’s ability to cope with the COVID-19 outbreak. Numerous Iranian health officials have confirmed this assessment. Rouhani added that Iran has “a good reserve of essential commodities for the next months and agriculture and trade ministers have given very promising reports for the situation during the coming months.”
Rouhani also told his colleagues that Iran’s Central Bank Governor said, “Iran has no problem in providing foreign currency until the end of the [Iranian] year,” which is March 2021.
The United States has no sanctions targeting humanitarian goods. Washington has established a banking channel with Switzerland to facilitate humanitarian trade for Iran while retaining oversight against Tehran’s long-standing abuse of humanitarian exemptions to U.S. sanctions laws. Several Iranian banks remain on the SWIFT financial messaging system to process humanitarian transactions. Tens of billions of dollars in Iranian oil escrow accounts exist around the world available for this trade.
Trade data and Iranian government officials confirm that Iran is receiving billions of dollars in essential goods that it needs to address its health crisis. Economic stimulus packages similar to what governments around the world have implemented should come from the regime’s over $300 billion in financial holdings not from any sanctions relief. The United States should only consider suspending or lifting sanctions when the regime ends its malign activities.
The United States has no sanctions targeting humanitarian goods. On the contrary, such goods are specifically exempted from all Iran sanctions. Sanctions targeting the Central Bank of Iran, as required by Section 1245 of the National Defense Authorization Act of 2012, exempt transactions related to food, medicine, medical devices and agricultural commodities. Sector-based sanctions imposed by statute and executive orders likewise exempt such transactions. Moreover, the Trade Sanctions Reform and Export Enhancement Act (TSRA) of 2000 exempts medicine, medical devices, and food from U.S. sanctions writ large.
EU trade data shows that Iran has not had difficulty maintaining its imports of pharmaceuticals from Europe. Even so, the United States has taken additional steps to ensure the continuation of humanitarian trade. These steps include the establishment of a special Swiss banking channel to give companies confidence in conducting such transactions in a manner that reduces the risks associated with selling humanitarian goods to a regime that uses front companies to divert products to the black market.
International aid to Iran should bypass the regime and go through non-governmental organizations and international human rights organizations not subservient to the regime.