Treasury Targets Iranian Sanctions-Busting Network as Nuclear Talks Remain Stalled

The Biden administration last week sanctioned a network of Iranian petrochemical producers and related front companies, a response to the deadlock in negotiations with Tehran over a return to the 2015 nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA). The administration’s attempt to turn up the heat on Tehran is important to sustain and may have also inadvertently strengthened the case for submitting the deal to Congress for a vote.

Since the United States and Iran began indirect nuclear talks last year in Vienna, the Biden administration has refrained from enforcing many of the tough sanctions the Trump administration imposed, which remain on the books.

This lack of enforcement led to increased Iranian oil and petrochemical sales after President Joe Biden entered office, enabling Tehran to draw out negotiations while generating revenue to drive its aggressive foreign policy. Last week’s sanctions package seeks to change that dynamic.

Iran’s intransigence, its last minute demands, and congressional pressure may be spurring the Biden administration to embrace a tool it previously denigrated to the delight of its adversary.

The new sanctions follow a sanctions-enforcement action by Treasury in May designed to curb the ability of the Islamic Revolutionary Guard Corps’ Quds Force, a designated Foreign Terrorist Organization, to smuggle and sell oil in contravention of U.S. sanctions.

The Biden administration issued the latest sanctions pursuant to the Trump-era Executive Order 13846, which reauthorizes sanctions waived or lifted by the JCPOA.

One of the targets of last Thursday’s sanctions was a network of front companies supporting an Iranian conglomerate called Triliance Petrochemical Co. Ltd. The Trump administration designated Triliance under Executive Order 13846 in January 2020 and subsequently designated additional entities for facilitating petrochemical transactions for the conglomerate. The Biden administration’s expansion of sanctions against the Triliance network demonstrates the substantial value the conglomerate has for Tehran.

The Biden administration’s first use of a Trump-era authority to issue sanctions waived by the JCPOA is also significant because Triliance was not a target of U.S. sanctions under the Obama administration, so there was no need to lift sanctions on the conglomerate pursuant to the JCPOA.

Therefore, last week’s designations unintentionally bolster the argument for submitting a revived JCPOA-associated agreement to the House and Senate for a vote pursuant to the Iran Nuclear Agreement Review Act (INARA). The Biden administration only recently, and after much congressional pressure, said it will submit any potential deal to Congress.

Congress enacted INARA in 2015 prior to the JCPOA’s finalization, when lawmakers of both parties demanded a say in the agreement. The law states that before he can lift sanctions, the president must submit to Congress any nuclear agreement that Washington reaches with Tehran. Congress then has 30 days to review and vote on the agreement.

Republican leaders have warned the administration not to attempt an end run around INARA by claiming that a new deal with Iran is just a return to the original JCPOA. Since any deal that emerges from Vienna would require the delisting of entities such as Triliance and its network of front companies, which are responsible for millions of dollars in transactions, or rescinding authorities such as Executive Order 13846, it would be implausible to claim there have been no material changes to the original deal. Hence refusing to submit such an agreement to Congress for a vote would be a violation of INARA.

Given the administration’s hesitance to acknowledge the law, Congress should continue pressuring it to keep its promise to fulfill its statutory obligations under INARA. Cracking down on illicit oil and petrochemical sales is essential to creating leverage for nuclear talks. Last week’s designations were a good start.

Behnam Ben Taleblu and Matthew Zweig are senior fellows at the Foundation for Defense of Democracies (FDD), where they contribute to FDD’s Center on Economic and Financial Power (CEFP) and Iran Program. For more analysis from Matthew, Behnam, CEFP, and the Iran Program, please subscribe HERE. Follow Matthew on Twitter @MatthewZweig1. Follow FDD, CEFP, and the Iran Program on Twitter @FDD, @FDD_CEFP, and @FDD_Iran. FDD is a Washington, DC-based, nonpartisan research institute focused on national security and foreign policy.