Non-Enforcement of U.S. Oil Sanctions on Iran Hits New High

Latest Developments

Following weeks of indications that the United States was moving toward an unacknowledged nuclear agreement with Iran that would include the non-enforcement of U.S. oil sanctions and the release of billions of dollars in frozen Iranian assets, The Wall Street Journal on July 6 reported that Iranian oil exports reached a five-year high of 1.6 million barrels per day — more than double the level of about one year ago.

On July 3, the chairman of the Iran-Iraq Chamber of Commerce in Tehran claimed that Iran now has access to $10 billion in previously frozen assets held in Iraq — up from a previously reported $2.76 billion. If true, this claim may reflect a further easing of U.S. sanctions policy. Israeli and Iranian press reports also indicate Tehran has been negotiating access to $6.7 billion in special drawing rights from the International Monetary Fund (IMF), which would also provide sanctions relief. Providing this relief to Iran in exchange for some nuclear concession — in this case, merely holding off production of weapons-grade uranium — could constitute a violation of the Iran Nuclear Agreement Review Act (INARA).

Expert Analysis

“Iran can’t skyrocket its oil exports to 1.6 million barrels per day by sanctions evasion alone. That number likely reflects a policy of non-enforcement of sanctions. With the administration pursuing so-called ‘de-escalation’ policies with both Iran and China simultaneously, tacitly approving increased Iranian oil exports to China is one way the White House can offer concessions to both regimes.” — Richard Goldberg, FDD Senior Advisor

“The secrecy surrounding the administration’s dealings with Iran makes it challenging for Congress and the American public to know what sanctions relief or accessible funds Tehran has received, when, and under what auspices. For starters, the administration should confirm whether all $10 billion in Iranian assets in Iraq are now accessible to Tehran and whether there has been or will be any special drawing rights provided to Iran via the IMF.” — Behnam Ben Taleblu, FDD Senior Fellow

Sanctions Relief May Be Underway, Evading U.S. Laws

INARA prohibits the president from issuing statutory sanctions relief for Iran in connection with any broadly defined “agreement” related to Iran’s nuclear program in which the U.S. “commits or otherwise agrees to take action, regardless of the form it takes, whether a political commitment or otherwise, and regardless of whether it is legally binding or not.” Open questions thus remain as to whether Iraq’s provision of sanctions relief to Iran — as enabled by the Biden administration — triggers the statutory requirement to submit any agreement to Congress pursuant to INARA.

Another law, the International Financial Institutions Act, requires the U.S. executive director at the IMF to “use the voice and vote of the United States to oppose any loan or other use of the funds of the respective institution to or for a country” that is designated as a state sponsor of terrorism. The law also prohibits providing funds to a non-nuclear weapons state seeking to develop a nuclear explosive device.