Key Points

Although Iran’s economy has shown resiliency in the immediate aftermath of the latest round of sanctions, Tehran is on shaky ground. Its economy is still under strain, and its access to hard currency is shrinking. Meanwhile, discontent among everyday Iranians is on the rise. The Trump administration has a historic chance to force the clerical regime to alter its dangerous course, but such an extraordinary result requires extraordinary measures.

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Congress and the administration maintain a somewhat rare bipartisan consensus on punishing Iran and its proxies directly. The overwhelming support in the House and Senate for the Hizballah International Financing Prevention Amendments Act, which the president signed in October, illustrates that both parties unanimously approved more pressure on Hezbollah. This legislation requires the administration to sanction Hezbollah’s fundraising and recruitment networks, as well as the instrumentalities of foreign states moving funds to the group. Entities and individuals in Iraq and Lebanon can be expected to attract increased attention.

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Curtailing Iran’s exports represents an essential component of the U.S. plan “to starve the Iranian regime of the revenue it uses to fund violent and destabilizing activities throughout the Middle East,” in the words of Secretary Pompeo. Thus, the U.S. should insist on progressive reductions by all of Tehran’s customers. The U.S. should also carefully monitor the escrow accounts where oil revenue will be held. In the past, Iran and Turkey colluded to launder tens of billions of dollars, much of it withdrawn from the escrow accounts. Any country that facilitates such actions should immediately lose its oil purchasing exemption.

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Shortly after Treasury’s announcement, National Security Advisor John Bolton noted that this is just the beginning of the administration’s economic pressure. There will be “sanctions that even go beyond” what had been introduced, and the Trump administration will not “be content with the level of sanctions that existed under Obama.” The Islamic Republic supports terrorism, proliferates weapons of mass destruction and their delivery systems, engages in money laundering and corruption, and denies the Iranian people their freedoms and human rights. With more sanctions on the way, the next rounds should leverage the full breadth of U.S. authorities to demonstrate clearly that the Iranian regime poses a threat to the global financial system and international business.

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The Trump administration has already signaled that more sanctions are on the way, though it has not identified prospective targets. “We’re gonna have sanctions that even go beyond this,” said National Security Advisor John Bolton on Monday. “We’re not simply going to be content with the level of sanctions that existed under Obama in 2015.” By enacting new sanctions that penalize the regime’s top human rights violators, President Trump can give added weight to this commitment.

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Events

EVENT: FDD's National Security Summit

August 28, 2018 | 10:00

EVENT: Iran's Deceptive Financial Practices

June 5, 2018 | 12:15

Projects