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Senior Fellow, Carnegie Endowment for International Peace
April 15, 2019
U.S. Considers More Sanctions on Iran

Kelsey Davenport

Congress and the Obama administration are considering expanding sanctions against Iran, as negotiations between Tehran and six world powers over Iran’s controversial nuclear program appear to have stalled again.

Legislation sponsored by House Foreign Affairs Committee Chairman Ed Royce (R-Calif.) and passed by that panel May 22 would further restrict trade with Iran and limit Iran’s access to overseas currency reserves.

An amendment added to the legislation would require that the six countries still importing oil from Iran—China, India, Japan, South Korea, Taiwan, and Turkey—reduce their combined purchases of Iranian oil by one million barrels per day within a year. This reduction would result in a de facto oil embargo because Iran is currently exporting just more than one million barrels per day.

The legislation, which has more than 350 co-sponsors, will “increase the costs” on Iran for continuing to move forward with its nuclear program, Royce said May 22.

But Wendy Sherman, undersecretary of state for political affairs, warned Congress in testimony at a Senate Foreign Relations Committee hearing May 15 that if the United States wants to require further reductions in the oil imports, it has to “work very carefully” with the six importing countries.

Under a provision of the 2012 National Defense Authorization Act, countries must receive exemptions from the U.S. government to continue importing oil from Iran or face U.S. sanctions, which include restrictions on their access to U.S. financial markets. The U.S. government grants exemptions for 180 days. To renew them, countries must demonstrate that they have significantly reduced their purchases of Iranian oil. (See ACT, July/August 2012.)

In her May 15 testimony, Sherman stressed the importance of maintaining unity and international pressure on Iran during negotiations and cautioned against imposing any sanctions that would further limit oil imports by the six countries beyond the reductions required by current law.

China, the largest importer of Iranian oil, is one of the six countries collectively known as the P5+1 negotiating with Iran over its nuclear program. Its exemption will be up for renewal in June. The other five countries in the negotiations are France, Germany, Russia, the United Kingdom, and the United States.

A congressional staffer familiar with the legislation told Arms Control Today in a May 20 e-mail that the legislation introduced by Royce would likely pass the House of Representatives and the Senate before the August congressional recess, with possible Senate amendments imposing further sanctions.

Sherman said the administration is considering additional executive orders that would increase pressure on Iran, but did not provide details. At the same hearing, David Cohen, treasury undersecretary for terrorism and financial intelligence, said the administration is looking at a “variety of different means” to target Iran’s revenues, Iran’s access to currency reserves in foreign countries, and lower the value of Iran’s currency, the rial.

Cohen noted that on July 1, current sanctions on anyone selling gold and other precious metals to the Iranian government will be expanded to cover sales to private Iranian individuals. Cohen said that due to the decline in the rial’s value, Iranians are “dumping their rials to buy gold.”

Talks Stall

As Washington ratchets up the pressure on Tehran, negotiations between Iran and the six world powers over Iran’s nuclear program appear to have stalled.

On May 15, Catherine Ashton, the lead negotiator for the P5+1, met with lead Iranian negotiator Saeed Jalili in Istanbul. Ashton said that she and Jalili discussed the proposal put forward during the last round of negotiations and would “reflect” on how to move on to “the next stage of the process.” No date was set for further talks between Ashton and Jalili or the resumption of negotiations between Iran and the P5+1.

Jalili described the meeting as “fruitful” and said that he and Ashton would talk again soon to set a date for the next round of negotiations.

The P5+1 and Iran have met twice this year in Almaty, Kazakhstan, to continue negotiations over Iran’s nuclear program after an eight-month hiatus. The last round of negotiations took place April 5-6. During these negotiations, the P5+1 offered some sanctions relief, including allowing gold sales, but the Iranian negotiators said the sanctions relief was not commensurate with the P5+1 demands on Tehran. (See ACT, May 2013.)

Tehran maintains that its nuclear program is entirely peaceful, but the international community is concerned that Iran might choose to pursue nuclear weapons.

No Progress in Iran-IAEA Meeting

Also on May 15, Iran met with the International Atomic Energy Agency (IAEA) to continue negotiations on the so-called structured approach, which will define the scope and sequence of the agency’s investigations into Iranian nuclear activities with possible military dimensions.

IAEA Deputy Director-General Herman Nackaerts, who led the agency delegation, said May 15 that the parties “could not finalize the structured approach document.” He said that the agency’s commitment to dialogue was “unwavering” but a date for the next meeting had not been set.

In a November 2011 report to its Board of Governors, the IAEA laid out the evidence of the alleged activities. The meeting on May 15 was the 10th meeting between the parties since the beginning of 2012.

Director-General Yukiya Amano said in a Dec. 6 speech at the Council on Foreign Relations in Washington that the talks should not continue “without producing any concrete result.” In her May 15 testimony, Sherman seemed to make a similar point, saying that, “at some point,” Amano will have to tell the UN Security Council that it must take further action because of the lack of progress.