New US Sanctions Power Could Squeeze Remaining Iranian Trade Channels
13 Jan 2020

Fresh sanction powers authorized by President Trump against Iran could squeeze the remaining trade and finance channels keeping the Iranian economy on life support by threatening those companies still doing business with the country.

The U.S. on Friday levied more sanctions on Iran in response to ballistic-missile attacks against U.S. bases in the region earlier this week, blacklisting eight senior Iranian officials and some of Iran’s largest metals manufacturers.

Along with new designations against officials and companies, President Trump also signed an executive order that authorizes the U.S. Treasury Department to target the construction, mining, manufacturing and textiles sectors of the Iranian economy. The Treasury Department can now blacklist any individuals or entities operating in these sectors, or anyone assisting them.

“U.S. sanctions do not change Iran’s strategic calculation, but the reverse,” Alireza Miryousefi, a spokesman for the Iran mission to the United Nations, said in a statement. “It is true the economic terrorism the U.S. has imposed on Iranians has caused harm, but we are self-sufficient in many areas, and will be in even more, as sanctions continue.”

The executive order is a limited expansion of the already extensive U.S. sanctions on Iran, but it gives sweeping power for the U.S. to issue secondary sanctions on non-U.S. individuals and companies that maintain ties with Iran, said Elizabeth Rosenberg, a former senior sanctions adviser at the Treasury Department.

“A primary intention of these measures is to threaten Iran and deter anyone who would do business with Iran,” she said.

For instance, as part of the new sanctions, the U.S. also blacklisted three China- and Seychelles-based companies that are accused of buying banned Iranian metals and selling materials needed by the industry.

By naming a few targets outside of Iran, the U.S. sends a signal that companies in East Asian and Gulf countries are susceptible to sanctions, said Ms. Rosenberg, who is now a senior fellow and director of the energy, economics and security program at the Center for a New American Security, a think tank in Washington, D.C.

“Companies in these sectors need to be really vigilant that they are not indirectly or directly related to those sectors in Iran,” she said.

The number of companies potentially harmed by the new secondary sanctions authority could be narrow because many big multinational companies have cut off Iran as a country to do business with, said Brian O’Toole, who previously worked at the U.S. Treasury Department and is now a senior fellow at the Atlantic Council.

“Most companies are already out of Iran,” said Mr. O’Toole, noting that businesses that would be willing to take the sanctions risk likely don’t do business in the U.S. and don’t care about getting cut off from the U.S. financial system.

The sanctions’ impact also will be affected by how the Treasury Department implements the secondary-sanctions authorities, said Ryan Fayhee, who advises companies on sanctions issues as a partner at law firm Hughes Hubbard & Reed LLP.

“The impact of these new sanctions really depends upon the administration’s decision to designate new companies,” he said.

By Mengqi Sun and Ian Talley, The Wall Street Journal, 10 January 2020

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