According to the Wall Street Journal, “[m]ore than $2 billion allegedly held on behalf of Iran in Citigroup Inc. accounts were secretly ordered frozen last year by a federal court in Manhattan, in what appears to be the biggest seizure of Iranian assets abroad since the 1979 Islamic revolution. Read the complete article, here. The announcement comes at a good time. Next week, the House of Representatives will likely vote on final passage of the Iran Refined Petroleum Sanctions Act of 2009 (“IRPSA”).
IRPSA amends the Iran Sanctions Act of 1996 (“ISA”). ISA requires that the president impose two sanctions from a set menu of options. These “cafeteria sanctions” includes such things as denial of Export-Import bank loans to blocked entities or the denial of licenses to the blocked party for the export of U.S. military or dual-use technology. Congress has modified and extended the measure several times since 1996.
If IRPSA becomes law, it could lead to the seizure of additional Iranian funds that can be used to compensate victims of Iranian terror. The main target of IRPSA however is the Iranian petroleum sector and it is not expressly designed to capture Iranian tainted monies. It will make companies that do business in the United States and Iran think long and hard about transacting any business with the Iranian oil sector. And to the extent that funds in the international monetary system can be tied to the Iranian oil sector, these funds can be frozen.
IRPSA expands the President’s existing authority to impose sanctions on Iran. It will also make three new sanctions mandatory because it : 1. prohibits transactions in foreign exchange by sanctioned petroleum companies caught doing business with Iran; 2. would essentially block sanctioned companies from the U.S. financial system; and, 3. blocks the sanctioned entity from acquiring or owning any U.S. property.
All of this begs the question, why would any company bother doing business with the Iranian regime? By most accounts of people who have done business in the region, the regime bureaucrats are unreliable and drive hard deals that usually make for bad business in the long run. The Iranian regime is a bad corporate citizen – it is causing regional instability and spreading its poison around the world through a network of terror tentacles that reaches places like other state sponsors of terror Cuba and her supporters in Venezuela and Ecuador. It should be a no-brainer, find another business partner.
The global kabuki dance that diplomats engage in on this Iran matter borders on nonsensical. The media hyper obsesses about it making it just about comical. Never in the history of humanity has negotiating with megalomaniacs reached fruitful conclusions. Iran will be no different.
Global, comprehensive, and hard-hitting sanctions are long overdue. The piecemeal approach, well, stay tuned for Monty Python moments in the weeks and months ahead. All in all while it may make for good political theatre, if things do not go well, the final scene can have some rather serious repercussions for us and others.
At last count, IRPSA had close to 350 co-sponsors and is expected to pass at least in the House. The companion Senate measure, S.908, has not been scheduled for a vote, yet. As is usual in these matters, the U.S. is leading the effort. The Europeans, so heavily invested in the Iranian energy sector, keep dragging their feet.