U.S. Can Still Do More On Iran

The Trump Administration’s maximum pressure campaign has placed the Iranian regime, and its economy under significant stress. With just over a month left in office, the Trump Administration can continue to build pressure and leverage by taking the following steps:

Addressing Iran’s Human Rights Abuses and Corruption

• President Trump’s Executive Order targeting Iran’s supreme leader and his associates in June 2019 was a force multiplier to the existing sanctions architecture. The administration needs to supplement these efforts by making greater use of authorities for addressing human rights abuses, censorship, and corruption in Iran. More than 60 Iranian officials sanctioned by the European Union for human rights violations have not been designated by the US government. The Trump administration should more aggressively employ Executive Order 13553—under which only 33 entities and persons have been sanctioned—the Global Magnitsky Act, and Executive Order 13846 to proscribe Iran’s worst offenders.
• After the crackdown on protesters in November 2019, new sanctions should include Iran’s Supreme National Security Council (SNSC), which gave the order to shut down the country’s access to the internet, and Hassan Rouhani in his role as chairman of the SNSC.
• Congress should enact—and the administration should fully implement—the Iran Human Rights and Hostage-Taking Accountability Act, sponsored by House Foreign Affairs Committee Ranking Member Michael McCaul (R-TX), which requires sanctions on senior regime officials and others responsible for hostage-taking and other human rights abuses. If Congress fails to pass that legislation, the president should nonetheless impose its provisions through existing legal authorities and, if necessary, new executive orders.

Countering Iran’s Role in the Region

Iranian Proxies in Lebanon, Syria, Yemen and Iraq

• The US Department of State should make greater use of its ability to designate Iran-backed Shiite militias as foreign terrorist organizations (FTOs). To date, aside from the IRGC, the only Shiite militias styled as FTOs are Hezbollah in Lebanon, Kataib Hezbollah in Iraq, the al-Ashtar Brigades in Bahrain, and Asaib Ahl al-Haq. Similar entities acting as Iran’s proxies should likewise be added to the FTO list—including the Houthis, the Badr Organization, Saraya Khorassani, Harakat Hezbollah al-Nujaba, Kata’ib Imam Ali, Zainabiyoun Brigade, Fatemiyoun Division, Liwa Abu al-Fadhal al-Abbas, and Kata’ib Sayyid al-Shuhada. As an interim measure, the US government should levy terrorism sanctions against Iran’s affiliates in Iraq, Syria, and Yemen under Executive Order 13224.
• The US government should also target Iranian religious endowments – the so-called Bonyads, directly controlled by Iranian Supreme Leader Ali Khamenei – that provide Hezbollah with funding. These include the Astan Quds Razavi (Imam Reza Shrine foundation), the Bonyad-e Mostazafan va Janbazan (Foundation of the Oppressed and Disabled), Bonyad-e Panzdah-e Khordad (15 Khordad Foundation), and the Bonyad Maskan (Housing Foundation). The United States should also sanction Mohammad Mokhber, the head of the Execution of Imam Khomeini’s Order. Mokhber plays an important role in the supreme leader’s financial empire, and has deep ties to Iran’s banking sector, serving at one point as chairman of Sina Bank. He was previously sanctioned by the European Union in 2010, but it later delisted him.
• Continued pressure – including and up to sanctions – on former Lebanese officials and former ministers either directly affiliated with Hezbollah or from Lebanese political parties allied with Hezbollah.
• The United States must also target the group’s vast economic holdings in Lebanon as well as offshore companies—including legitimate businesses and investments—in addition to targeting those businesses’ suppliers. Entities like this include Atlas Holding – which is partially owned by Hezbollah’s Martyr Foundation – and its subsidiaries. These subsidiaries are Amana Fuel Co. and Amana Plus Co., which own a chain of gas stations and trade in fuel and oil derivatives; Shahed Pharm, involved in pharmaceutical drug importation and local wholesale; and MEDIC, which imports and sells pharmaceuticals, cosmetics, and medical equipment for local wholesale
• Predicating U.S. aid to the Lebanese government on sweeping and genuine economic reforms, and increased transparency in the financial sector, to guarantee Hezbollah’s exclusion – directly or via intermediaries – from the Lebanese banking and financial sphere.

Tightening the Noose on Sectors of the Iranian Economy

Petrochemical Sector

• The US government needs to further crack down on Iran’s petrochemicals sector— its second largest export industry after oil. In June 2019, the US Department of the Treasury took action against Iran’s largest and most profitable petrochemical holding group, Persian Gulf Petrochemical Industries (PGPIC), and PGPIC’s vast network of 39 subsidiary petrochemical companies and foreign-based sales agents. However, individual sanctions need to be levied against every Iranian petrochemical company and complex, as well as other key players in the sector, in order to eliminate any regulatory gap. Notably, Tamin Petroleum & Petrochemical Investment Co (TAPPICO), a subsidiary of state- owned Social Security Investment Company (SSIC) and a major investment vehicle holding majority stakes in multiple petrochemical plants, projects, and companies, warrants a similar designation to PGPIC.

Shipping Sector

• UANI has identified scores of foreign-flagged vessels collaborating with the Iranian regime in an effort to continue exporting sanctioned Iranian oil and gas. Using a wide array of evasive and illicit tactics – ‘going dark,’ obscuring ownership, ‘flag-hopping,’ renaming, ‘spoofing,’ ‘ship-to-ship’ transfers – these vessels are providing the regime with its most critical economic lifeline. OFAC must work with the international shipping community, especially flag registries, classification societies, and P&I Clubs, to establish a widely accessible clearing-house of ‘rogue vessels’ prohibited from flagging, classing or insurance. While flag registries are increasingly alive to the issue of ‘flag-hopping,’   OFAC should also seek to individually designate vessels and/or their owners/operators as a complementary remedy.

Iranian Trade Conference Circuit

• The US Treasury should further inhibit the ongoing Iranian trade conference circuit. There are still dozens of Iran trade conferences encouraging foreign investment and business attended by Western companies. The US Department of the Treasury has already sanctioned the New Horizons conference organizer for supporting the IRGC-QF and for “host[ing] international conferences that have provided Iranian intelligence officers a platform to recruit and collect intelligence information from attendees...” Furthermore, the Treasury Department should sanction any European organizer, notably including Germany’s IMAG GmbH, which continues to play a big role in convening Iranian conferences. Finally, the US government should call on all foreign companies to refrain from attending Iranian trade shows and business conferences for the same reasons that New Horizons was sanctioned: exposure to surveillance and corporate theft.

Construction & Engineering Sectors

• In October 2018, the IRGC commander-in-chief appointed Saeed Mohammad (a.k.a. Saeed Mohammad Esmaili) as KCB’s new “Commander.” Mohammad must be individually designated to inhibit his and KCB’s abilities to solicit foreign investment which directly advances the IRGC’s cause. As Iran’s largest contractor for industrial and construction projects with hundreds of satellite firms under its control, KCB is the most critical element in the IRGC’s economic dominance over the Iranian economy.

Working with Our Allies to Counter Iranian Aggression

• The US should encourage other countries to follow its lead and issue maritime guidance for all companies, involved in maritime trade as the UK’s Office of Financial Sanctions Implementation (OFSI) has recently done.