New Measures Further Constrain Iranian Oil Revenues, Target Iran’s Human Rights Abusers
By Dialogo February 11, 2013
The United States took a number of actions on January 7 to tighten sanctions on Iran’s access to its oil revenues and further expose the Iranian government’s continued abuse of human rights.
Key provisions of the Iran Threat Reduction and Syria Human Rights Act of 2012 (TRA) that went into effect that day, expand the scope of sanctionable transactions with the Central Bank of Iran and designated Iranian financial institutions by restricting Iran’s ability to use oil revenue held in foreign financial institutions as well as preventing repatriation of those funds to Iran.
The U.S. Department of the Treasury, in consultation with the U.S. Department of State, also designated one individual and four entities for their involvement in the Iranian government’s censorship activities. These censorship activities restrict the free flow of information in Iran and punish Iranian citizens who are attempting to exercise freedom of assembly and expression.
“Our policy is clear – so long as Iran continues to fail to address the concerns of the international community about its nuclear program, the U.S. will impose tighter sanctions and intensify the economic pressure against the Iranian regime,” said Treasury Under Secretary for Terrorism and Financial Intelligence David S. Cohen. “We will also target those in Iran who are responsible for human rights abuses, especially those who deny the Iranian people their basic freedoms of expression, assembly and speech.”
January 7 marked 180 days since President Obama signed the TRA. Section 504 of the TRA amends existing sanctions in the National Defense Authorization Act for Fiscal Year 2012 (NDAA) that target the Central Bank of Iran, designated Iranian financial institutions and Iran’s energy sector. At the 180-day mark, section 504 narrowed the exception for countries that have significantly reduced their purchases of Iranian crude oil so that the exception now only applies to financial transactions that facilitate bilateral trade between the country granted the exception and Iran. For the exception to apply to a financial transaction, funds owed to Iran as a result of such bilateral trade will now have to be credited to an account located in the country granted the exception and may not be repatriated to Iran.
This provision will significantly increase economic pressure on Iran by restricting Iran’s repatriation of oil revenue. In addition to effectively “locking up” Iranian oil revenue overseas, this provision sharply restricts Iran’s use of this revenue for bilateral trade and severely limits Iran’s ability to move funds across jurisdictions.