US Eases And Imposes Iran Sanctions On Same Day

US Eases And Imposes Iran Sanctions On Same Day

In another demonstration of President Obama’s inability to formulate a coherent policy in the face of fresh Iranian violations of missile test bans, the United States both imposed new sanctions on and eased trade with Iran on the same day on Thursday.

Iran’s renewed aggression is unmistakable even to those whose willful blindness wrought the Joint Comprehensive Plan of Action (“JCPOA”).

New Sanctions In Response to Iranian Missile Tests

Earlier this month, Iran conducted two days of tests in violation of UN resolutions.  At least one of the missiles had “Israel must be wiped of the face of the earth” written on it.  These violations prompted many lawmakers to call for new sanctions on Iran, including Hillary Clinton and a number of Republican Congressmen.

Perhaps in a move to head off new legislation, the Department of Treasury’s Office of Foreign Assets Control (OFAC) added additional entities to its Specially Designated Nationals (“SDN”) list of people and entities sanctioned under existing U.S. law.  Two of the additions are Iranian companies – Shahid Nuri Industries and Shahid Movahed Industries – directly involved in Iran’s ballistic missile program.

But OFAC also added a British aircraft parts and services company, two British nationals and two companies operating in UAE, all for their links to Mahan Air.  According to Reuters:

The Treasury Department . . . blacklisted two British businessmen, Jeffrey John James Ashfield and John Edward Meadows, for running businesses that have provided support for Mahan Air, an Iranian airline. The United States has accused Mahan Air of ferrying troops, equipment and weapons to support the government of President Bashar al-Assad in Syria’s civil war.

Ashfield was “directly involved” as of late 2015 in negotiating the purchase of U.S. aircraft engines for Mahan Air, the Treasury said. Meadows is the director of a company that has worked to provide aviation parts and financing to Mahan Air, the Treasury said.

Two companies in the United Arab Emirates, Grandeur General Trading FZE and HSI Trading FZE, were also blocked for supporting Mahan Air.

These are “secondary sanctions” imposed on non-Iranian businesses for doing business with an Iranian airline linked to the Iranian military.

New General License Under Joint Comprehensive Plan Of Action

Just hours after announcing these new sanctions, OFAC published General License I, easing export of commercial aircraft and related parts and services to Iran pursuant to the JCPOA President Obama entered into last year.  General License I allows US businesses to negotiate and enter into:

executory contracts, executory pro forma invoices, agreements in principle, executory offers capable of acceptance such as bids or proposals in response to public tenders, binding memoranda of understanding, or any other similar agreement.

These preliminary agreements are critical to consummating a major commercial transaction.

OFAC also updated its Frequently Asked Questions regarding Iran sanctions relief under the JCPOA.  According to FAQ J.9, General License I is meant to “allow for more efficient processing of specific license applications for the export or re-export to Iran of commercial passenger aircraft and related parts and services.”

To be clear, General License I does not allow export to Iran.  It does and is meant to speed the process for obtaining a license for later export of commercial airline parts and services to Iran.

Working At Cross Purposes

It is passing strange that OFAC eased sale of commercial aircraft and related parts and services to Iran on the same day it imposed sanctions on companies providing commercial aircraft parts and services to Iran.  If can be classified as policy, it is confused, inconsistent and doomed to fail.

Yes, the new sanctions arose out of the implicated entities’ links to Mahan Air and Mahan’s ties to Iran’s military.  But it is naive to think a generally more robust Iranian commercial aviation does not at least indirectly help Mahan as well, or that the Iranian government would hesitate to nationalize or otherwise co-opt other airlines’ men and material whenever and however it sees fit.  If Iran’s commercial air industry grows, the government will have a ready supply from which to replace Mahan’s derelict fleet as necessary.

In short, sanctioning past commercial aircraft transactions while easing future commercial aircraft transactions is nonsensical.

The problem, of course, is that President Obama entered into a historically bad deal in the JCPOA, and lacks either the introspection or the political and personal will to admit and repair his mistake.  As Secretary of State Kerry admitted after Iran’s last set of missile tests last year, the JCPOA does not limit Iran’s ability to conduct ballistic missile tests.  This limits Obama’s political maneuverability to link JCPOA sanctions relief to Iran’s compliance with UN missile test restrictions.  So sanctions relief continues.

At the same time, Iran remains the world’s leading state sponsor of terrorism and continues to develop weapons to threaten the very survival of core US allies.  So Congress can and should impose sanctions in response to Iranian provocations, and OFAC should use the tools at its disposal to impose penalties without new legislation.  So sanctions increase.

These discordant policies cannot co-exist.  They reflect an administration adrift and rudderless, hoping for positive results without any vision of how they would come about.

Assuming the damage is not irreparable, the next President should scrap the JCPOA which is warping US policy.  In its place, the US should re-impose sanctions that were working until Obama undercut them, and make absolutely clear that Iran will be frozen out of world markets so long as it pursues any part of a nuclear arsenal – including delivery systems.  Sanctions relief should come in response to good behavior, particularly closing or decommissioning nuclear-, missile- and terror-related facilities.

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