U.S. Failure to Follow Through on Iran Sanctions is Baffling

World Politics Review
May 31, 2007

Last week, the International Atomic Energy Agency reported once again that Iran had defied U.N. Security Council demands to stop enriching uranium. And in response, the United States once again demanded that international sanctions against Iran be made more severe.

This call for sanctions—which has become routine by now—would be a lot more credible if it were not for a one embarrassing fact: The United States now lags many other countries in enforcing sanctions that the United Nations has already voted. One of the few real penalties to survive previous rounds of Council negotiation over sanctions is an asset freeze on Iranian entities involved in missile and nuclear work. Yet of the 50 entities listed in Security Council Resolutions 1737 and 1747, the United States has frozen the assets of only twelve (pdf file). The European Union, by contrast, has frozen the assets of all entities named in both resolutions (see here and here).

The lack of follow-through in Washington is baffling. Freezing the assets of Iran’s nuclear and missile builders would inhibit them from buying crucial technology. It would also make it harder for them to finance their work. A freeze on assets would go beyond the general restrictions on U.S. trade with Iran that date from the 1980’s.

To implement the financial penalties contained in both resolutions, the United States has chosen to use a June 2005 Executive Order, which allows the President to freeze the assets of entities engaged in proliferation activities. But only a handful of the Iranian organizations whose assets the United Nations has asked its member states to freeze have so far been designated under this Executive Order. Not yet targeted are Pars Trash and Farayand Technique—two entities involved in Iran’s centrifuge enrichment work. The same goes for the Esfahan Nuclear Technology Center, where the uranium gas feedstock for Iran’s centrifuges is produced, and for the Karaj Nuclear Research Center, which houses dismantled equipment from undeclared laser enrichment work and where unexplained traces of highly enriched uranium and plutonium were found by U.N. inspectors. All four of these entities are part of the Atomic Energy Organization of Iran.

It should be obvious that one of the best ways to tighten the noose around Iran’s nuclear and missile developers is to tie up their subsidiaries. Without such a step, the former can continue to operate through the latter. Iran’s Defense Industries Organization oversees several key subsidiaries, including Parchin Chemical Industries, the Ammunition and Metallurgy Industries Group and an organization know as “7th of Tir,” all of which the United Nations has linked to nuclear and missile work, and for which it has required an asset freeze. But the United States still has not obliged. The same is true of the Fajr Industrial Group, a subsidiary of Iran’s Aerospace Industries Organization that, according to the Security Council, is involved in Iran’s missile program.

The United States may believe—wrongly, in fact—that most of these entities are already covered by a U.S. asset freeze because they are “owned or controlled” by or act “for or on behalf of, directly or indirectly,” an organization listed in the Executive Order. The Executive Order does include Iran’s Atomic Energy Organization, its Aerospace Industries Organization and its Defense Industries Organization. It is extremely unlikely, however, that U.S. banks around the world, which are expected to freeze the assets of these entities, will know the names of their subsidiaries. To make sanctions work in the real world, a bank needs to be told exactly whose assets to freeze.

What’s more, assets must be frozen swiftly, before they can be moved to safety. The United States waited three months to take action after the Security Council asked for an asset freeze against Iran’s Defense Industries Organization. Why so long? And why has the United States still not frozen the assets of twenty-six of the twenty-seven individuals listed by the Security Council since December? The Executive Order clearly allows for individuals to be subject to its penalties.

This U.S. foot dragging is particularly embarrassing in light of the fact that a number of U.S. allies have already frozen the assets of most, if not all, the persons and organizations that the Security Council has identified. In April, the European Union even exceeded the U.N.’s requirements by freezing the assets of twenty-three new Iranian entities that the United Nations had not named. Included in the E.U. list is a nuclear laboratory linked to undeclared uranium metal conversion experiments, and a number of individuals from Iran’s nuclear brain trust. These individuals, along with those listed in Security Council Resolutions, were also slapped with an E.U. travel ban.

Thus far, the United States has helped shepherd two rounds of unanimously-backed sanctions against Iran through the Security Council, where unanimity among permanent members is difficult to achieve. This process of gradually increasing international pressure on Iran should continue as long as Iran keeps its centrifuges running.

But if the United States really expects sanctions to affect Iran, the United States must take the lead in enforcing them. That means, at a minimum, swiftly implementing U.N. resolutions. Anything less sends a message to the rest of the world that the penalties don’t matter, and that the U.S. policy on Iran is business as usual.

Published in the World Politics Review, a daily foreign policy, national security and international affairs Web publication, on May 31, 2007.