Iran and Us Sanctions

Iran and US Sanctions
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Iran and US Sanctions The history of U.S sanctions over Iran dates back to early 1950s when Britain and America boycotted Iranian oil. The 1950s boycott was as result of the nationalization British Iran’s oil company. The result of the boycott adversely affected the Iran economy and eventually led to the deposition and Mosaddeq who the president by then. In 1979, during the Iran revolution, United States government backed a coup in Iran and the exiled Shah was re-installed as the president. As a result, a group of students seized the American embassy in Tehran and this lead to the U.S freezing approximately 12 billion dollars in Iran assets. These included bank deposits and other properties, which up-to-date remain legal cases, which have yet to be resolved (associated Press). In 1984, Iraq, which by then was under the rule Saddam Hussein, attacked Iran and the United States intensified sanctions against Iran. The sanctions were extended to deny Iran any international loan from major international donors. Iran was also prohibited from purchase of weapons or any military assistance. These sanctions were because of bombing of United States in Lebanon in 1983 where Iran was seen as a major sponsor to the bombing. In fact, Ronald Reagan who was the president of the United States during this period, declared Iran as a major sponsor of international terrorism. By august 1986, United States banned export of spare parts to Iran and this was seen a major blow because relied on U.S for aircraft spare parts. In 1992, there was a growing about Iran manufacturing of weapons of mass destruction. As a result, in October the same year the Iran- Iraq Arms proliferation Act was passed by the congress after CIA established that Iran had allocated more than 2 billion dollars for developing weapons of mass destruction. The worst sanctions against were later passed during the period when Bill Clinton served as the U.S president. During this period the soviet Union had collapsed and therefore America being the only super-power could take greater political risk to protect human rights violations and international terrorism especially development of weapons of mass destruction in Iran. On the other hand, Clinton administration preferred sanctions instead of military action as way to tame the growing insecurity threat from Iran. As a result, in March 1995, President Clinton banned US contribution to oil development in Iran through an executive order. He also issued a total trade embargo against Iran and declared Iran as extra-ordinary threat to international security. The executive order had major extra-territorial effects on Iran since it affected other countries. For instance, Germany under pressure from the United States government gave up the plans to sell a nuclear reactor to Iran. The trade and investment embargo against are seen one of the reasons why Iran –Iraq war ended abruptly. This could be so, because the two warring countries could have been unable to continue with war after being denied military and financial support. Later in 1996, the congress passed the Iran-Libya sanctions Act (ILSA) that put more pressure even to the other foreign companies investing in Iran. The Act stated that any foreign company investing more than 20 million U.S dollars for oil development in Iran was to suffer at least two of seven possible sanctions (Liang). According to Wright (p.104) the seven possible sanctions included,

• The companies were to be denied the assistance of Export-Import Bank. • Any company that violated these rules was to be denied export license • Any violating company was to be denied access to loans in the American financial institutions. • Violating companies were also to be denied access to U.S government debt instrument. • Violating companies were to loose an opportunity to act as an agent for U.S government funds. • Violating companies risked loosing American government procurement opportunities. • Depending on the magnitude of violation, the company could suffer total ban of its imports. Due to these strict measures, many foreign companies tried as much to avoid dealing with Iran. In 1997, there was a proposal in the U.S congress to ease the sanctions but there was not much achieved in easing the sanction against Iran. When President George W. Bush come to power there a wave of optimism that the sanctions against Iran would be lifted especially among the players in the oil industry. The sanctions were not working well within the oil industry and many players in the industry anticipated the new administration would lithe bans to assist the oil industry. Collin Powell, who was the U.S secretary of state by then, issued a statement arguing that the differences between U.S and Iran should not prohibit greater interaction in terms of commerce and dialogue. He also promised that the security team would look into ways of dealing with Iran (Nikolas). However, there was another major player U.S – Iran politics and this was the America Israel Public Affairs Committee (AIPAC). During this period when the sanctions were being revisited the AIPAC was pressurizing the Government to intensify the sanctions due to the following reasons. ▪ During this time, Iran had developed missile, which could reach Israel. ▪ Iran had condemned 10 Jews for allegedly spying Iran. ▪ Iran was still sponsoring anti-Jewish terrorist organizations like Hamas. ▪ Iran government had issued statement-condemning Israel. As a result, in 2001 U.S renewed the ILSA Act after it 74 senators voted in favor of it. The ILSA was extended for a five-year period and this scattered any hope of America trading with Iran. While signing the bill into law president Bush hinted that the sanctions should reviewed often to establish their suitability and their practicability. Later in September the same year, the worst terrorist attack occurred on the U.S soil. In view of the events that led to the attack, Iran was classified as member of the axis of the evil (Nikolas)l. Later this year, President Obama extended the sanctions against Iran arguing that the Iranian policies are still a threat to the United States security and anti-terrorism policy. President Obama promised that that his administration will deal openly with Iran but will not allow Iran to develop weapons of mass destruction. The Iranian government has insisted that their nuclear policies are peaceful. The Iranian president dismissed the extension of the sanction as a “childish idea and a big mistake” (Ray). The new administration under the Presidency of Barrack Obama is still considering the foreign policies especially on Iran. The secretary of State, Hillary Clinton has hinted that America may consider inviting Iran to an international scheduled at the end of this month within an aim to revisit the U.S foreign policy in Afghanistan. Many observers have expressed optimism and argued that, if the U.S is able to establish diplomatic ties with Iran it would have made a major step towards anti-terrorism. The U.S foreign policy and sanctions against Iran is surrounded by many controversies. Some critics of the United States have argued that oil politics is major cause of the conflict between U.S and Iran (Lionel). However, the U.S foreign policy and the anti-terrorism policy have played a major role in these sanctions. Iran’s open support to the terrorist groups such as Hamas and other Palestinian terrorists has been as a major threat to the America’s security. Several studies have tried to establish the impacts of ILSA in terms of cost both to the U.S and to Iran economy. The major reason to impose ILSA was ensure that Iran does not have access to foreign capital for their oil industry and in the process make them unable to support Hezbollah and other international terrorists as well as deter them from developing weapons of mass destruction. However, the ILSA has not been very successful because foreign investment has been going on the upstream of Iran. On the other hand, despite the fact that ILSA has slowed the development of international oil and gas pipeline in Iran, it has not actually stopped the process. More to that, ILSA could have slowed the extraction and the development of the Liquefied Natural Gas but still has motivated the Iranians and the allies to develop technology which is totally free from the United States components thus relieving themselves from further reliance to the U.S in future (Sharon). As a result, Iran has not ceased from supporting the terrorist organizations and on the other hand, they had continued with their plans of developing weapons of mass destruction. American oil industry has also been adversely affected by the ILSA since Iran could have been a source of cheap oil for the United States. In view of this failures especially the fact that Iran policies continue to pose a major threat to U.S security, many observers have suggested that diplomatic contacts would help both countries. The new U.S administration is expected to establish new diplomatic ties with Iran. However, this may not be possible due to Iran nuclear plans.

Works cited

Associated Press. UN Sanctions 11 Firms Tied to Iran Bank. The Jerusalem Post. 2009. Retrieved from
Liang Youchang. Iran turns cold shoulder to U.S. sanctions, promises to continue co-operation with IAEA, EU. 2008. Retrieved from Lionel Beehner. US Sanctions Biting Iran. Council on Foreign Relations. 2007. Retrieved from < http://www.cfr.org/publication/12478/us_sanctions_biting_iran.html
Nikolas Gvosdev & Ray Takeyh. Russia's Role in the Iran Crisis. Council on Foreign Relations .2008. Retrieved from Sharon Squassoni. Iran’s Nuclear Program. CRS Report for Congress .2006. Retrieved from