U.S. Sanctions Listing Could Hurt Humanitarian Trade With Iran
October 19 2018 - 5:59AM
Dow Jones News
By Samuel Rubenfeld
U.S. sanctions intended to squeeze an Iranian paramilitary force
may have unintended consequences for humanitarian efforts in the
country because of its targeting of a bank, lawyers and analysts
say.
They also could signal a harder-line approach toward Iran as the
U.S. prepares to restore the final tranche of its sanctions lifted
following the 2015 nuclear accord that target key economic engines,
such as oil and petrochemicals. President Donald Trump said in May
when exiting the nuclear deal that the sanctions would phase back
in over a 180-day period.
The measures announced this week by the U.S. Treasury Department
target companies and financial institutions allegedly supporting
the Basij militia, a force subordinate to Iran's Islamic
Revolutionary Guard Corps, and which the U.S. says recruits child
soldiers.
The restrictions, imposed under the Treasury's counterterrorism
authority, also were meant to send a warning to companies and
governments considering continued dealings with Iran after the
restoration of sanctions, senior administration officials told
reporters.
But one of the institutions blacklisted this week, Iran's
Parsian Bank, is seen as a key conduit for international
humanitarian trade with Iran. Observers don't consider it as
closely linked to the country's illicit activities as other Iranian
financial institutions, and they suggested the sanctions could
chill funding for otherwise legal exports to Iran, such as medicine
and food.
"This will make it more difficult to get financing for
humanitarian projects," said Adam M. Smith, a partner at law firm
Gibson Dunn & Crutcher LLP, who previously served as a senior
adviser to the director of the Treasury Department's sanctions
office. "That makes me very nervous."
Unique to this case is the justification for the sanctions. The
companies weren't targeted for their own actions, according to the
Treasury's announcement. The decision instead came as a result of
an investment firm that profited from investments in Parsian and
two other entities. The proceeds from those investments flowed up
to the network supporting the Basij, the Treasury said.
"There are eight degrees of derivation between Parsian Bank and
the [intended sanctions target], the IRGC," said Erich Ferrari,
founder of Ferrari & Associates PC, a boutique law firm focused
on representing targets of U.S. sanctions.
The sanctions freeze U.S. assets and bar Americans from
conducting transactions with those targeted. A spokesman for the
Treasury declined to comment beyond the press release announcing
the sanctions.
Parsian Bank didn't respond to an email seeking comment. During
the era of heightened sanctions on Iran, Parsian covered "a
substantial volume of the humanitarian trade" in goods and
services, and imports of food and medicine, the bank says on its
website.
Parsian also says it has an established an anti-money-laundering
compliance program and that it follows national and international
standards. The company has held compliance training for its staff,
as well as for other Iranian lenders, "in an effort to promote the
proficiency of the personnel within the Iranian banking system,"
Alireza Alaei, the bank's manager of its international operations,
is quoted as saying on the bank's website.
The sanctions this week come ahead of the restoration of
restrictions on the Iranian shipping sector, the oil sector and the
central bank, scheduled for Nov. 5.
Javad Zarif, Iran's foreign minister, condemned this week's
sanctions on Twitter, saying they violate an international court
order not to impede humanitarian trade.
"Utter disregard for rule of law & human rights of an entire
people," he said, calling the U.S. an "outlaw regime" with an
"addiction to sanctions."
One of the likely intended audiences for the sanctions on
Parsian Bank was the European signatories to the nuclear deal,
according to a note issued by the Eurasia Group, a political risk
consultancy firm. The European Union considers Iran's access to
humanitarian goods a priority, and European officials likely are
outraged by the step against the bank, the note said.
It could motivate European officials further to implement a
planned special-purpose vehicle to bypass U.S. sanctions. The
mechanism may only be effective for the humanitarian transactions,
however, and not for oil or other exports as Tehran hopes, the note
said.
Sanctions experts said last month that the vehicle, based on
early sketches of its structure, was unlikely to work.
Write to Samuel Rubenfeld at samuel.rubenfeld@wsj.com
(END) Dow Jones Newswires
October 19, 2018 05:44 ET (09:44 GMT)
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