Israel Matzav

US fails to enforce its existing Iran sanctions

Here's more evidence that even if 'crippling sanctions' against Iran are adopted (which appears unlikely), they won't be enforced by the United States, let alone by anyone else. The New York Times reports in Sunday's editions that over the past decade, the United States federal government has awarded over $107 billion in contracts to companies that do business in Iran. Two thirds of that amount went to companies in Iran's sensitive energy sector, and some $15 billion went to companies that were clearly in violation of existing US sanctions. Among other things, existing US sanctions are supposed to punish foreign companies that invest $20 million or more per year in developing Iran's oil and gas fields. It didn't happen under President Bush and it isn't happening under President Obama.

More than two-thirds of the government money went to companies doing business in Iran’s energy industry — a huge source of revenue for the Iranian government and a stronghold of the increasingly powerful Islamic Revolutionary Guards Corps, a primary focus of the Obama administration’s proposed sanctions because it oversees Iran’s nuclear and missile programs.

Other companies are involved in auto manufacturing and distribution, another important sector of the Iranian economy with links to the Revolutionary Guards. One supplied container ship motors to IRISL, a government-owned shipping line that was subsequently blacklisted by the United States for concealing military cargo.

Beyond $102 billion in United States government contract payments since 2000 — to do everything from building military housing to providing platinum to the United States Mint — the companies and their subsidiaries have reaped a variety of benefits. They include nearly $4.5 billion in loans and loan guarantees from the Export-Import Bank, a federal agency that underwrites the export of American goods and services, and more than $500 million in grants for work that includes cancer research and the turning of agricultural byproducts into fuel.

In addition, oil and gas companies that have done business in Iran have over the years won lucrative drilling leases for close to 14 million acres of offshore and onshore federal land.

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The government can, and does, bar American companies from most types of trade with Iran, under a broad embargo that has been in place since the 1990s. But as The Times’s analysis illustrates, multiple administrations have struggled diplomatically, politically and practically to exert American authority over companies outside the embargo’s reach — foreign companies and the foreign subsidiaries of American ones.

Indeed, of the 74 companies The Times identified as doing business with both the United States government and Iran, 49 continue to do business there with no announced plans to leave.

One of the government’s most powerful tools, at least on paper, to influence the behavior of companies beyond the jurisdiction of the embargo is the Iran Sanctions Act, devised to punish foreign companies that invest more than $20 million in a given year to develop Iran’s oil and gas fields. But in the 14 years since the law was passed, the government has never enforced it, in part for fear of angering America’s allies.

That has given rise to situations like the one involving the South Korean engineering giant Daelim Industrial, which in 2007 won a $700 million contract to upgrade an Iranian oil refinery.

According to the Congressional Research Service, the deal appeared to violate the Iran Sanctions Act, meaning Daelim could have faced a range of punishments, including denial of federal contracts. That is because the law covers not only direct investments, such as the purchase of shares and deals that yield royalties, but also contracts similar to Daelim’s to manage oil and gas development projects.

But in 2009 the United States Army awarded the company a $111 million contract to build housing in a military base in South Korea. Just months later, Daelim, which disputes that its contracts violated the letter of the law, announced a new $600 million deal to help develop the South Pars gas field in Iran.

Read the whole thing. Sanctions are a farce. They won't be crippling, they won't be enforced, and they're being undertaken far too late in the game to have a chance of convincing Iran to put a stop to its nuclear weapons development even if they were both crippling and properly enforced. There is only one way to stop Iran from obtaining nuclear weapons. And it will be left to Israel and to Israel alone to use that method.

posted by Carl in Jerusalem @ 6:07 PM