FPI Bulletin: U.S. Must Hold the Line on Iran Sanctions

April 20, 2016

Without a trace of irony, Tehran has once again accused Washington of failing to uphold its obligations under the nuclear deal. In a speech on Friday, the governor of Iran’s Central Bank argued that the pact, formally known as the Joint Comprehensive Plan of Action (JCPOA), would collapse if the United States continues to deny Iran access to the dollar — a claim with no basis in the text of the agreement. Rather than grant this new concession, which would only encourage further Iranian misbehavior, the United States should strengthen the sanctions that still exist. Washington can then make clear that any future relief will depend on meaningful Iranian steps to halt its regional aggression and human rights violations.

Iran’s Latest Threat

In his appearance before the Council on Foreign Relations (CFR), the Central Bank’s head, Valiollah Seif, stated that U.S. sanctions relief thus far has proven “insufficient.” Noting that Iran still cannot access most of its frozen funds abroad, he asserted that America and the European Union must engage in “more face-to-face contacts with the international banks, assuring them they do not penalize them working in Iran,” and make “changes to the laws and regulations to give access to the U.S. financial systems.” “Otherwise,” he warned ominously, “the JCPOA breaks up under its own terms.”

The Obama administration’s own rhetoric and timidity have invited this implicit threat. By publicly indicating, in response to fresh complaints by the Islamist regime, that it would consider reopening the U.S. financial system to Iran, it spurred further, and more aggressive, Iranian pressure. Likewise, by remaining largely passive in the face of Tehran’s serial provocations, including its ballistic missile tests, capture of U.S. sailors, purchase of offensive weapons, support for terrorism, and subjugation of its own people, the administration effectively strengthened Iran’s belief that it could extract further concessions.

In large measure, the administration’s inaction stems from fear that further sanctions may spur Tehran to withdraw from the agreement. In reality, the administration’s posture has done little more than embolden the regime to flout the deal’s spirit. Adding insult to injury, Tehran now alleges that the United States is the real provocateur — a transparent attempt to deflect charges that Iran’s own behavior has deterred international banks from conducting business with the country.

At CFR, Seif dismissed an audience member’s question about Iran’s support for terrorism as “Iran-phobia,” and claimed that Tehran possesses only “peaceful intentions.” “Over the course of the past few years,” he asked, “do you have any history of Iran’s aggression against any of its neighbors?” — apparently forgetting his country’s destabilizing role in Iraq, Syria, Lebanon, Yemen, Afghanistan, and the Gulf states. Noting that Iran resides “in a very high-risk part of the world,” Seif defended Tehran’s ballistic missile program as necessary to shield Iran from the Islamic State and protect the people of Yemen — conveniently omitting the regime’s pursuit of an intercontinental ballistic missile capable of reaching the United States.

Seif also disingenuously deflected charges that conducting business with Iran would pose a financial risk. Dubbing Iran’s economy “very transparent,” he criticized the Financial Action Task Force, an inter-governmental body devoted to combatting terrorist financing, for engaging in “political behavior” by calling the regime a threat to the integrity of the global financial system. Asked to respond to Iran’s Transparency International Corruption Perceptions Index ranking of 130 out of 168 countries, he called the designation “politically motivated.”

Iran’s Latest Bluff

Seif’s threat to abandon the deal — like the prior threats of other Iranian officials — is almost certainly a bluff. After all, so long as banks refuse to conduct business in Iran, the regime maintains a strong interest in upholding the agreement. Should it withdraw, it would sacrifice any chance of regaining the banks’ confidence for the foreseeable future, whereas remaining in the pact enables Tehran to continue exerting pressure for further concessions. In this context, the Central Bank governor’s statement marks a strategic effort to extract further concessions from the White House by exploiting its desperation to preserve the deal.

Thus, only one day later, in what amounted to a good cop-bad cop routine, Iranian Foreign Minister Mohammad Javad Zarif effectively walked back Seif’s statement. “I do not see [the] JCPOA in jeopardy,” he asserted during a visit of European Union officials to Iran. Rather, he said, the United States has only violated its spirit. “All we’re asking the United States,” he declared, “isn’t to interfere and to assure…international banks that they will not be fined again illegally for doing business with Iran.” Zarif’s seemingly accommodating posture secured a commitment from the EU’s foreign policy chief, Federica Mogherini, to continue pressuring the United States to restore Iranian access to the dollar.

“The main message that I have delivered here is the fact that we Europeans have as much as an interest as the Iranians that this issue is solved,” Mogherini told reporters. “We have an economic interest also in coming back here as the first trading partner…In order to do that we need our banks to be present here.” She also said the EU was trying to “reassure” major European banks that they could safely resume business with Iran. Thus, Iran’s conflicting messages served to increase pressure on the United States and galvanize international support for its new demands.

Yesterday, Iran appeared to make further progress. After a meeting between Zarif and Secretary of State John Kerry at the United Nations, America’s top diplomat said that the two nations “are both working at making sure…the Iran agreement is implemented exactly as it was meant to be and all the parties to that agreement get the benefit that they are supposed to get out of the agreement.” Tellingly, Kerry seeks to satisfy Iranian demands with no actual foundation in the deal itself even as Tehran continues to demonstrate contempt for numerous and longstanding American concerns.

America’s Latest Concession?

Tehran’s strategy has achieved results in the past. To date, its repeated threats to withdraw from the deal have deterred the White House from inflicting meaningful penalties on Iran for its misbehavior. Similarly, Iran’s threat to abandon the agreement persuaded the United States and its partners to accept a U.N. report that largely whitewashed Iran’s past efforts to weaponize nuclear material, also known as the possible military dimensions (PMD) of the regime’s nuclear program.

The Obama administration must not repeat its prior mistakes. Instead, it should reinvigorate existing sanctions, and then state publicly that any future relief hinges on concrete Iranian steps to halt its support for terrorism, human rights abuses, illicit weapons procurement, and ballistic missile development. In the meantime, the United States should reject any Iranian request for concessions it has not earned.

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