RS20871
Iran Sanctions
October 08, 2009
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Summary
Iran is subject to a wide range of U.S. sanctions, restricting trade with, investment, and U.S. foreign aid to Iran, and requiring the United States to vote against international lending to Iran. Several laws and Executive Orders authorize the imposition of U.S. penalties against foreign companies that do business with Iran, as part of an effort to persuade foreign firms to choose between the Iranian market and the much larger U.S. market. Most notable among these sanctions is a ban, imposed in 1995, on U.S. trade with and investment in Iran. That ban has since been modified slightly to allow for some bilateral trade in luxury and humanitarian-related goods. Foreign subsidiaries of U.S. firms remain generally exempt from the trade ban since they are under the laws of the countries where they are incorporated. Since 1995, several U.S. laws and regulations that seek to pressure Iran™s economy, curb Iran™s support for militant groups, and curtail supplies to Iran of advanced technology have been enacted. Since 2006, the United Nations Security Council has imposed some sanctions primarily attempting to curtail supply to Iran of weapons-related technology but also sanctioning some Iranian banks. U.S. officials have identified Iran™s energy sector as a key Iranian vulnerability because Iran™s government revenues are approximately 80% dependent on oil revenues and in need of substantial foreign investment. A U.S. effort to curb international energy investment in Iran began in 1996 with the Iran Sanctions Act (ISA), but no firms have been sanctioned under it and the precise effects of ISAŠas distinct from other factors affecting international firms™ decisions on whether to invest in IranŠhave been unclear. While international pressure on Iran to curb its nuclear program has increased the hesitation of many major foreign firms to invest in Iran™s energy sector, hindering Iran™s efforts to expand oil production beyond 4.1 million barrels per day, some firms continue to see opportunity in Iran. This particularly appears to be the case for companies in Asia that appear eager to fill the void left by major European and American firms and to line up steady supplies of Iranian oil and natural gas. Some in Congress express concern about the reticence of U.S. allies, of Russia, and of China, to impose U.N. sanctions that would target Iran™s civilian economy. In an attempt to strengthen U.S. leverage with its allies to back such international sanctions, several bills in the 111th Congress would add U.S. sanctions on Iran. For example, H.R. 2194, H.R. 1985, H.R. 1208, and S. 908 would include as ISA violations: selling refined gasoline to Iran; providing shipping insurance or other services to deliver gasoline to Iran; or supplying equipment to or performing the construction of oil refineries in Iran. H.R. 2192 and S. 908 would also expand the menu of available sanctions against violators. H.R. 1208 would further restrict trade with Iran. There has also been movement on the part of some U.S. states to divest from firms that do business with Iran, even if such trade is legal, and several bills would protect investment funds from lawsuits for divesting from companies active in Iran. However, some experts see such legislation as angering Europe and thereby reducing European cooperation with the United States on Iran, or as potentially backfiring by strengthening the political control exercised by Iran™s leaders. For more on Iran, see CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman.
