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OFAC Targets More Iranian Entities

Following the trail of UN Security Council Resolution 1929 passed last week in response to Iran’s continued non-compliance with earlier UNSC resolutions, the United States today added numerous parties to its listed of sanctioned entities.

The U.S. government entity responsible for the country’s primary sanctions regime against Iran is the U.S. Treasury Department of Foreign Assets Control (OFAC).  In addition to promulgating regulations limiting trade with Iran and a number of other countries, OFAC also maintains the Specially Designated Nationals (SDN) list, a list of entities with whom any U.S. trade is prohibited.

Today’s listing, summarized in a Reuters article today, includes numerous entities related to Iran’s defense sector. This includes Defense Minister Ahmad Vahidi, Islamic Revolutionary Guards Corps (IRGC) Commander-in-Chief Ali Jafari, and head of the IRGC’s Basij paramilitary force, Brigadier General Mohammad Reza Naqdi.  Also included, among other entities, is the IRGC Air Force and IRGC Missile Command.

The sanctions also cover extensive shipping industry entities, including a number of ships and shipping companies.

Iran’s Post Bank has also been listed on the SDN.

Notably, as the previous post noted, the European Union is also contemplating similar types of sanctions against Iranian entities.  It should be stated that these sanctions do not appear to pose any particular pressure on Iranian civilians, rather they look to be crafted with an eye to pressure the IRGC and related entities, as well as entities deemed to be assisting Iran’s nuclear and missile programs.

New Sanctions Against Iran

A report in Tuesday’s Sydney Morning Herald states that the government of Australia has adopted sanctions against certain Iranian entities including Bank Mellat, Islamic Republic of Iran Shipping Line (IRISL) and General Rostam Qasemi head of the IRGC’s Khatam Al-Anbiya Construction Group.

The Australian decision follows a report in the New York Times detailing plans by the European Union to implement sanctions against Iran.  According to the report, these sanctions may eventually touch on Iran’s financial and energy sectors.  There appears to be a lack of consensus among EU states, and as such it will be interesting to see what the EU ultimately decides on.

Notably, the Financial Times has reported that there are certain legislative initiatives underway in the United States to sanction international banks engaging in business with Iran, in other words, third country institutions engaging in certain business with specific Iranian entities.

Given the very strong sanctions regime against Iran under current U.S. law, the U.S. government is arguably somewhat limited in using direct sanctions as leverage against Iran.  Conversely, the U.S.’ more recent strategy of dissuading third country financial institutions and other companies from doing business with Iran appears to be having a more direct impact on the Iranian economy.

Gazprom and the New Hydrocarbon Market

Generally the impression in the US media is that international energy companies have been largely unaffected by the global economic crisis. This article in Thursday’s Financial Times outlines challenges facing Russian energy giant Gazprom.

Coming off the victory of passing health care reform, the Obama administration is now taking on energy challenges, including a decision to begin some exploratory drilling in the Atlantic ocean.  Due to the inherently high costs of drilling in North America (compared to the MENA region) it remains to be seen whether this will be profitable or simply overshadowed by alternative energy becoming more commonplace.