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Administration should help under-resourced countries prevent sanctions evasion by rogue states 

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American extra-territorial ‘secondary’ sanctions that compel behavioral changes in non-U.S. entities by threatening access to U.S. markets are an effective American policy tool. Few companies opt to forego access to the world’s largest consumer market in favor of rogue countries like Iran that are subject to U.S. sanctions. Unfortunately, targeted countries like Iran are adept at developing complex sanctions evasion techniques that rely on the involvement of unwitting governments and businesses. The U.S. could increase the impact of its sanctions efforts by sharply boosting the capabilities of smaller and under-resourced nations that fall victim to these sanctions evasion schemes.  

The U.S. already does this well with respect to financial crimes, including money laundering, terror financing, intellectual property theft, and counterfeit merchandise. It leads multilateral organizations like the Financial Action Task Force (FATF). The State Department “develops, funds, and implements” programs to strengthen the capacities of foreign countries facing the threat of “kidnapping for ransom, wildlife trafficking, exploitation of the gaming industry, and misuse of non-bank financial products including hawala.” Regulatory agencies including the IRS, and law enforcement including the FBI and DEA share best practices and provide training and technical assistance to officials around the world with the goal of enhancing the capacity of other nations to take action. 

President Joe Biden and Congress should use the next International Affairs Budget, which guides U.S. diplomatic engagement with the world, to reassert American leadership and make a robust commitment to helping our friends and allies protect themselves against Iranian chicanery while advancing our own interests. 

Since the Biden administration came into office, Iran has exported an average of almost 800,000 barrels per day of sanctioned Iranian oil to customers in China. This translates into tens of billions of dollars in revenue for the Iranian regime that can be used to advance its nuclear program, strengthen its capability to strike the U.S. and allied forces in the region, and fund terrorist proxy forces. Iran is on track to have exported more oil in 14 months under the current administration than the 48 months of the previous administration. 

To move its oil and natural gas to China, Venezuela, Syria, and even gas-rich Russia, Iran uses a combination of low-tech and sophisticated techniques. It has amassed a large “Ghost Armada” of vessels flagged — often unwittingly — by countries like Tanzania, the Cook Islands, Belize, Cameroon, Gabon, and Guyana. The provision of these flags — a requirement to enter any port in the world — is crucial to the success of Iranian oil smuggling efforts.  

Iran has built on the historic successes of its allies that pioneered such sanctions evasion, notably North Korea. For years, Pyongyang has been directing ship-to-ship transfers of oil and natural gas in international waters in violation of U.S. and UN sanctions. Recently, Iran has copied the formula for its own oil export schemes — with considerable success. Washington has not managed to shut down any of it. 

U.S. warnings to foreign capitals about bad actors that repeatedly register with new flag states to avoid detection are ineffective. Officials in countries most often targeted by Iran are not yet capable of independently detecting if vessels flying their flags are linking up with Iran’s blacklisted National Iranian Tanker (NITC) fleet to take on Iranian oil or natural gas in “ship-to-ship” transfers. They are ignorant of vessels repeatedly switching flags, changing names, and altering their physical markings. They do not know that other jurisdictions might have previously identified such activities and stripped the vessels of their flags, that the vessels might have called at Iranian ports, or which vessels are known to manipulate or disable their Automatic Identification System (AIS) satellite transponders to mask or hide its journeys. 

To deny the Iranian regime essential revenue streams enabling its malign behaviors, the U.S. must get serious about sealing the widening cracks in effective enforcement by enhancing international capacity to implement sanctions. This means providing assistance by the Coast Guard, State Department, Treasury, and/or other U.S. government agencies to foreign flag registries. Such aid should include establishing a mechanism to securely share information in real-time, training on best practices to prevent sanctions evasion, and resources to access open-source monitoring. 

If the U.S. does make a commitment to make such capacity building a point of emphasis, it won’t have to start at the ground level. Maritime agencies in states targeted by Tehran have come to rely on support from non-governmental organizations. United Against Nuclear Iran (UANI), which uses AIS, satellite imagery, vessel comparison, tanker classification, and cargo datasets to identify vessels carrying illicit cargo, regularly notifies authorities about likely violations of U.S. sanctions. 

In contrast to some of the larger ship registries, such as Panama, officials in countries like Tanzania are highly responsive when presented with evidence of vessels engaging in illicit activities while flying their flag. Officials in the Cook Islands, for example, told The Guardian in March 2021 that “we just do what they [UANI] tell us to do.” But private nonprofits should not be leading the charge to enforce U.S. sanctions. Washington should step up its own efforts to do so. 

If, however, the U.S. continues to ask flagging foreign authorities to fend for themselves, we can expect that Iran will take advantage of their lagging capabilities to continue to enrich itself through smuggled energy resources. Adversaries including China, Russia and Venezuela will become increasingly brazen in their disregard for sanctions. Bad actors in the private sector will be emboldened to take on other types of illicit cargo, such as weaponry. And those least capable of enforcement will continue facing the brunt of the risk of potential sanctions violations. 

Joseph I. Lieberman is a former senator from Connecticut and chairman of United Against Nuclear Iran. Mark D. Wallace is the CEO of United Against Nuclear Iran and former U.S. Ambassador to the UN for Management and Reform. 

Tags foreign relations Joe Biden Nuclear program of Iran Sanctions against Iran

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