Sanctions relief isn’t necessary to assist Iran’s coronavirus response
The rapid spread of the coronavirus in Iran is deeply alarming, as are the severe difficulties facing the Iranian government — which continues to mishandle its response — in dealing with the outbreak, treating the ill, and taking necessary preventive measures. Iran ranks sixth worldwide for confirmed cases of COVID-19, and fourth for deaths from the virus. The reality is likely far worse, considering the lack of testing capacity and the government’s inclination to lie. Given what public health experts anticipate about the lethal trajectory of this virus, the instinct to assist other countries — such as Iran — in their efforts to flatten the curve is perfectly understandable.
In the case of Iran and its struggle to contain the virus and treat the sick, however, sanctions relief is not a cure-all. Moreover, systematic corruption of Iran’s leaders and the weak capacity of its government mean it is doubtful that lifting sanctions would translate into the robust response the Iranian people need and deserve.
However, there are actions that the United States could take — short of lifting sanctions — to aid the humanitarian response in Iran. Without fundamentally altering the sanctions infrastructure, the administration could provide greater clarity on allowable humanitarian trade and authorizations for nongovernmental organizations (NGOs) to expand their work in Iran.
Iran does have access to funds to pay for medical and humanitarian supplies. It does not need emergency loans or sanctions waivers to finance humanitarian purchases from abroad. Even though the Trump administration sanctioned the Central Bank of Iran (CBI) in September 2019 for supporting terrorism, the Treasury Department recently took action to allow humanitarian trade transactions involving the CBI. The Treasury could clearly inform banks that Iran is authorized to use the foreign exchange held in CBI accounts abroad, including Iranian oil revenues stuck in escrow accounts in China, Japan, India and South Korea, to finance the importation of goods that will help the government respond to its coronavirus outbreak.
And despite U.S. sanctions, mechanisms exist for Iran to import medical and humanitarian goods, and additional ones could come online soon. On March 23, South Korea’s Foreign Ministry announced that it was considering ways to provide humanitarian relief to Iran. This could include establishing a mechanism such as the Swiss channel, inaugurated last month by agreement between the U.S. and Switzerland to facilitate humanitarian-related trade with Iran by Swiss firms. The Swiss channel was designed, in part, as a work-around for the sanctioned CBI. So the kicker is that South Korea does not even need to establish its version of the Swiss channel to assist Iran.
But Iran is still struggling to obtain supplies despite technical changes that should make it easier for Iran to access its offshore accounts, and despite the existence of mechanisms designed specifically to ensure that humanitarian supplies can reach the Iranian people.
The most significant obstacle is foreign banks, who are wary of U.S. sanctions and inclined to avoid the risk of facilitating these transactions out of an abundance of caution. Iran’s return to the Financial Action Task Force’s blacklist in February is an additional obstacle. U.S. sanctions have broad humanitarian exemptions built in, and personal protective equipment and ventilators are specifically allowable. Even though the Treasury Department allows for the sale to Iran of relevant medical devices and will provide reassurances to banks facilitating these transactions, the fear of U.S. sanctions is a deterrent. There is widespread confusion and concern about not running afoul of U.S. sanctions on Iran.
The Trump administration could, therefore, do much more on the public diplomacy front to signal that it has no intention of blocking firms and companies for working with Iran to address its coronavirus outbreak. Treasury could issue additional guidance clarifying which humanitarian goods are allowable. In these days of telework, a virtual town hall with senior officials is a no-brainer in order to clarify that the administration will not block the provision, or financing, of medical devices to Iran necessary for treating coronavirus patients. Social media outreach, and even a short statement from the White House podium during the daily Coronavirus Task Force briefings, are easy steps to take.
The White House also could demonstrate goodwill toward the Iranian people, as distinct from its policy of regime behavior change, by publicly supporting the delivery of humanitarian supplies and work of NGOs. And there is precedent for this. In 2003, the Bush administration issued a 90-day General License that facilitated NGO work in Iran to assist in recovery efforts after the Bam earthquake killed more than 26,000 people. In 2012, the Obama administration issued a 45-day General License to allow NGOs up to $300,000 to Iran for humanitarian and reconstruction activities after earthquakes killed more than 260 people.
Iran already has rejected U.S. offers of aid, but the administration should continue to find ways to signal to Iran’s leaders that the offer is genuine and a standing one, if not through direct aid then by signaling its willingness to facilitate the work of NGOs. Many elements of these temporary authorizations for disaster response and NGO activities have been made permanent in recent years. However, it would not be unprecedented for Treasury to issue a new license consolidating existing authorizations to clarify that they apply to current circumstances, or to expand some authorizations, even if time-limited. Members of Congress can assist here, as can the international organizations and NGOs already assisting Iran.
The U.S.-led sanctions architecture has changed significantly since the Bush and Obama administrations implemented their policies of humanitarian goodwill crisis-response, not only because of the Trump administration’s maximum-pressure campaign but also through legislative action. In 2017, Congress passed the Countering American Adversaries Through Sanctions law (CAATSA) which directed the administration to sanction Iran’s Islamic Revolutionary Guard Corps (IRGC) under counterterrorism authorities. This represented a serious expansion of terrorism-related Iran sanctions. Reports that the IRGC is involved alongside Iran’s Ministry of Health in setting up mobile clinics and producing medical equipment is an added layer of complexity for the U.S. and those around the world wanting to help Iran.
The international community is rightly focused on taking all necessary steps to respond to COVID-19, while also taking steps to prepare to respond to the next wave. In the case of Iran, there are a range of actions that the United States can and should take — it is both a security issue and a moral imperative to do so. But sanctions relief should not be at the top of the list of these remedial actions.
Katherine Bauer is the Blumenstein-Katz Family fellow at The Washington Institute for Near East Policy and a former Treasury official who served as the department’s financial attaché in Jerusalem and the Gulf. She is also an adjunct associate professor in the Security Studies Program at Georgetown University’s Edmund A Walsh School of Foreign Service. Follow her on Twitter @katecbauer.
Dana Stroul is a senior fellow in The Washington Institute’s Geduld Program on Arab Politics, served as a senior staff member on the Senate Foreign Relations Committee, covering the Middle East, North Africa and Turkey, and previously served in the Middle East policy office of the secretary of Defense. Follow her on Twitter @dstroul.
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