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The Message of Iran Sanctions

March 29 was supposed to have been a big day regarding U.S. sanctions relating to Iran. For six months, the State Department has been investigating international firms involved in Iran’s petroleum sector, including various Chinese, Turkish and Venezuelan companies. Under the “Comprehensive Iran Sanctions and Divestment Act” (CISADA), the Department’s determinations were due by March 29.

On March 29, the State Department issued a press release ominously entitled “Iran Sanctions Announcement:”

Today, the United States is taking further action to increase pressure on Iran for its failure to meet its international obligations with regard to its nuclear program. … [T]he State Department is sanctioning Belarusneft, a state-owned Belarusian energy company … In a thorough review, the Department confirmed that Belarusneft entered into a $500 million contract with the NaftIran Intertrade Company in 2007 for the development of the Jofeir oilfield in Iran.

One company? Owned by Belarus? A contract entered into four years ago, discovered just now in a “thorough review” by the State Department? Well, at least the sanctions must have been biting.

Not exactly.  Asked at the State Department press conference to describe the practical effect, spokesman Mark Toner said they would prohibit Belarusneft from receiving U.S. Export-Import Bank assistance or U.S. government export licenses, bank loans exceeding $10 million, or U.S. government contracts. That produced this colloquy:

QUESTION: And just on to the actual real impact of this, how many bank loans exceeding $10 million does this company have now?

MR. TONER: Again, I’m aware of none, but it obviously impedes their ability to deal –

QUESTION: Have they sought – have they ever sought a bank loan –

MR. TONER: No, but essentially what this –

QUESTION: — for one dollar or $10 million?

MR. TONER: What this does is it closes off their ability to access any U.S. market or the U.S. market.

QUESTION: Has this company ever evinced an interest in getting into the U.S. market?

MR. TONER: No, but it also sends a message.

And what message is that?

MR. TONER: … a message to our partners in Europe as well that this is a company that we’ve decided to sanction. And I’m sure they have access or would seek access into European markets.

So the U.S. sanctions will have no effect on Belarusneft — much less on Iran. But at least there’s a message to our partners in Europe.


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