Giving Teeth to the Iran Sanctions: Targeting Re-Export Loopholes
By Matthew Levitt
Testifying before the Senate Foreign Relations Committee this week, Undersecretary of State William Burns and Undersecretary of the Treasury Stuart Levey laid out the administration's game plan for leveraging the sanctions mandate created by UN Security Council Resolution 1929, adopted earlier this month. Central to this strategy is "vigorous" implementation, in part through a monitoring committee. The resolution, Burns noted, includes "new platforms" and "new tools," including a tough cargo inspection regime to detect and prevent Iranian smuggling efforts aimed at circumventing the sanctions. Now that these measures have been passed, he emphasized, we "need to make the maximum use of them." One key area that would benefit from greater attention and enforcement is closing the re-export loopholes through which Iran has successfully evaded sanctions in the past.
Deceptive Trade Practices
Mirroring the Iranian banking sector's deceptive financial practices -- which the Treasury Department has studiously exposed over the past few years -- procurement agents, businesses, and transporters in Iran have developed a network of front companies and willing partners as a means of procuring controlled military and dual-use technologies. Some of these fronts are aware of the deception, while others are not.
Resolution 1929 highlighted such conduct by both Islamic Republic of Iran Shipping Lines (IRISL) and IranAir's cargo division. For example, since Treasury designated IRISL in 2008, the company has sought to evade sanctions by not only establishing new front companies, but also renaming and repainting its vessels.
The just-released annual report of the Czech Security Information Service (BIS) offers similar findings. In 2009, Iran used "mediating firms" in the Czech Republic to procure items that could facilitate the production of weapons of mass destruction. According to the report, Iran orchestrates "complex business channels in which companies from various countries fulfill only partial tasks without knowing the whole chain of suppliers and customers." Iranian procurement agents have been active within the United States as well.
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