Trump Mulls Squeezing Iran With Tougher Sanctions

The White House is considering ramping up existing sanctions to hold Tehran’s feet to the fire.

An Iranian military truck carries parts of the S300 missile system during the annual military parade marking the anniversary of the start of Iran's 1980-1988 war with Iraq, on September 21, 2016, in the capital Tehran. / AFP / CHAVOSH HOMAVANDI        (Photo credit should read CHAVOSH HOMAVANDI/AFP/Getty Images)
An Iranian military truck carries parts of the S300 missile system during the annual military parade marking the anniversary of the start of Iran's 1980-1988 war with Iraq, on September 21, 2016, in the capital Tehran. / AFP / CHAVOSH HOMAVANDI (Photo credit should read CHAVOSH HOMAVANDI/AFP/Getty Images)

The Trump White House is poised to ratchet up existing sanctions against Iran and is weighing a much stricter interpretation of the nuclear agreement between Tehran and major world powers.

The administration is inclined to adopt a “more rigorous application of the tools at its disposal,” a senior White House official told Foreign Policy, referring to sanctions policy. Among the options under consideration: broadening U.S. sanctions to include much larger chunks of the Iranian economy linked to the Islamic Revolutionary Guard Corps (IRGC).

No final decision has been taken by the president or the cabinet. But officials said some decisions will need to be taken soon. On April 25, Iran and the six governments that negotiated the nuclear deal with Tehran, including the United States, are due to meet in Vienna for a quarterly review of the accord.

How President Donald Trump decides to proceed on sanctions and the nuclear deal more broadly carries high stakes for the United States, Iran, and the wider Middle East. A concerted U.S. effort to squeeze Iran would represent a gamble that Tehran’s regional push for power, particularly in Syria and Yemen, could be checked in part by increasing economic pressure.

But the approach could backfire if it causes tensions with the Islamic Republic to spin out of control or prompts Tehran to pull out of the nuclear deal. Tougher U.S. sanctions would make for a tougher re-election fight for President Hassan Rouhani, a relative moderate who championed the 2015 nuclear deal but is under pressure to show Iranians a notable improvement in the economy. And a harder line on sanctions also could drive a wedge between Washington and its European allies.

Sweeping sanctions that cut across economic sectors could jeopardize the nuclear agreement and prompt Iran to withdraw, said Richard Nephew, who was the leading sanctions expert on the U.S. team that negotiated the accord with Iran.

“It all really comes down to whether the people making decisions agree that the [nuclear deal] is worth keeping,” said Nephew, now at Columbia University’s School of International and Public Affairs.

The 2015 agreement imposed numerous restrictions on Iran’s nuclear program in return for easing an array of sanctions — including U.S. measures — that had badly damaged the country’s economy. President Trump repeatedly blasted the accord as “the worst deal” and, while on the campaign trail, vowed to “tear it up,” but now that he is in office, he has not indicated what he will do.

Trump doesn’t have to tear up the deal to tighten the screws on Iran. The agreement, which is not a treaty, provides broad leeway to the governments that signed it in interpreting its terms, and the Trump White House is mulling taking a much more forceful stance on enforcing the deal to the letter.

There are already signs that the Trump administration is using existing legal authorities in a more forceful manner than the Barack Obama administration. Last Thursday, the Treasury Department announced it had sanctioned the brother of the powerful head of the special forces arm of the IRGC, Sohrab Soleimani, for his role in abuses at the country’s prisons. And in February, the Treasury Department blacklisted eight organizations linked to the Revolutionary Guards, as well as one of its officials based in Lebanon.

Last week’s move was a “further indication that the Trump administration will be taking a much tougher line in applying sanctions than did its predecessor,” said Mark Dubowitz, CEO of the Foundation for Defense of Democracies who has urged ramping up economic pressure on Iran.

Dubowitz, an influential voice on sanctions policy particularly among Republican lawmakers in Congress, said he also expects the Trump administration to pursue more prosecutions of illicit financial activities linked to the Iranian regime and of attempts to secure prohibited materials related to weapons or nuclear technology.

The sanctions measures imposed since Trump entered office were based on cases prepared by the Obama Treasury Department that were never enacted, said the White House official, who spoke on condition of anonymity because of the sensitive nature of the administration’s policy.

“We are still going off the work they did not execute,” the official said.

And Treasury’s recent actions reflect a heightened focus by the administration on the Revolutionary Guards, which wield major military and financial clout in Iran and have interests in numerous Iranian companies. The Treasury actions coincide with a debate within the administration about whether to designate the entire IRGC as a terrorist organization. At the moment, only the group’s special forces arm, the Quds Force, is blacklisted.

Apart from designating the entire Revolutionary Guards as a terrorist organization, the administration is also looking at other options. At the moment, any entity that has a 50 percent ownership stake or more held by the IRGC is subject to sanctions, but the administration is mulling a change that would drop the threshold to a lower percentage.

Such a move would break with long-standing policy at Treasury, which has traditionally defined ownership as above 50 percent for any category of sanctions. A lower threshold would mean blacklisting hundreds and possibly thousands of additional Iranian companies and organizations with links to the IRGC, experts said. That would almost certainly cause a political backlash in Iran and chill any international interest in investing in Iran. European officials — and former Obama administration officials — are worried that if the White House opts for a blanket blacklisting of the Revolutionary Guards, it could effectively kill the nuclear agreement or trigger retaliation against U.S.-led forces in Iraq.

Appetite for a tougher stance isn’t just found in the White House. In the Republican-controlled Congress, there is growing bipartisan support for pushing back against Iran through additional sanctions, though most Democrats want to steer clear of measures that would directly violate the nuclear deal. New bills in the House and Senate call for additional sanctions against Iran over its ballistic missile program and its human rights violations and support for terrorist groups.

The Senate bill, which has backing from some Democrats who endorsed the nuclear deal, would slap sanctions on any individual lending “material support” to Iran’s missile program. And it would also apply terrorism-related sanctions to the Revolutionary Guards.

The bill’s supporters say the provisions on the IRGC would merely codify existing presidential executive orders. But some former Obama administration officials argue the legislation could open the door to a sweeping designation of the entire IRGC as a terrorist organization.

The former officials say the sanctions legislation poses a possible threat to the nuclear deal as the measures could wreck the consensus among the countries that negotiated the deal.

“Rather than containing Iran, such steps would isolate the United States,” several former administration officials wrote in a commentary in FP.

Critics of the deal accused the Obama administration of tolerating Iranian violations of the accord. International inspectors found that Iran last year had twice exceeded limits on stockpiles of heavy water, which is used to cool reactors producing plutonium. Washington chose to resolve the issue discreetly, granting Iran some time to fix the problem. Opponents of the accord are urging the White House to insist on a more assertive interpretation of the deal’s provisions — and appear to have found a receptive audience.

Administration officials said they are now looking at holding Iran’s feet to the fire over every breach, however small. One option under consideration is an “incredibly strict implementation” of the deal, the senior official said.

But the official added that the administration “was not inconsiderate of the ramifications of the deal” and was carefully weighing the benefits and the risks of a different approach.

The Obama administration, facing complaints from Iran that it was not seeing the promised economic benefits from the accord, had embarked on “road shows” to reassure European governments and foreign companies that non-U.S. investors could return to the Iranian market without necessarily running afoul of U.S. sanctions. Rouhani is facing an electoral challenge from a hard-line favorite of the mullahs and needs to sell the deal as a success to win re-election next month.

But the road shows convinced few: Banks in particular are leery of diving back into the Iranian market when U.S. sanctions could suddenly snap back or be expanded to other parts of the economy.

“It’s not surprising to me that financial institutions all over the world are hesitant to re-engage with Iran,” said Daniel Glaser, a former senior Treasury official under the Obama administration who crafted hard-hitting sanctions that preceded the nuclear agreement.

Since Trump took office, the outreach effort has been abandoned.

FP reporter David Francis contributed to this article.

Photo credit: CHAVOSH HOMAVANDI/AFP/Getty Images