The Construction of the Sanctions Regime Against Iran: Political Dimensions of Unilateralism

© T.M.C. Asser Press and the author(s) 2015
Ali Z. Marossi and Marisa R. Bassett (eds.)Economic Sanctions under International Law10.1007/978-94-6265-051-0_2

2. The Construction of the Sanctions Regime Against Iran: Political Dimensions of Unilateralism

Hisae Nakanishi 

Graduate School of Global Studies, Doshisha University, Karasuma Higashi-Iru, Imadegawa Dori, Kamigyoku, Kyoto 6028580, Japan



Hisae Nakanishi


The objective of this chapter is to examine political dimensions of the sanctions against Iran that originated from and are still strongly characterized by the US unilateralism. The hypothesis is that changing political factors surrounding the US and Iran since 11 September 2001 shaped the sanctions regime but also provided room for compromise among all stakeholders. To examine this hypothesis, this chapter analyzes how the sanctions against Iran emerged and developed over the years and under what political contexts sanctions continue today. A perception of Iran’s nuclear ambition ultimately determined the course of events that led to the current multifaceted sanctions regime. The vicious circle of deadlocking nuclear negotiations and the subsequently strengthened sanctions against Iran reached a balance with the Joint Plan of Action in November 2013. The persistent pursuit of Iran’s right to enrichment, based on Iran’s maintaining the NPT’s principles, as well as shared interests between the US and Iran in the wider context of changing security situations in Afghanistan, Iraq, and Syria, define the political dimensions of American unilateralism and of Iran’s resistance to it.

2.1 Introduction

It has been 34 years since Iran was placed under international sanctions. Although the first sanctions were initiated unilaterally by the United States in 1980, subsequently, US-allied States such as EU Member States and Japan followed to comply with them. Thus, the implementation of the three and half decade sanctions should be called international. Since 2006, the framework of the sanctions has been multilateral, as the UNSC has also passed a resolution sanctioning Iran.

Some analysts maintain that both financial sanctions and, particularly, an oil embargo that started in 2011 have significantly impacted Iran’s economy.1 Iran’s currency, the Rial, hit one of its lowest points against the dollar—about 40,000 Rial per dollar—in February 2013.2 It is estimated that the Rial has lost 80% of its value in the last two years. Helped by Iran’s mismanagement of its economy, the rapid devaluation of the Rial has caused a severe increase in inflation. Although different statistical data exist, it is safe to say that there has been 40–50% inflation in the cost of consumer goods over the last few years.3

Other analysts observe that Iran’s exports in 2012 fell 39% compared to 2011.4 After the EU initiated an embargo on Iran’s oil in July 2012, and subsequently issued European Council Decision 2012/365/CFSP in October 2012 institutionalizing additional sanctions against Iran’s banking system, oil and petrochemical industry, and shipping industry,5 Iran’s oil revenue dropped to a third of the previous year’s level.6

It is certain that the EU sanctions have also contributed to the worsening of Iran’s economy. Yet it was the US that started and mobilized the international community against Iran. The present sanctions regime still has a strong unilateral character in which the US maintains the decision-making power concerning whether additional sanctions should be imposed or whether some aspects of the sanctions might be lifted.

International law experts have done detailed analysis of legal characteristics of the sanctions. Many have argued that unilateral sanctions are illegal from an international law perspective.7 On the other hand, studies also exist that emphasize Iran’s nuclear threat as a proper justification for the economic sanctions.8 Yet few serious studies have been done regarding the political nature of the sanctions. More acute scrutiny on the processes by which the sanctions regime has been constructed and of the politicization of Iran’s threat must be done.

Almost decade-long nuclear negotiations between the P5 plus 1—the multilateral negotiation team on Iran comprised of the five permanent members of the UNSC and Germany—and Iran finally emerged from a deadlock in November 2013. Iran and the P5 plus 1 signed the Joint Plan of Action in 25 November 2013.9 This document is the first concrete agreement between Iran and the P5 plus 1 and is considered a basis for confidence building.

The objective of this chapter is to examine the political dimensions of the sanctions that were originated and are still strongly characterized by US unilateralism and to analyze the political implications of the sanctions and the nuclear issue. A hypothesis is that changing political factors surrounding the US and Iran since 11 September 2001 (11 September) shaped the sanctions regime but also provided a room for compromise among all stakeholders. This chapter analyzes how sanctions against Iran emerged and developed over the years and under what political contexts they continue today. The first part of this article deals with historical background that has shaped the US–Iran relationship since the Islamic Revolution in 1979 and analyzes how the logic of the sanctions against Iran has transformed over the past three decades. Then the chapter examines Iran’s reaction to the politicization of its nuclear program and where a balancing act has been achieved between Iran and other nuclear negotiation stakeholders. Finally, it addresses how the United States’ and Iran’s shared interests in Middle East security since 11 September have actually led to cooperation. Finally, it provides prospects for the future of the sanctions regime.

2.2 The Construction of the Sanctions Regime

2.2.1 Historical Background

The present complicated dynamic among the US, Israel, and Iran emerged only after the Islamic Revolution of Iran in February 1979. During the Pahlavi era, Iran was one of the most significant US allies. It was the US that initially assisted Iran in developing a nuclear program beginning in the 1950s and continuing until the dawn of the Revolution. The post-Revolution Hostage Crisis at the US Embassy in Tehran between 1979 and 1981 led to diplomatic rupture between the two States.10

Immediately after the US hostage crisis erupted, the US imposed sanctions against Iran. In November 1979, US President Jimmy Carter issued Executive Order 12170 freezing all Iranian assets.11 Since then, numerous sanctions have been imposed unilaterally by the United States.

The diplomatic breakdown of the US–Iran relationship since the hostage crisis in 1979–1981 has also negatively impacted the Israel–Iran relationship. The United States and Israel consider each other strategic partners in Middle East security. The period of high tensions between Israel and Iran from 2010 to 2013, resulting from Iran’s nuclear development and its hostility to Israel, has repeatedly raised the prospect of military attack against Iran.12 One of the most alarming events occurred when Iran declared the possibility of closing the Hormuz Strait if Israel were to attack Iran.13 Despite Israel’s repeated threats, no military attack has happened. However, the mere possibility of an Israeli attack often causes international anxiety. This is indicative of the magnitude of security sensitivity to Iran’s nuclear problem.

Though the general term ‘sanctions’ is often used, what the sanctions actually mean in practice is complex. The list of US unilateral sanctions against Iran shows that different US government bodies have enacted different types of sanctions.14 These include the Iran and Libya Sanctions Act of 1996 passed by the Congress; the Comprehensive Iran Sanctions Divestment Act of 2010 issued by the Department of the Treasury; and about a dozen executive orders issued by various Presidents over the last three decades. The diversity of sanctions is the result of general US antagonism toward Iran, particularly in the 1990s during which the United States implemented the so-called Dual Containment Policy toward Iran and Iraq. After 11 September, the United States attempted to prevent Iran from acquiring both nuclear and missile development technologies by issuing numerous diverse sanctions on the ad hoc basis in the last decade. The United States also mobilized the international community to strengthen the sanctions regime.

The UNSC imposed six sets of sanctions on Iran under various UNSC resolutions between 2006 and 2010. The EU also imposed sanctions between 2010 and 2012, which have helped to enforce the UNSC sanctions. Thus, EU Member States joined in the multilateral phase of the sanctions against Iran and cooperated fundamentally with the United States. One of the most serious sanctions imposed by the EU against Iran was implemented in 2012.

On 25 November 2013, international media reported a nuclear agreement between Iran and the P5 plus 1 as a historical breakthrough. The agreement took the shape of the so-called Joint Plan of Action. There were differing views on the feasibility of Iran’s actual implementation of this plan. Yet, on 20 January 2014, Iran started to implement the agreement, with an established time frame of six months. There seems to be no doubt, at the time of writing, that the so-called nuclear impasse has ended. It is likely that Iran will restore its relationship with the United States and Europe in the near future.

2.2.2 Changing Rationales for the Sanctions

A review of the series of the sanctions against Iran imposed by the United States, UNSC, and EU indicates that not all the sanctions are relevant to Iran’s nuclear development, or more precisely to Iran’s uranium enrichment and processing activities. The very first sanctions issued to freeze Iran’s assets, as mentioned earlier, were imposed by the United States to convey a public message against Iran’s taking of American hostages. US Sanctions

The 1979 freeze on Iran’s assets that still exists today can be considered a symbolic action of the United States cutting its diplomatic relationship with Iran. This was followed by the US Department of State’s 1984 designation of Iran as a state sponsor of terror. This designation came into place after it alleged that Iran backed radical Islamic militants who bombed US Marine Barracks in Beirut in 1983. The designation led to bans on US–Iran transactions, including, for example, bans on arms sales and the export of dual-use technologies. Executive Order 12613 of 1987 also banned the import of Iranian commercial goods into the United States.15 The Iran–Iraq Arms Nonproliferation Act of 1992 strengthened the US trade ban against Iran and prohibited any foreign individual or entity from providing Iran with technology that would assist it or Iraq in possessing weapons of mass destruction.

In 1995, US President Bill Clinton issued Executive Order 12957 entitled “Prohibiting Certain Transactions with Respect to the Development of Iranian Petroleum Resources.” The Order banned “contract[s] that include overall supervision and management responsibility for the development of petroleum resources located in Iran” or “contract[s] for the financing of the development of petroleum resources located in Iran.”16

Thus, the early US sanctions of the 1980s and early 1990s targeted general trade and transactions related to Iran’s oil resources. These sanctions had the vague rationale of sanctioning Iran as a state sponsor of terrorism. In this respect, the United States considered the sanctions precautionary measures against possible implementation of Iran’s developing weapons of mass destruction. The rationale that Iran was a security threat remained vaguely projected.

Even the Iran and Libya Sanctions Act of 1996, which is considered one of the United States’ core sanctions against Iran,17 is simply aimed at preventing foreign companies and individuals from investing in Iran’s petroleum industry so that Iran could not develop nuclear-related technology. This was passed without any evidence that Iran was actually receiving or developing such for the potential production of weapons of mass destruction. This policy was pursued directly by Executive Order 12599 of 1995 and indirectly through Executive Order 13059 of 1997. In other words, the rationale of US sanctions against Iran was mainly one of arms control and nonproliferation.

Regarding the United States and Europe’s position on nonproliferation, it has been argued:

Since the Cold War’s end … the United States—along with Britain, France, and Israel—has been determined to constrain the diffusion of fuel cycle capabilities to non-Western states. Their main motive has been to maximize America’s freedom of unilateral military initiative and, in the Middle East, that of Israel.18

A turning point emerged in 2002 when the so-called Iranian threat emerged. Iran’s anti-regime Mujahidin Khalq Organization leaked that it was possible that Iran was developing nuclear weapons. A series of nuclear negotiations between Iran and the P5 plus 1 began in 2003. Since this time, the threat of Iran developing nuclear weapons has become a principle concern of the nuclear negotiation States.

US propaganda on Iran’s threat should be also considered in the context of the US ‘War on Terror.’ The Bush Administration’s denomination of Iran as a member of the ‘Axis of Evil’ marked US basic policy toward Iran. However, during the Obama Administration, the United States has imposed much harsher sanctions against the State.

A new type of sanctions was initiated in 2006—a financial embargo against Iranian banks and other financial institutions. On 9 August 2006, the US Treasury Department banned business activities between the United States and Iran’s Saderat Bank because that bank transferred money to terrorist organizations such as Lebanon’s Hezbollah, a militant Islamic organization.19 The United States has maintained a pro-Israel policy in the Middle East since the establishment of that State in 1948. Israel and Hezbollah were at war in August 2006. Together with Syria, Iran has financially and militarily assisted Hezbollah, which has historically antagonized Israel. Hezbollah’s use of Iran-made missiles was decisive in its victory over Israel in the month-long war.20 The US perception of Iran’s threat rose after this event, making it natural for the United States to strengthen its sanctions.

On 22 October 2008, the US Treasury Department’s Office of Foreign Assets Control newly identified four entities whose property and interests in property should be blocked to prevent the proliferation of weapons of mass destruction.21 Among the four entities was the Export Development Bank of Iran, which the United States alleged was involved with weapons of mass destruction-related payments.22

US Sanctions against Iran moved into a new phase in 2010. The so-called “Comprehensive Iran Sanctions,” together with President Barack Obama’s executive orders and other acts, started impacting Iran’s financial sector and its oil industry.23 The banking sanctions that had started in 2006 expanded to cover 16 Iran banks as well as Islamic Revolutionary Guard Corps, which engaged in large-scale business sectors in Iran. UN Sanctions

Another turning point occurred when the UNSC started implementing resolutions to sanction Iran’s economy.24 The United States was successful in mobilizing UNSC Members (and the EU) to create an international sanctions regime. Seven UNSC resolutions were issued between 2006 and 2011. The first of these, Resolution 1696(2006), which was issued under the UNSC’s Chapter VII authority under the UN Charter,25 was premised on its concern that “the IAEA was still unable to provide assurances about Iran’s undeclared nuclear material and activities after more than three years,” and thus demanded Iran suspend all uranium enrichment activities in a month.26 It also stated that Iran’s failure to do so would lead to economic and diplomatic sanctions. The phrase “assurances about undeclared nuclear material” connotes that nondeclaration would be a sign that Iran was concealing material or technology that could lead to making weapons and that Iran poses danger or threat. In other words, the IAEA’s inability to deny the presence of undeclared nuclear material and activities of Iran became the indication of Iran’s threat to international peace and security.

Ali Larijani, Iran’s Secretary of the Supreme National Security Council at the time, rejected this resolution, stating it was illegal because Iran had not violated the NPT.27 This argument has been maintained by scholars from other States. For example, it was argued that Resolution 1696(2006) carried a presumption (or an assessment) of Tehran’s intent to build nuclear weapons that was repudiated by the US intelligence community in 2007.28

Review of other UNSC resolutions on Iran shows that Resolution 1696(2006) is, in retrospect, the cornerstone of the international sanctions regime against Iran. The six subsequent resolutions—1737(2006), 1747(2007), 1803(2008), 1835(2008), 1929(2010), and 1984(2011)—were all based on the same assumption that Iran has an intention to make nuclear weapons. Furthermore, subsequent sets of sanctions, namely those under UNSC Resolutions 1737(2006) and 1803(2008), intended to prevent Iran from receiving any aid for developing, respectively, nuclear and ballistic missiles and weapons of mass destruction.29 UNSC Resolution 1737(2006) not only banned Member States from buying arms-related equipment from Iran but also prohibited them from dealing with Iran’s financial institutions.30

As mentioned above, Resolution 1696(2006), the first of these measures, ordered Iran to suspend all uranium enrichment and other reprocessing activities. Yet, whether the UNSC has the authority to order such suspension is a question. As the UNSC did not find any specific violation of the NPT but imposed additional obligations beyond what the NPT obliges, the UNSC acted as if it has authority superior to the IAEA, despite the fact that monitoring the NPT is the IAEA’s mandate, not a power within the authority of the UNSC. In short, the UNSC overrode the NPT regime.31 Moreover, Chapter VII applies to “breaches of peace.” With Resolution 1696(2006), however, the UNSC merely showed a serious concern about the IAEA’s reference to “topics which could have a military nuclear dimension” but did not specify any immediate threat to international peace nor breaches of peace.32 In sum, Resolution 1696(2006)’s foundation in the UNSC’s Chapter VII authority is not appropriate.

A precise reading of all seven resolutions reveals another interesting fact: each subsequent resolution was issued due to Iran’s failure to comply with the previous resolution(s). This means that Iran’s noncompliance with the previous resolutions, which were linked with IAEA’s consecutive reports, became fundamental for the legal justification of the resolutions, despite the fact that the very first resolution was implemented while ignoring the validity of NPT. Thus, the international community did not have room to question the legality of the resolutions. This vicious circle of mounting resolutions consequently constructed a self-fulfilling sanctions regime toward Iran in which Iran’s ability to justify its enrichment activities under the NPT was highly restricted.33

With regard to this trend, US legal scholar Daniel Joyner has argued:

[T]he tendency for the Security Council to judge compliance and to act as an enforcer of the NPT needs to be urgently rectified. There is no doubt this inclination has a political motivation, as the Council will not in any way act in a similar manner on non-compliance to Article VI. It has also become a source of concern that the expansion of the Security Council’s involvement in this field risks to undermine the author of the IAEA.34

According to Joyner, analysis of UNSC Resolutions 1737(2006) and 1929(2010) proves that the UNSC is becoming a “legal hegemon.” He considers that the international legal system needs to develop “effective limits” upon the UNSC’s authority.

The seven above-mentioned resolutions were not isolated from the dialogue between IAEA and Iran. It should be noted that despite the IAEA’s complaints about Iran’s failure to report its nuclear enrichment activities, the 2009 IAEA report stated that no clear evidence had been found that Iran had developed nuclear weapons.35 Yet at the same time, the IAEA Board of Governors passed a new resolution condemning Iran’s failure to declare nuclear activities near Qom.36

As indicated earlier, the present sanctions regime began with unilateral sanctions by the United States but further developed into the current multilateral framework. In this framework, both the IAEA and UNSC highlighted the threat posed by Iran using the logic that ambiguity is suspicious and thus dangerous. How has Iran reacted to such a vicious circle of the accumulated sanctions?

2.3 Iran’s Nuclear Strategy and its Breakthrough in Nuclear Negotiations

2.3.1 Iran’s Discourse on Nuclear Development