Treasury
seeks to clarify legal humanitarian trade with Iran
But the department is
announcing no new exemptions from U.S. sanctions, as some Democrats have urged
Sen. Christopher S. Murphy,
D-Conn., and other Democrats have urged new exemptions from Iran sanctions
because of the coronavirus pandemic.
By Rachel Oswald
Posted April 17, 2020 at 5:34pm
The Treasury
Department’s sanctions office on Friday said it was prioritizing requests to
send food, medicine and medical devices to Iran during the coronavirus
pandemic.
The move came a day after
Treasury published new guidance sought by the private sector about humanitarian
exemptions to U.S. sanctions against Iran, Venezuela, North Korea and other
countries in light of the COVID-19 emergency.
“It’s one of
my primary objections to make sure that sanctions do not impede humanitarian
relief efforts related to the COVID-19 crisis,” Andrea Gacki, the director of
Treasury’s Office of Foreign Assets Control, said during a virtual panel
discussion organized by the Center for a New American Security.
Requests for
licenses to provide humanitarian items to Iran are being treated with “the
utmost priority and urgency” and expedited to the extent possible, she said.
Iran is
experiencing the world’s eighth highest COVID-19 outbreak with 79,494 confirmed
cases of the virus and 4,958 deaths as of Friday, according to Johns Hopkins
University’s coronavirus dashboard.
The 10-page OFAC fact sheet
published Thursday did not announce any new exemptions from Iran sanctions, as
liberal lawmakers including Sens. Christopher S. Murphy, D-Conn., and Bernie
Sanders, I-Vt., have urged.
Rather, it consolidated
existing guidance and clarified what the existing exemptions could be used for.
For example, most personal
protective equipment such as medical gowns, goggles, surgical gloves, face shields,
masks and certain respirators “already qualify for export and re-export to Iran
under general licenses, without the need for further authorization from OFAC,”
according to the fact sheet.
Practically though, there will
not be much export of U.S. supplies of PPE to Iran until August at the
earliest.
Because of the current
severe shortage of PPE in the United States, the Federal Emergency Management
Agency last week issued a rule temporarily banning the export of N95 masks,
surgical masks and gloves.
But if Iran can obtain
PPE supplies from other countries, OFAC has made it clear that those foreign
businesses, banks and shipping companies that facilitate such transactions will
not be subject to U.S. financial sanctions.
“We are not seeing a ton of
requests to export PPE, I think, in large part because of the needs of the
United States,” Gacki said.
She also
spoke of a payment channel established earlier this year between the Trump
administration and the Swiss government to facilitate third-party countries’
humanitarian exports to Iran.
The channel is a voluntary option for foreign banks
to enter into that comes with some extra compliance hurdles in return for the
peace of mind of knowing that their financial transactions with Iran are fully
compliant with U.S. rules.
Gacki, who
has led OFAC since fall 2018, said the Treasury and State departments are
“evaluating requests” from other countries to establish their own humanitarian
trade channels with Iran, similar to the Swiss arrangement.
Last week, the South
Korean government was reported to be actively pursuing such an arrangement.
But she
criticized a recent effort by France, the United Kingdom and Germany to
establish a barter-type trade channel, dubbed INSTEX, that aims to evade
sanctions by circumventing the U.S. financial system and enabling some limited
trade with Iran in hopes of retaining Iranian compliance with the 2015 nuclear
agreement.
President Donald Trump
pulled the United States out of the nuclear accord in 2018, claiming it didn’t
do enough to curb Iran’s bad behavior.
“Unlike the Swiss channel,
where we have a high degree of comfort on the degree of due diligence, we don’t
have the same degree of comfort on the INSTEX mechanism,” Gacki said.
John Smith, who preceded Gacki
from 2015 to 2018 as OFAC director, told the center's virtual audience that
while Treasury’s new COVID-19 fact sheet was “incredibly helpful,” he did not
know if it would go far enough in dispelling the business community’s
uncertainty about engaging in humanitarian trade with Iran while it is under so
many complicated and overlapping sanctions from the United States.
Because there is a lot of
opaqueness in the Iranian economy, foreign companies are reluctant to engage in
trade with Iran out of fear they may ultimately be benefiting an Iranian entity
that has been blacklisted by the United States.
That reality, coupled
with continued threats from the State Department of maximum pressure on Iran,
has created a murky area for the businesses to operate in, and it is deterring
some legitimate trade, Smith said.
“The politics are impacting the
actual transmission of the humanitarian equipment because people are scared,”
said Smith, a partner with Morrison & Foerster LLP.
He called the current
situation a “lose-lose” one for banks considering whether to do business with
Iran.
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