Trump EO Expands Iran Sanctions Authority; US Imposes More Iran Sanctions

“We will continue to apply economic sanctions until Iran stops its terrorist activities and commits that it will never have nuclear weapons,” he said. Mnuchin also warned European leaders that any actions involving Instex -- the European payment system designed to trade with Iran despite U.S. sanctions (see 1912020025) -- will likely be sanctioned. “I don’t believe there’s been any Instex transactions,” Mnuchin said. “We’ve warned Instex and others that they will most likely be subject to secondary sanctions depending on how they use that.”

Mnuchin said Treasury is still offering a mechanism for companies to export humanitarian-related items to Iran (see 1910250057), although Congress members have said U.S. sanctions are inadvertently blocking those exports (see 1912120027). Mnuchin also said he and Secretary of State Mike Pompeo have spoken to European leaders “several times over the last few days” about Iran, U.S. sanctions and Iran’s decision to breach the Joint Comprehensive Plan of Action (see 2001060048). “We’ve had very direct conversations with our counterparts about that,” he said.

Mnuchin also said the U.S. has discussed its Iran sanctions with China but did not say whether they will come up in trade deal negotiations, including as Chinese and U.S. officials prepare to sign the phase one agreement this week (see 2001090019). “We’re having conversations with China as well as any other party on sanctions evasions,” he said

Along with sanctioning Iran’s construction, mining, manufacturing and textiles sectors, the executive order allows the Treasury’s Office of Foreign Assets Control to sanction people or companies involved in a “significant transaction … in connection” with any of those sectors. This includes sanctions against foreign banks that facilitate these transactions or are involved with a deal relating to a sanctioned individual in Iran. The U.S. may also block the opening of a “correspondent account or a payable-­through account by such foreign financial institutions” in the U.S., the order said. Trump issued a message to Congress detailing the new authorities granted in the executive order.

“This order will have a major impact on the Iranian economy, authorizing powerful secondary sanctions on foreign financial institutions,” Trump said in a statement. “These punishing economic sanctions will remain until the Iranian regime changes its behavior.”

Both Pompeo and Mnuchin said U.S. sanctions against Iran are proving successful despite a recent escalation in tensions in the Middle East, including Iran’s decommitments under the JCPOA. “If we didn't have these sanctions in place, literally Iran would have tens of billions of dollars. They would be using that for terrorist activities throughout the region,” Mnuchin said. “There's no question by cutting off the economics of the regime, we are having an impact.”

Pompeo said Iranian President Hassan Rouhani recently “admitted our sanctions against Iran have cost over $200 billion dollars in lost foreign income and investment. As long as Iran’s outlaw ways continue, we will continue to impose sanctions.”

As a result of the executive order, OFAC announced sanctions against eight senior Iranian officials, the country’s “largest” steel, aluminum, copper and iron manufacturers and a ship that transfers metal goods. The agency also designated 17 Iranian metal producers and mining companies and a network of China and Seychelles-based entities.

Treasury designated Beijing-based Pamchel Trading Beijing Co. Ltd for buying “tens of thousands” of metric tons of steel slabs on a “monthly basis” from Iran’s Esfahan Mobarakeh Steel Company, OFAC said. Pamchel Trading uses Seychelles-based Power Anchor Limited, which is also being sanctioned, as a front company to hide the Iranian end-user for metal materials shipped to Iran, Treasury said. The vessel Hong Xun, also sanctioned, transports the steel slabs from Iran to China. China-based Hongyuan Marine Co. is being designated for managing the vessel.

Treasury also designated Saba Steel, Hormozgan Steel Company, Esfahan Steel Company, Oxin Steel Company, Khorasan Steel Company, South Kaveh Steel Company, Iran Alloy Steel Company, Golgohar Mining and Industrial Company, Chadormalu Mining and Industrial Company, Arfa Iron and Steel Company, Khouzestan Steel Company and Iranian Ghadir Iron & Steel Co. for operating in Iran’s metal sectors. Oman-based Reputable Trading Source LLC, which is controlled by Khouzestan Steel Company, is also being sanctioned, along with Iran Aluminum Company, l-Mahdi Aluminum Corporation and National Iranian Copper Industries, the leading copper producer in the Middle East and North African regions.

Treasury designated several high-profile Iranian officials, including Ali Shamkhani, the secretary of Iran’s Supreme National Security Council; Gholamreza Soleimani, commander of the Basij Resistance Force; Mohsen Reza’i, a member of Iran’s Expediency Council; and Mohammad Reza Naqdi, the deputy coordinator of the Islamic Revolutionary Guards Corps. In addition, OFAC sanctioned Mohammad Reza Ashtiani and Ali Abdollahi, senior Iranian military appointees, along with Ali Asghar Hejazi, a senior official in the Supreme Leader’s Office, and Mohsen Qomi, deputy adviser for international affairs in the Supreme Leader’s Office.

Pompeo said the sanctions strike “at the heart of the Islamic Republic’s inner security apparatus” and will continue under the U.S.’s maximum pressure campaign. “We want Iran to simply behave like a normal nation,” he said. “We believe the sanctions we’re imposing today further that strategic objective.”