Continuation of US Sanctions and Major Banks' Avoidance of Iran

On Wednesday, US Treasury Secretary Jack Lew stated that "the excessive and easy use of sanctions jeopardizes America's leadership role in the global economy." This statement is more reflective of the ongoing conflicts between the Obama administration and Congress, particularly the Republicans, rather than a shift in policy towards reducing sanctions, especially concerning Iran. The current Congress's reluctance to engage in any new compromises with the Islamic Republic of Iran, combined with the limited time available to the current administration before the presidential elections in November, will hinder any structural changes regarding the lifting of sanctions related to Iran. Lew emphasized that "sanctions against Iran related to support for terrorism, missile programs, and human rights violations will continue," indicating no change in the current US administration's policies aimed at reducing economic and financial pressures on Tehran, outside the framework of the nuclear agreement from July 15 of last year. The prohibition of dollar transactions with Iran has been in place since 2008, and as a result, US commercial and financial institutions are unable to conduct dollar transactions or direct banking exchanges with Iran, even if they open offshore credit accounts. Concurrently, Supreme Leader Ali Khamenei's sharp criticism of the US last week regarding its failure to fulfill commitments from the nuclear agreement coincided with House Speaker Paul Ryan's warning to Obama about Congress's concerns regarding the potential decision to allow dollar transactions with Iran in the future. At the end of last month, the US government announced the "negotiation" of Boeing's entry into the Iranian passenger aircraft market, while the law prohibiting dollar transactions with Iran remains in effect. This ongoing barrier has not only kept Iran's imports facing past banking issues but has also negatively impacted the faster increase of Iran's crude oil exports. Continued insurance problems for oil tankers carrying Iranian crude and rising insurance costs have deterred many buyers from entering the newly opened market, leading in some cases to canceled purchases and returned shipments. Major banks' fears of heavy penalties have resulted in around $200 billion in fines since 2008 for violations of sanctions imposed by the US Treasury, whether from congressional legislation or presidential executive orders. Given the ongoing concerns of major global banks about entering into any transactions with Iran, the reconstruction of foreign trade exchanges for Iran will be much more challenging than the Tehran government claims. Resolving Iran's foreign trade banking issues cannot be achieved merely by allowing access to SWIFT services, as opening credit accounts for companies dealing with Iran and paying for foreign purchases through banking services will remain difficult for an indefinite period due to major banks' reluctance to open credit accounts. The US Treasury's Office of Foreign Assets Control has implemented economic and financial sanctions against Iran based on its foreign policy and national security considerations, and America's European partners have also adhered to the shared goal of "preventing the Islamic Republic from acquiring nuclear weapons," while the unstated goal of the sanctions—justifying the fairness of "equal oppression" and keeping large European companies away from the Iranian market—continues to be pursued despite some openings after the nuclear agreement.