EU Set to Delist Entities Linked to Iran’s Ballistic Missile Test

Iranian lawmakers broadly endorsed the Joint Comprehensive Plan of Action (JCPOA) nuclear deal on October 11. That same day, Iran’s defense minister heralded the launch of the Emad, a new precision-guided medium-range ballistic missile, and thanked two entities for helping facilitate the launch: his own defense ministry and its subsidiary, the Aerospace Industries Organization (AIO).

Both entities are currently under U.S. and EU sanctions, but according to the terms of the JCPOA, those of the EU will be lifted on “Transition Day” – at most, eight years from now. The delistings are not only awkward in light of the ballistic missile launch, they also pose a grave challenge to international efforts to keep Iran from acquiring a nuclear bomb.

As early as 1996, the U.S. State Department sanctioned the Iranian defense ministry over “missile technology proliferation activities” with a North Korean company. In 2007, pursuant to Executive Order 13382, the U.S. Treasury also targeted the ministry for facilitating ballistic missile-related transactions. Over the years, a number of ministry-linked entities and subsidiaries were also targeted by the U.S., EU, and UN.

The AIO’s record isn’t much better. Since the late 1990s, it has helped manufacture a host of different missile systems and platforms. In June 2005, the AIO was part of the initial batch of entities Treasury targeted due to concerns over nuclear proliferation and delivery vehicles. In June 2012, Treasury noted that the AIO “oversees all of Iran’s missile industries.”

Many of the AIO’s own subsidiaries were also listed in the annexes of UN Security Council resolutions for supporting Iran’s ballistic missile program through procurement or research and development. Some of Iran’s most lethal missiles (like the liquid-fueled Shahab-3 and solid-fueled Sejil-2) are the product of the AIO’s murky nexus between government entities, parent companies, and subsidiaries.

While Iran’s defense minister explicitly mentioned his ministry and the AIO in the aftermath of the latest missile launch, it is still unclear which financial institution in Iran bankrolled the project. The historical record likely points to Bank Sepah, a state-owned bank that Treasury has claimed is the AIO’s “bank of choice.” Pursuant to the JCPOA, the EU will also de-designate Bank Sepah come Transition Day.

Iranian resolve on ballistic missiles – the chief delivery mechanism for nuclear weapons – has hardened since the signing of this summer’s nuclear deal. This raises troubling questions about how Washington plans to enforce an agreement designed to prevent Iran from obtaining nuclear weapons, when that same deal boosts its ability to deliver them.

Behnam Ben Taleblu is a Non-Resident Iran Research Fellow at Foundation for Defense of Democracies