If The US Wants A Nuclear Deal

Nuclear negotiations with Iran are now in their final stretch. But serious gaps remain. If a final agreement is not reached by the November 24 deadline, another extension of the interim deal might be possible and there is a real risk that Iran may seek to stretch that deal indefinitely — along with the modest sanctions relief if offers. All the while, Iran’s scientists can improve enrichment technology and its operating centrifuges can stockpile more low-enriched uranium.

How can the United States and its European allies keep their negotiation leverage intact under such circumstances?

The answer is to continue to implement existing sanctions as much as possible — a step explicitly allowed in the interim agreement signed in Geneva in November of 2013. The United States and the European Union could aggressively target Iran’s Revolutionary Guards, or IRGC, along with its vast business empire.

Efforts to curtail the IRGC using the existing sanctions regime would not undermine negotiations. To the contrary, it would put the negotiating process's domestic detractors on the defensive.

For months, Iran watchers have been documenting a power struggle inside Iran between the IRGC and President Hassan Rouhani. Though there is reason to believe that Rouhani’s team is not as moderate as some claim, the clash with the IRGC is real. The IRGC is the faction inside Iran’s regime that is most vociferously opposed to Rouhani’s efforts to reach a nuclear compromise with the international community.

All the while, the IRGC continue to be the regime’s main conduit for nuclear proliferation, missile technology procurement, and terror financing and support abroad. This includes defending the murderous Syrian dictator Bashar al-Assad and providing Hamas with the long range rockets — and the ability to produce short range rockets — in their fight against Israel.

So far, both the Obama administration and the European Union have been reluctant to enforce sanctions to their utmost possible degree, for fear or upsetting their Iranian counterparts during sensitive negotiations and jeopardizing the prospects of a final nuclear deal.

The addition, in late August, of Iranian entities and front companies — none affiliated to the IRGC — to the US Treasury Department's sanctions list drew the ire of Iran’s president Hassan Rouhani, who openly accused the United States of undercutting chances for a nuclear deal. Iran’s negotiator, deputy Foreign Minister Abbas Araghchi, condemned the move and explicitly threatened an Iranian walkout should Treasury sanction any additional Iranian entities.

Araghchi's angry reaction, coupled with Mr Rouhani’s candid public admission that Iran routinely seeks to bypass sanctions, should prove the conventional wisdom wrong: new listings hurt Iran and keep pressure on its economy.

They signal that Iran will not be open for business until a nuclear deal is satisfactorily concluded. And new listings that target Iran’s hardliners would make it clear that those opposed to compromise or actively bent on undermining its prospects stand to pay for such a posture.

Both the Obama administration and its European allies seem unfazed by the prospect of losing leverage: they insist that economic concessions under the interim agreement — a combination of suspending some sanctions and refraining from introducing new ones — have given little leeway to Iran’s crippled economy. Yet there are worrying signs that time will erode the sanctions' effects on Iran, thus diminishing the West’s bargaining chips at the negotiating table.

The IRGC has also exploited the last nine months of sanctions relief to build economic resilience so that Iran’s economy would be well-positioned to weather the storm that would follow a full return to a pre-Geneva sanctions regime. Even if talks drag on, a recovering economy will enable Iran to resist painful concessions.

This trend needs to be offset. The IRGC offers a target-rich environment for sanctions’ implementation, including 42 companies publicly traded on the Tehran Stock Exchange and 218 smaller companies directly controlled by the three main IRGC holding companies, with a grand total of 1,073 managers who should be subject to travel bans and asset freezes.

First in line should be companies owned by the sanctioned IRGC Cooperative Foundation, or Bonyad-e Ta’avon Sepah.

Its chairman, Brigadier General Morteza Rezaei, is the former head of IRGC intelligence for a decade and former deputy commander in chief of the IRGC. He's a man with past direct involvement in terror activities. The Foundation's chief financial officer, Mr Morteza Bahmanyar, is the head of the budget planning department at the sanctioned Aerospace Industries Organization, a Ministry of Defense company in charge of Iran’s ballistic missile program.

The board also includes IRGC financial mastermind Masoud Mehrdadi (not sanctioned), an economist educated at Emam Hossein university, the IRGC defense college. He sits on the board of many IRGC entities, such as the U.S.-sanctioned Ansar Bank.

The IRGC Cooperative Foundation’s senior leaders illustrate the confluence of shady finance, support for terrorism, and proliferation.

And yet, most of the companies they control on the Tehran Stock Exchange, such as the Bahman Investment (68 percent IRGC ownership) and the Mobile Communication Company of Iran (90 percent IRGC ownership), are not sanctioned.

Why wait until late November to blacklist them?

The West’s message to Iran should be clear: pressure will not be let off just for talking, and there will be no discounts on a nuclear deal.

Sanctioning the IRGC economic empire does not violate the interim deal with Iran and it will weaken those inside Iran who are most likely to oppose a deal and seek to sabotage it. At the same time, it keeps Western leverage afloat. What are we waiting for?

Emanuele Ottolenghi is a Senior Fellow at the Foundation for Defense of Democracies, where Saeed Ghasseminejad, a Ph.D. candidate in Finance at City University of New York, is an Associate Fellow. Follow them on Twitter at @eottolenghi and @SaeedGhassemine.