Why New Iran Sanctions Are So Important

Trade delegations are clamoring to get into Iran. Economists are now seeing signs of economic recovery after years of sanctions in response to Iran’s illicit nuclear program. And Iranian President Hassan Rouhani is now aggressively courting foreign companies, including at a recent appearance before the global business elite in Davos, Switzerland. As Iran’s nuclear chief Ali Akbar Salehi boasted, “The iceberg of sanctions is melting while our centrifuges are also still working.”

The Obama administration and its European allies insist that their carefully constructed Iran sanctions’ architecture has not been eroded by the recently-implemented Joint Plan of Action, which offers Iran economic relief for a pause in its nuclear program.

“It’s not going to be hard for us to turn the dials back or strengthen sanctions even further,” President Obama promised, adding that if Iran reneges on the interim deal, or doesn’t reach an acceptable final deal, he would “work with members of Congress to put even more pressure on Iran, but there’s no reason to do it right now.”

The Obama administration is correct that most sanctions measures remain in place. However, the JPOA has sparked a psychological shift. This change, prompted in part by sanctions relief, means that economic pressure on the Iranian government is diminishing. Diplomatically speaking, this is bad news. If Iran’s economy recovers, Washington has less leverage to put pressure on Iran’s leaders as they negotiate a nuclear deal.

The administration understands the stakes. The president has already dispatched Treasury’s top sanctions official, David Cohen, to global capitals to convey the message to policymakers and the business community that nobody should rush to Tehran just yet. However, Treasury alone cannot restore fear in the international markets and prevent a psychological shift that leads to a financial windfall for Iran. That’s why tough Congressional legislation is the key.

But the Obama administration is now blocking the Nuclear Weapon Free Iran Act, legislation co-sponsored by 59 Democratic and Republican senators and a House bill that passed in July 2013 by a vote of 400-20.

The proposed legislation would lend credibility to the administration’s message — that this is the wrong time for companies to go streaming back into Iran. It would also impose a heavy price on sanctions-busters who bet prematurely that Iran will comply with its Geneva nuclear commitments, not launch or support terrorist attacks directly or by its proxies against Americans, not test intermediate-range or long-range ballistic missiles that threaten America and our allies, and meet the international community’s requirements for an acceptable deal within 12 months.

The legislation is important to pass now, rather than after a collapse of talks, because it dangles a Sword of Damocles over international companies considering a return to Iran. It is a crucial instrument in preventing the shift in market psychology that already is beginning to create economic benefits for Iran.

With the White House committed to blocking new congressional measures, it is making a bet that it can prevent the unraveling of the sanctions regime and maintain a strong negotiating hand to peacefully resolve the Iranian nuclear crisis. That is an enormous bet, particularly when miscalculation could mean the most dangerous state sponsor of terrorism in the world getting its hands on the world’s most lethal weapon.

Mark Dubowitz is executive director of the Foundation for Defense of Democracies.