CRS Report for Congress Prepared for Members and Committees of Congress Iran Sanctions Kenneth Katzman Specialist in Middle Eastern Affairs December 7, 2012 Congressional Research Service 7-5700 www.crs.gov RS20871 Iran Sanctions Congressional Research Service Summary The principal objective of international sanctionsto compel Iran to verifiably confine its nuclear program to purely peaceful useshas not been achieved to date. However, a broad international coalition has imposed progressively strict sanctions on Irans oil export lifeline, adversely affecting Irans economy to the point where key Iran leaders are considering the need for a nuclear compromise. Among the key causes of Iranian leaders worry: Oil exports provide about 70% of Irans government revenues and Irans oil exports have declined to about 1.25 million barrels per day as of December 2012, a dramatic decline from the 2.5 million barrels per day Iran exported during 2011. The main cause of that drop has been a European Union embargo on purchases of Iranian crude oil that took full effect on July 1, 2012. This embargo is coupled with decisions by several other Iranian oil customers to substantially reduce purchases of Iranian oil in order to comply with a provision of the FY2012 National Defense Authorization Act (P.L. 112-81). To date, twenty countries have been deemed in compliance. The loss of sales has caused Iran to reduce oil production to about 2.6 million barrels of day, from the longterm baseline close to 4 million barrels per day. Other oil producers, particularly Saudi Arabia, are selling additional oil to Irans customers, thus far preventing the lost Iranian sales from raising world oil prices. The loss of hard currency revenues from oilcoupled with the cut off of Iran from the international banking system and the decline of Irans foreign exchange reservescaused a collapse in the value of Irans currency, the rial, in early October. That collapse prompted street demonstrations and a halt to commerce by merchants who are uncertain how to price their goods. In response, Iran has tried to impose currency controls and arrested some illegal currency traders, although these steps are unlikely to restore public confidence in the regimes economic management. Sanctions may be slowing Irans nuclear program somewhat by preventing Iran from obtaining some needed technology from foreign sources. However, Department of Defense and other assessments indicate that sanctions have not stopped Iran from building up its conventional military and missile capabilities with indigenous skills. Iran is also judged not complying with U.N. requirements that it halt any weapons shipments outside its borders, particularly with regard to purported Iranian weapons shipments to help the embattled Asad government in Syria. And, international sanctions targeting the regimes human rights abuses do not appear to have altered Irans repression of dissent or its efforts to monitor public use of the Internet. Despite the imposition of what many now consider to be “crippling” sanctions, some in Congress believe that economic pressure on Iran needs to increase further and faster. In the 112th Congress, H.R. 1905, P.L. 112-158 (“Iran Threat Reduction and Syria Human Rights Act of 2012”), makes sanctionable numerous additional forms of foreign energy dealings with Iran, including shipments of crude oil, and enhances human rights-related provisions of previous Iran sanctions laws. A Senate amendment to a FY2013 national defense authorization act (S. 3254), imposes sanctions on several key sectors of Irans economic infrastructure. For a broader analysis of policy on Iran, see CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman. Iran Sanctions Congressional Research Service Contents Overview and Objectives . 1 Energy Sector Sanctions: The Iran Sanctions Act (ISA) and Related Laws . 1 The Iran Sanctions Act and Amendments . 2 Key “Triggers” . 2 Mandate and Time Frame to Investigate ISA Violations . 6 Available Sanctions Under ISA . 7 Waivers, Exemptions, and Termination Authority . 8 Termination Requirements . 9 Sunset Provisions . 9 Int