Considered one of the leading experts on the use of economic and financial sanctions, Mark Dubowitz is the CEO of the Foundation for Defense of Democracies, a non-profit, non-partisan policy institute located in Washington, D.C.
At FDD, where he has worked since 2003, Mark Dubowitz is the driving force behind projects focused on Iran, sanctions, nuclear nonproliferation, and illicit finance. Mark also heads FDD’s Center on Sanctions and Illicit Finance.
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Q: You have argued that the Iran Deal has contributed to the ongoing war in Syria. How so?
A: The Iran deal wasn’t supposed to fuel Iran’s imperialism and its ardent anti-Semitism. And yet precisely that has happened. President Obama appears to have done exactly what he and Secretary of State John Kerry promised not to do: directly finance the Syrian tragedy and the terrorists on America’s watch lists.
During the nuclear negotiations, and especially since reaching the agreement with Iran, the administration rejected congressional concerns that sanctions relief would fund the mullahs’ malign activities. But the administration’s assurances have been undercut by Iran’s own behavior since at least July 2015. Gen. Joseph Votel, commander of U.S. Central Command, has said Iran has become “more aggressive in the days since the [nuclear] agreement.” The Iranian regime is keeping Bashar al-Assad afloat in Syria and actively supports Lebanese Hezbollah, which has a 150,000-rocket stockpile with only one target: Israel. Tehran has expanded its efforts to create Shiite militias in the Middle East and has continued to send aid, including weaponry, to radical Palestinian groups.
The Iranian regime needs money — liquid, untraceable, convertible, and easy to transfer. And now they have it. It has access to $100 billion in frozen oil revenues, its back in the oil markets, billions of dollars of foreign investment has started to flow into the country, its economy is recovering at a rate of 4-5% GDP/month, and inflation has dropped from 80% to single digits. In addition, in three shipments from January to February, the United States transferred $1.7 billion in cash to Iran, ostensibly to settle a thirty-year military claim before the Iran-United States Claims Tribunal. As the administration was finally forced to acknowledge under intense congressional and media scrutiny, the first installment of $400 million was part of what the Wall Street Journal called “a tightly scripted exchange specifically timed to the release of several American prisoners.”
In recent testimony, a State Department official claimed that the $1.7 billion cash payment was necessary because Iran needed cash to address its “critical economic needs.” The Iranian parliament, however, already allocated the $1.7 billion to its Revolutionary Guard-dominated defense budget, which nearly doubled this year.
So we have pallets of cash to close a thirty-year military sales dispute, arriving with the release of U.S. hostages. We have refusals to answer congressional questions about billions in cash going to the world’s leading state sponsor of terrorism. We have implausible claims that Iran is using this money for domestic concerns. The unavoidable fact is that the Obama White House refused to acknowledge the obvious: The nuclear deal has already led the United States to fund terrorists, sectarian warfare, and chaos in the Middle East.
Q: Some argue that the conclusion of the Iran nuclear deal justifies lifting sanctions on Iran. You disagree. Why?
A: The Islamic Republic is desperately trying to legitimize its financial sector despite an extensive rap sheet of illicit financial activities. Since the conclusion of the nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA), the Obama White House missed numerous opportunities to issue sanctions against Iran’s ongoing illicit activity. Rather than implementing sanctions, the Obama administration acted as Tehran’s chamber of commerce. Washington’s bipartisan effort to hold the mullahs accountable for their belligerent non-nuclear behavior — their support to designated terrorist groups; incitement of sectarian conflict in Syria, Iraq and Yemen; and human rights violations at home — were, in the Obama administration’s eyes, of lesser importance than preserving the JCPOA. This, in turn, explains the perceived need to financially reward the Iranian leadership for backing the atomic deal.
President Obama was fearful that Iranian president Hassan Rouhani and the nuclear deal he negotiated might not survive the next Iranian presidential election in 2017, and therefore committed himself to Rouhani’s re-election. This is an unnecessary fear; every Iranian president has served two terms since the early 1980s. In order to ensure the election outcome fell in Rouhani’s favor, Obama decided to oppose any sanctions that limit Iranian economic growth, including those permitted under the JCPOA.
The JCPOA provided Iran with substantial economic relief that helped it avoid a severe economic crisis and even enjoy a modest recovery. The lifting of restrictions on Iran’s use of frozen overseas assets, totaling about $100 billion, now gives Iran badly needed physical currency to settle its outstanding debts, continue to economically repair itself, build up its diminished foreign-exchange reserves, and ease a budgetary crisis. However, it is important to note that these funds also provide the regime with an opportunity to increase its aggressive actions abroad.
Q: You have testified before Congress more than 20 times. What have you told members of Congress regarding sanctions against Iran?
A: First and foremost, the JCPOA is a fatally flawed deal. It provides Iran with a patient pathway to nuclear weapons capability by placing limited, temporary, and reversible constraints on Tehran’s nuclear activities. It also does nothing to address the full range of Iran’s illicit activities, which include ballistic missile development, support for terrorism, regional destabilization, and human rights abuses.
The Obama administration officials pledged that the United States would continue to enforce non-nuclear sanctions and oppose all of Iran’s dangerous activities. However, my FDD colleagues and I raised concerns that Iran would view any imposition of sanctions as a violation of the deal and grounds to “snap back” its nuclear program, and that those threats would prevent Washington from imposing new non-nuclear sanctions. We have called this Iran’s “nuclear snapback.” It should come as no surprise that the Obama administration acted in accordance with this fear of nuclear snapback, and missed numerous opportunities since the conclusion of the JPCOA to push back against Iran’s malign activities.
By agreeing to the JCPOA, the Obama administration allowed Iran to hold the U.S. responsible for delivering financial and economic outcomes. This, in turn, provided ever-greater sanctions relief in order to persuade Iran to continue to uphold the JCPOA. This is not good policy. Instead, the Trump administration and Congress should ensure that the responsibility is placed on Iran. If Tehran wants more sanctions relief and wants to encourage multinational companies to enter the Iranian market, it must change its dangerous behavior.
The JCPOA lifts sanctions on Iran’s nuclear activities, however it does not prevent the United States from using non-nuclear sanctions – despite statements from Iran that it will view any imposition of sanctions as a violation of the deal and grounds to reenact its nuclear program. Congress should reject this Iranian stance – a form of nuclear blackmail – and hold the administration accountable for its commitments to “oppose Iran’s destabilizing policies with every national security tool available.” Sanctions need to be imposed. These necessary steps are not a violation of the JCPOA, but rather an affirmation of stated U.S. policy. Specifically, we recommend that Congress consider taking the following steps, in order to target Iran’s support for terrorism, ballistic missile program, support for the Assad regime in Syria and designated Shiite militias in Iraq, and human rights abuses:
- Protect the integrity of the U.S. dollar from Iranian illicit finance.
- Counter the narrative that Iran is a responsible financial actor.
- Strengthen sanctions against the Islamic Revolutionary Guard Corps (IRGC) by designating it for terrorism and expanding non-proliferation sanctions and designations.
- Require updated reporting on IRGC penetration in sectors of the Iranian economy, along with reporting and sanctions on the sectors involved in Iran’s ballistic missile development.
- Require the U.S. Treasury to designate companies with IRGC or Ministry of Defense beneficial ownership.
- Require the U.S. Treasury to create an IRGC Watch List.
- Require reporting to the Securities and Exchange Commission regarding any transactions with IRGC Watch List companies or in sectors connected to Iran’s ballistic missile program.
- Insist on robust investigation into illicit procurement and outstanding concerns about the possible military dimensions of Iran’s nuclear program.
- Expand human rights sanctions by imposing sanctions on Iranian state organs responsible for institutionalized human rights abuses and by linking sanctions concessions to improvements in human rights conditions.
- Target corruption and kleptocracy for reasons related to terrorism and human rights issues.
- Require reporting on U.S. citizens and other dual-nationals held hostage in Iran.
- Require reporting on and expand sanctions against Iran’s support for the Assad regime and IRGC activities in Syria.
- Require presidential certification that commercial planes are only used for civil aviation end-use before authorizing the sale of any aircraft to Iran.
- Prohibit any U.S. financial institution, including the Export-Import Bank, from financing any trade with Tehran while Iran remains a state sponsor of terrorism.
- Require reporting on the use of foreign airports and seaports by sanctioned Iranian entities.
Q: How do you think the new Trump administration will respond to any violations by Iran?
A: The new White House will be more likely to challenge any Iranian violations of the letter or spirit of the JCPOA, as well as its regional destabilization and support for terror groups. Sanctions need to continue to target the regime’s support for terrorism, ballistic-missile development, aid to Assad’s regime in Syria and designated Shiite militias in Iraq, and human-rights abuses. These necessary steps are not a violation of the JCPOA, but rather an implementation of stated U.S. policy to “oppose Iran’s destabilizing policies with every national security tool available.”