New GAO Report Questions Efficacy of Sanctions Measures on Iran by Victor Comras

New GAO Report Questions Efficacy of Sanctions Measures on Iran
By Victor Comras

A new GAO report, released January 16, 2008, seriously challenges the efficacy of current US sanctions on Iran and calls for a re-evaluation of our overall sanctions measures vis a vis Iran. The report is particularly critical of the Administration’s failure to develop and collect baseline information and criteria to assess the effectiveness of the measures adopted and the adequacy of the overall enforcement effort behind these measures. The report, “IRAN SANCTIONS: Impact in Furthering U.S. Objectives Is Unclear and Should Be Reviewed,” maintains that, overall, the sanctions have imposed few real costs on the Iranian economy and have failed to achieve the stated objectives for which they were imposed. The report also concludes that “The extent of the sanctions’ impact in deterring Iran from proliferation activities, acquiring advanced weapons technology, and support for terrorism is unclear.”

The GAO report discounts Treasury and other US Agency claims that the sanctions have persuaded European and other banks to withdraw from the Iranian market, slowed foreign investment in Iran’s petroleum sector and denied parties involved in Iran’s proliferation and terrorism activities access to the U.S. financial system. Rather, it notes that “Iran’s overall trade with the world has grown since the US imposed sanctions,” that “the Iranian government has signed contracts reported at about $20 billion with foreign firms to develop its energy resources” and that “sanctioned Iranian banks {now} fund their activities in currencies other than the dollar.” The growing worldwide demand for oil, coupled with high oil prices and Iran’s extensive reserves, enabled Iran to generate more than $50 billion in oil revenues in 2006. The report also concludes that the measures adopted by the UN Security Council have still not been fully implemented, raising questions as to their overall effectiveness.

Between 1987 and 2006, the report points out, Iran’s exports grew from $8.5 billion to $70 billion, while imports grew from $7 billion to $46 billion, reflecting an annual growth rate for exports of nearly 9 percent and 7 percent for Iran’s imports. During this same period Iran has been successful in circumventing the US trade ban by channeling its acquisition of US products and technology through third countries, including Germany, Malaysia, Singapore, the United Kingdom, and, "according to Commerce officials, the United Arab Emirates (UAE) in particular." Not until August 2007 did the UAE, at US behest, and pursuant to the UN sanctions, begin to cut off the transshipment of sensitive nuclear technology and armaments to Iran, the report says. And even here, the GAO maintains that these measures are still too new to assess their real impact.

I have frequently presented my own doubts concerning the efficacy of the current US sanctions on Iran and advocated that new steps be taken domestically and internationally to strengthen these measures. I have also stressed the critical importance of convincing our European allies and other like minded countries to join us in this crucial effort. I was disappointed, therefore, that the GAO report, while recognizing the shortcomings in our current sanctions strategy makes no bolder recommendations than to call upon the administration to undertake a more complete assessment of its current sanctions policies. I hope that Congress will be more bold when it reads the findings and conclusions of this alarming report and that they once again stimulate a domestic and international debate on this important topic.

As to the GAO Report Recommendations, they state:

Congress {should} consider requiring the NSC, in collaboration with the Departments of State, the Treasury, Energy, and Commerce; the intelligence community; and U.S. enforcement agencies to ….: (1) collect, analyze, and improve data on U.S. agencies’ actions to enforce sanctions against Iran and complete an overall baseline assessment of the impact and use of U.S. sanctions, including factors that impair or strengthen them. This assessment should … consider factors such as, but not limited to…the number of goods seized, penalties imposed, and convictions obtained under the trade ban; sensitive items diverted to Iran through transshipment points; the extent to which repeat foreign violators of Iran-specific sanctions laws have ended their sales of sensitive items to Iran; the amount of assets frozen resulting from financial sanctions; and the extent of delays in foreign investment in Iran’s energy sector.

(2) develop a framework for assessing the ongoing impact of U.S. sanctions, taking into account any data gaps that were identified as part of the baseline assessment , and the contribution of multilateral sanctions.

(3) report periodically to the Congress on the impact of sanctions against Iran in achieving U.S. foreign policy objectives.


January 17, 2008 12:14 AM Link