U.S. Sanctions Policy on a Collision Course against Iran; Increasing Tensions with China

By Flynt Leverett and Hillary Mann Leverett, www.RaceForIran.com

 

, June 27th, 2012.

America’s policy on Iran-related secondary sanctions is on a collision course with itself as well as China. Secondary sanctions violate the United States’ obligations under the World Trade Organization and are, thus, illegal. (While a WTO signatory may decide, on national security grounds, to restrict its trade with another country, there is no legal basis for one state to impose sanctions against another over business that the second state conducts with a third country.) If Washington actually imposed secondary sanctions on another state for, say, buying Iranian oil and the sanctioned country took the United States to the WTO’s Dispute Resolution Mechanism, the United States would almost certainly lose the case.

Given this reality, the whole edifice of Iran-related secondary sanctions is in reality a house of cards. It rests on an assumption that no state will ever really challenge the legitimacy of America’s Iran-related extraterritorial sanctions—and this means that the United States cannot ever really impose them. Instead, successive U.S. administrations have used the threat of such sanctions to elicit modifications of other countries’ commercial relations with the Islamic Republic; when these administrations finally reach the limit of their capacity to leverage other countries’ decision-making regarding Iran, the United States backs off.

The Obama Administration is bringing this glaring contradiction increasingly to the fore, by supinely collaborating with the Congress to enact secondary sanctions into laws that give the executive branch less and less discretion over their actual application. This dynamic is now coming to a head in the Administration’s dealings with China.