Even the Losers

The following is an excerpt:

Each Christmas for the past 15 years, I’ve returned to the city of my childhood, Toronto. It feels like the same city of immigrants united by their ethnic food, entrepreneurship, and gratitude for Canada’s polite and tolerant embrace. But this time is different. The Maple Leafs are winning. There’s even hope that this may be the year they win their first championship since 1967, the year before I was born to a rugby-loving family in South Africa.

Read Mark’s op-ed for The Washington Examiner here.

Trump Delivers a Victory to Iran

The president’s decision to withdraw U.S. forces from Syria has ruined the administration’s efforts to contain the Islamic republic.

The following is an excerpt:

Trump’s decision to withdraw U.S. forces from Syria, concurrently with his intention to drastically reduce the number of American soldiers in Afghanistan and the likely soon-to-be-announced further drawdown of U.S. personnel in Iraq, has made mincemeat of the administration’s efforts to contain Iran. If you add up who wins locally by this decision (the clerical regime in Iran, Russian President Vladimir Putin, the Syrian dictator Bashar al-Assad, Lebanese Hezbollah, Iraqi Shiite radicals, and Turkish President Recep Tayyip Erdoğan) and who loses (Jordan, Israel, the Syrian and Iraqi Kurds and Sunni Arabs, everyone in Lebanon resisting Hezbollah, the vast majority of the Iraqi Shia, the Gulf States), it becomes clear that the interests of the United States have been routed.

Before Trump pulled the plug in Syria, the rhetorical center of the president’s Iran policy was the “New Iran Strategy” speech by Pompeo at the Heritage Foundation on May 21, 2018. The 12 demands that Pompeo issued to Tehran are not historically provocative—they were, until the coming of Obama, essentially what the United States had always sought: to deny the mullahs nuclear weapons and stop them from spreading their version of Islamic militancy. Washington hadn’t been brilliantly successful in countering Tehran and only occasionally efficient in bringing real pain to the mullahs and their praetorians, the Revolutionary Guards, who are responsible for the deaths of hundreds of American soldiers since they first drew blood in Lebanon in 1983. But Pompeo, by redrawing the lines, clearly signaled that the United States wasn’t giving up, that a campaign of “maximum pressure” was still coming. It is clear now, however, that the secretary’s speech was a bridge too far for Trump, who may never have read it.

Read Mark’s op-ed for The Atlantic, co-authored by Reuel Marc Gerecht, here.

New U.S. Sanctions Omit Key Firms Linked to Iran’s Armed Forces

The following is an excerpt:

The United States on Monday sanctioned more than 700 Iranian entities and individuals for enabling Tehran’s malign conduct, but it omitted half of the publicly listed firms under the principal control of the regime’s security forces. Listed on the Tehran Stock Exchange (TSE), these lucrative companies play a major role in financing Iran’s regional aggression and domestic repression.

The Armed Forces of the Islamic Republic of Iran owns more than 50 percent of the shares – or controls more than 50 percent of the seats on the boards of directors – of 22 TSE-listed companies. These firms encompass a variety of industries, including finance, energy, construction, automotive, and telecommunications, among others. Eleven of the 22 companies fall under the Armed Forces’ general jurisdiction; the IRGC, in particular, controls the rest.

The Armed Forces includes the Islamic Revolutionary Guard Corps (IRGC), the regime’s praetorians; the Law Enforcement Force (LEF) of the Islamic Republic of Iran, the state police; the Basij, or religious police; the Artesh, or conventional military; the General Staff of the Armed Forces; and the Ministry of Defense and Armed Forces Logistics (MODAFL). Supreme Leader Ayatollah Ali Khamenei, the commander-in-chief of the Armed Forces, directly appoints the heads of all of them except the MODAFL. The United States had already designated the IRGC, the LEF, the Basij, and the MODAFL prior to Monday’s sanctions.

On Monday, Washington sanctioned six companies under the Armed Forces’ general jurisdiction. Treasury had sanctioned two of those six – Ghadir Investment and Parsian Oil and Gas – before the finalization of the 2015 nuclear deal, which led to their delisting. Treasury had not previously sanctioned the other four – Motogen, Sepahan Cement, Shargh Cement, and Kurdistan Cement.

Treasury has yet to sanction the remaining five, which they should do in light of their ties to other firms that Treasury designated on Monday.

Read the complete policy brief by Mark and Saeed Ghasseminejad on FDD’s website here.

Harris: Joining me now with more on this: Mark Dubowitz, CEO of the Foundation for Defense of Democracies. He’s also advised Secretary Pompeo’s team and helped Congress write the very sanctions now being reimposed. Sorry to talk about you in the third person for a minute but I wanted people to know the importance of why we have you on the program today.

So tell me about these sanctions specifically do they affect oil—what do they affect?

Mark: Well, the sanctions that are coming back on Monday are going to affect Iran’s ability to attract investment in its energy sector, export its oil which accounts for about 70% of its export earnings, and it’s also going to affect Iran’s ability to tax at the global financial system—to move money around, to repatriate foreign exchange for its reserves, to defend its currency… so these sanctions are maximum pressure and they’re maximum financial pressure.

Harris: And what does that mean for the people on the ground in Iran because they will eventually as they have in the past I would imagine you know rise up and become part of the conversation again?

Mark: They’ve actually already risen up—since December there have been protests all over Iran. There been strikes by teachers and truck drivers, and what’s interesting is the protests are really the political base of the regime. These are blue-collar workers who normally have supported the regime but are now on the streets yelling “death to the supreme leader!” “death to President Rouhani!” “Why are you spending billions of dollars supporting Bashar Assad’s slaughter in Syria and funding Hezbollah instead of taking care of us?” So, the regime is being squeezed by the Trump administration externally and internally by Iranians who are very frustrated and angered by the regime.

Harris: And is there any reaching out that we would do [as the U.S.] to these people on the ground?

Mark: Secretary Pompeo has really had a really robust public diplomacy strategy in reaching out to the Iranian people through Farsi language Twitter, through broadcasting, through speeches that he’s given, and [Pompeo is] really underscoring that this is a wonderful culture, wonderful people with a great history. The only place where Iranians don’t succeed around the world is inside Iran, because the Islamic Republic represses them and deprives them of opportunities. So he’s made those points. He’s underscored that that’s been backed by the President and others, and I think that messaging campaign is critical going forward.

Harris: So Mark, these reimposed sanctions go into play on Monday, and then as we look ahead to 2019, I’ve heard you say that things could get worse for Iran—how?

Mark: They’re going to get worse for the Islamic Republic, because the State Department, under Secretary Pompeo’s leadership, hasn’t stopped reducing Iranian oil exports. What he’s done is he’s carefully calibrated how to take a million barrels off without spiking the price of oil and he’s been enormously successful in doing that. You know, the price of rent is the same as it was when the President withdrew from the deal in May, so that’s quite a remarkable achievement. Going into 2019, they’re gonna be locking up Arabian oil revenue so Iran has limited ability to spend it—and can only spend it on humanitarian goods—and as oil markets loosen, the State Department is really committed to taking another 500 to 800 thousand barrels a day off line. So the regime is going to get continue to be squeezed. And on the financial side, Secretary Mnuchin has been as successful in designating banks and designating 700 Iranian entities (300 more to come) and cutting off Iran’s access to the global financial system.  

Harris: That is fascinating to me, because now the question becomes—with all that in play—does this bring Iran back to the negotiating table or not?

Mark: It’s an open question…the Iranians are always defiant until the day before they decide to come back [to the negotiating table]. We’ve seen that in the past. I think that the Iranian strategy for now may be to count on their hope that President Trump is a one-term President and wait him out for two years, and maybe get a President in the White House in 2021 who takes America back into the deal and isn’t willing to be as tough. So that is the strategy. The question is: can they make it over two years? And what happens if they’re wrong and President Trump actually has six years to impose maximum pressure? That may be a very difficult strategy to maintain.

Harris: I’ve always thought with a government agency that you put in place it’s hard to go back to what previously was there with any government, so, if they’re waiting out our politics, that seems like a fruitless strategy. But they’ll have to deal with it because those sanctions are in play—reimposed—on Monday. Mark, thank you so very much for giving us a kind of an inside look on how you’ve been supporting the Secretary of State on these sanctions against Iran.

Mark: Thanks so much for having me.

Don’t Let Iran’s Rulers Abuse the Humanitarian Channel to the Detriment of the People

The following is an excerpt:

Treasury Secretary Steve Mnuchin announced today that the global financial messaging service SWIFT “would be subject to U.S. sanctions” if it does not remove designated Iranian banks from its system “as soon as technologically feasible.” He noted that humanitarian transactions with non-designated Iranian entities are permissible but warned, “People need to be careful that those are real humanitarian transactions,” not illicit transactions disguised as food and medical trade. The warning is well deserved, as that is exactly how the Islamic Republic exploited the humanitarian exemption after its banks were “de-SWIFTed” in 2012.

Six years ago, in response to congressional initiatives threatening to sanction SWIFT, the organization removed sanctioned Iranian banks from its network. The ban, however, was not total. The U.S. Treasury and EU regulators intentionally left a few Iranian banks connected as a humanitarian channel to avoid measures that would unduly harm the Iranian people. Officials had committed to monitoring Iran’s transactions to prevent illicit funds from moving through the SWIFT system.

Despite these assurances, a December 2013 corruption scandal in Turkey revealed that Iranian banks were using SWIFT for illicit financial transactions. A leaked prosecutor’s report showed SWIFT transaction receipts as Iranian banks processed sanctions-busting transactions. Turkish-Iranian businessman Reza Zarrab, at the center of the scheme, pleaded guilty in U.S. court last year to facilitating billions of dollars in illicit transactions.

Read the complete policy brief by Mark and Annie Fixler on FDD’s website here.