In a game of yo-yo policies, U.S. tightens Iran oil sanctions while granting exceptions on others

There are still a lot of unknowns about this new policy.

Secretary of State Mike Pompeo speaks during a press conference at the US Department of State in Washington, DC on April 22, 2019. Andrew Caballero-Reynolds/AFP/      Getty Images.
Secretary of State Mike Pompeo speaks during a press conference at the US Department of State in Washington, DC on April 22, 2019. Andrew Caballero-Reynolds/AFP/ Getty Images.

The Trump administration’s Iran policy is getting more complicated by the day.

Nearly one year after the Trump administration decided to withdraw from the Iranian nuclear deal, the Trump administration announced on Monday that all countries must stop purchasing oil from Iran by May 2 or they will be subject to U.S. sanctions. But just a day earlier, Reuters reported that the State Department has carved out exemptions for sanctions on Iran’s Revolutionary Guard, allowing some firms to continue to deal with Iran.

“Our goal has been to get countries to cease importing Iranian oil entirely … Today, I’m announcing that we will no longer grant any exceptions. We are going to zero — going zero across the board,” Pompeo said on Monday.

He warned that any country violating those sanctions should be aware that “the risks are simply not going to be worth the benefits.” He repeated the list of behaviors the Trump administration wants Iran to change — from curtailing its ballistic missile program to ceasing support for Hezbollah in Lebanon and Houthi rebels in Yemen.


When asked by a reporter if the United States is really interested in renegotiating the nuclear deal or if the expectation was that Iran change its foreign policy “without getting anything in return,” Pompeo replied, “we’re happy to get the outcome however we can achieve it.”

Pompeo said the United States had laid out its goals — the dozen policy changes it demanded in May 2018 when it withdrew from the agreement — and said that when Iran complies, then the United States would deal with Iran as a “normal” nation.

In November, the State Department issued 180-day waivers for countries that buy Iranian oil — such as China, South Korea, India, and Turkey — to move toward importing from other countries. China, which is one of the largest purchases of Iranian oil, has already decried the sanctions, with Foreign Ministry spokesman Geng Shuang accusing the United States of overreaching.

Iran’s oil exports have dropped from 2.5 million barrels per day in April 2018 to around 1.0 million barrels per day.

It’s unclear whether Saudi Arabia and the United Arab Emirates will increase their outputs to supply those markets and keep oil prices from spiking, although Pompeo on Monday said the U.S. had received assurances from both to provide “appropriate supplies.”  It is unclear if the sanctions will kick on May 3, or how they will work for countries that don’t use U.S. currency or employ credit or trade for Iranian oil.


Iran isn’t without options when it comes to retaliatory measures — beyond threats to shut down the Strait of Hormuz — that could really hurt U.S. interests, noted Barbara Slavin, director of the Future of Iran Initiative at the Atlantic Council.

“We have [U.S. Special Envoy to Afghanistan] Zalmay Khalilzad running around the world trying to broker a deal with the Taliban — Iran has no interest in making that agreement happen, and they’re going to keep us bogged down in places like Afghanistan,” she said. “They’re not going to facilitate a Yemen [peace] settlement, they’re not going to work in any way that helps U.S. interests in Syria…and they’re probably going to pressure the Iraqis to kick the Americans out.”

Slavin calls the current U.S. strategy “a wanton overuse of sanctions” that will only force other countries — including our allies — towards using other currencies, reducing the utility of U.S. sanctions going forward.

“This is the United States drunk on unilateralism,” she added.

U.S. grants exceptions on IRGC sanctions

But just as one set of sanctions are tightened, there seems to be some daylight in another.

On Sunday, Reuters reported that the Trump administration has carved out major exceptions allowing foreign governments, companies, and NGOs to deal with Iran — without automatically facing U.S. sanctions over dealing with the country’s powerful Islamic Revolutionary Guard Corps (or IRGC), which controls large stakes in businesses.


As the administration has had to keep extending waivers for countries buying oil from Iran, it had to grant exceptions to these sanctions too, apparently realizing that isolating Iran and the IRGC is not as easy as anticipated.

“There are so many contradictions in U.S. policy,” said Slavin, adding, “We’re in Iraq, we’re in Syria, we’re in Afghanistan — we are dealing with governments who have normal diplomatic relations with Iran, and so a policy of trying to prevent others with dealing with the IRGC is clearly a non-starter.”

“This is just recognizing reality,” she added. “There’s a limit for how much we can bully the world.”

The State Department deemed the the IRGC, a branch of the country’s armed and intelligence forces, a foreign terrorist organization (FTO) on April 15, making it almost impossible for entities in other countries to deal with it.

But it’s become clear that will interfere with the work of U.S. diplomats, who can rely on Iranians as middlemen in places such as Iraq, Syria, and Oman.

The exceptions would allow humanitarian groups to work in Iran and in other countries where the IRGC is active without being automatically sanctioned, although even the exceptions have exceptions, and they are broadly defined.

For instance, providing the IRGC with “material support” will leave a company, government, individual, or NGO vulnerable to sanctions, but what constitutes “material support” can cover a range of activities, from providing funds to food, or distributing literature. One lawsuit sought to hold Twitter liable with material support for ISIS because the group used the platform.

“Under the first group exemption, the secretary determined that, generally — but with one important exception — a ministry, department, agency, division, or other group or sub-group of any foreign government will not be treated as a Tier III terrorist organization,” said a State Department spokesman, according to Reuters.

The IRGC was labeled a terrorist organization over the objections of the State Department’s own Near Eastern and South and Central Asian bureaus, as well as the Departments of Defense and Homeland Security, according to unnamed U.S. officials who spoke with Reuters.

Slavin said this hardline approach towards Iran, which equals a “collective punishment against the world’s largest Shia state,” is a gift to extremist groups like ISIS, going back to President George W. Bush’s strategy of trying to make Iran an “axis of evil” pariah state.

“They see the world in zero-sums right? We could have Iran as an ally against these groups, instead, we chose to make them an enemy,” she said.