Nearly 700 Iranian banks, corporations and individuals already are covered by a variety of U.S. financial penalties that bar Americans from dealing with them, according to a Treasury Department database.
The broadest strictures, known as “secondary sanctions,” threaten to bar from the U.S. market banks and businesses in other countries if they trade with Iranian entities facing sanctions.
Iran’s biggest financial institutions, including Bank Saderat and Melli Bank, are covered by those measures. But other banks that concentrate on domestic agricultural and mortgage lending are not.
“There’s more that can be done to tighten the screws. But it may be more symbolic than actual,” said Adam Smith, a partner with Gibson, Dunn & Crutcher who worked on sanctions issues at the Treasury Department in the Obama administration.
In a White House statement aimed at calming fears of an imminent war between the U.S. and Iran, Trump said he would continue ratcheting up the “maximum pressure” campaign he launched against Iran in 2018.
The president started squeezing Iran’s roughly $440 billion economy after withdrawing the United States from the 2015 nuclear treaty negotiated by the Obama administration, China, France, Germany, Britain and Russia. Earlier U.S. sanctions had been lifted once that deal, which blocked Iran’s path to a nuclear weapon, was reached.
Iran responded to the reimposition of U.S. sanctions in 2018 by stepping up its support of anti-U.S. militias in neighboring Iraq, Syria and Lebanon, according to administration officials.
Trump’s comments Wednesday followed an Iranian missile barrage against bases where U.S. forces were stationed in Iraq. Tehran labeled the strikes as retaliation for the U.S. killing of Maj. Gen. Qasem Soleimani, a top Iranian military leader.
“As we continue to evaluate options in response to Iranian aggression, the United States will immediately impose additional punishing economic sanctions on the Iranian regime,” the president said Wednesday. “These powerful sanctions will remain until Iran changes its behavior.”
Administration officials offered no details of the president’s plans. But extending secondary sanctions risks blowback from governments that continue to engage in some commerce with Iran, including China, the European Union, Turkey and India.
The United States and its allies already are at odds over the best approach to the Iranian government.
The European Union, for example, has tried to arrange for Iran to continue enjoying some economic benefits from the nuclear deal. At the same time, the Trump administration seeks to impose economic pain on Tehran to pressure it into negotiating a more comprehensive agreement that would limit its nonnuclear military efforts.
While the administration insists its fight is with the government of the Islamic Republic rather than its 83 million people, tighter sanctions risk increasing human suffering. Many of the Iranian businesses that have not yet been hit with secondary sanctions are engaged in importing basic consumer goods, including household appliances, automobiles and clothing, according to Kenneth Katzman, a Middle East specialist at the Congressional Research Service.
Inflation is expected to approach 30 percent this year, according to the International Monetary Fund. And unemployment is also in double digits.
“Sanctions have accumulated over time and have a diminishing effect,” Djavad Salehi-Isfahani, an economist at Virginia Tech, wrote in an email. “It is especially hard to imagine that, having just suffered a serious blow as a result of losing a top general (Soleimani), possibly thinking about more revenge, and having resisted sanctions for the last 18 months, that Iran will suddenly start acting differently.”
Thanks to sanctions and poor economic policies, Iranian incomes in 2018 were at the same level as a decade ago. The economy, already in a deep recession, is expected to shrink by 9.5 percent this year, according to the International Monetary Fund.
“It’s a little difficult to see what else could be done to weaken the Iranian economy that hasn’t already been done in the last year or two,” said Lawrence Ward, a sanctions specialist at Dorsey & Whitney in Seattle.