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Obama’s claim that his administration ‘built a coalition that imposed sanctions on the Iranian economy’

(Susan Walsh/Associated Press)
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“Despite frequent warnings from the United States and Israel and others, the Iranian nuclear program steadily advanced for years. At the beginning of my presidency, we built a coalition that imposed sanctions on the Iranian economy, while extending the hand of diplomacy to the Iranian government.”

— President Obama, commencement address at the U.S. Military Academy at West Point, May 28, 2014

Every White House has a tendency to believe — or at least assert — that time started when the president entered office. But in reality, problems are inherited and also passed on to the next administration. In many cases, a presidential administration will build on work that was done before, even if the new president disagrees rhetorically with a predecessor’s policies.

The Iranian nuclear file is an interesting example. Look at the way President Obama first frames the issue, “Iran’s nuclear program steadily advanced for years.” That’s the bad stuff that happened before he became president. Then, he says: “At the beginning of my presidency, we built a coalition that imposed sanctions on the Iranian economy, while extending the hand of diplomacy to the Iranian government.” That’s the good stuff that happened after he took office.

But is that an accurate depiction of what happened?

The Facts

Eight years ago, on June 1, 2006, the United States and five other world powers announced that they would pursue a dual path of offering incentives to Iran in negotiations and seeking sanctions at the United Nations. This marked a major shift in the George W. Bush administration’s policy toward Iran, as previously the United States had not been part of the negotiations over Iran’s nuclear ambitions. (This change in policy is detailed in Chapter 9 of The Fact Checker’s 2007 book, “The Confidante.”)

The talks between Iran and the world powers largely went nowhere, so pressure was applied at the United Nations. Before Bush left office, there were three U.N. Security Council resolutions imposing sanctions that were passed with no negative votes. (There were two other resolutions related to Iran’s nuclear program that did not include sanctions.) The descriptions below come from the U.S. Institute of Peace’s excellent and authoritative Iran Primer.

Resolution 1737 was unanimously passed on Dec. 23, 2006.  This resolution directed all U.N. member states to adopt measures to prevent the supply, sale or transfer of materials to Iran that could be used for nuclear or ballistic missile programs. The resolution called on member states to freeze the financial assets of 22 corporations and individuals involved in these programs. 

Resolution 1747 was unanimously passed on March 24, 2007. This resolution prohibited member states from procuring combat equipment or weapons systems from Iran, and called on states to “exercise vigilance and restraint” in supplying such items to Iran. It also called on member states and global financial institutions not to enter new financial commitments with Iran’s government — including grants or concessional loans — except for humanitarian and developmental purposes.

Resolution 1803 passed on March 3, 2008, by a vote of 14 to 1. This resolution called on states to “exercise vigilance” when providing export credits, guarantees and insurance to Iranian entities. It also called on states to voluntarily limit their interaction with Iranian banks operating in their territories. The resolution specifically urged states to cut ties with Bank Melli and Bank Saderat, which the United States accused of providing financial services for Iran’s nuclear and ballistic missile programs, in addition to facilitating money transfers to terrorist organizations. It also authorized inspections of air and sea cargo traveling to or from Iran if “reasonable grounds” suggested the vessel was transporting illicit materials. 

Administration officials, in defending the president’s language, noted that these resolutions were virtually all about Iran’s nuclear or missile programs, whereas in the president’s speech he referred to “a coalition that imposed sanctions on the Iranian economy.” They argue that it was not until the Obama administration that broad economic sanctions, including against Iran’s oil sector, were embraced not only at the United Nations but also by the European Union and many individual countries, going beyond the U.N. Security Council resolutions.

That effort came after the Obama administration first tried to engage directly with Iran on the nuclear issue. The Bush administration had maintained tight restrictions on its diplomats, but Obama decided at first to allow a direct approach to see whether it might bear fruit — and  to build credibility for another sanctions push.

When those talks failed, the administration succeeded in passing another U.N. resolution, Resolution 1929, which was approved June 9, 2010, in a 12 to 2 vote, with one abstention. Among other items, that resolution targeted Islamic Republic of Iran Shipping Lines (IRISL), a state-owned shipping conglomerate involved in transporting items related to Iran’s nuclear and ballistic missile programs. It also urged bans on new branches of Iranian banks overseas and from member-state financial institutions from doing business in Iran.

After the U.N.S.C. resolution was adopted, many nations began to adopt even tougher individual sanctions against Iran.

“Not one country ever imposed its own national sanctions against broad economic sectors in Iran during the previous administration,” an Obama administration official said. “During this one, the E.U., Canada, Australia, Japan, Korea, Norway and Switzerland all imposed national sanctions regimes targeting energy, transportation, finance, insurance and other sectors.”

“We never said there were no sanctions before, but that the overwhelming majority of sanctions came in this administration,” the official said.  “Not one sanction under Bush dealt with oil — only the Iran Sanctions Act, which was never once enforced under Bush — had any connection to the oil sector before those that came under this administration. They certainly never convinced a dozen countries to eliminate their Iranian oil purchases and half a dozen countries to cut them in half. Insurance is the same way. They probably designated an insurance company, but we took it to the next level by convincing the E.U. to pass sanctions that prohibited P&I [property and indemnity] insurance for Iranian tankers, a move that cut Iran off from almost all global maritime insurance for its oil exports.”

The official added: “We’re not disputing the importance of the U.N.S.C.Rs. But what we have done is unquestionably a step increase from anything that was contemplated previously.”

Former Bush administration officials involved in the sanctions effort against Iran believe the administration’s success cannot be separated from what happened before — and that what happened under Obama is indeed what was contemplated before he took office.

“This is a misleading and unfair articulation of the history of the financial campaign and sanctions put on Iran starting in 2006 — which had deep and broad international support,” said Juan Zarate, who was deputy national security adviser for counterterrorism. “This was crafted as a constriction campaign starting with the targeting of the Iranian banking sector, access to the insurance and transport sectors, and then the constriction of the oil sector. Some of the most critical and impactful steps happened in 2007, led by the U.S. Treasury and the State Department.”

Zarate noted that Obama specifically retained a key architect of the Iranian effort, Treasury Undersecretary Stuart Levey, to maintain continuity and to build on Bush’s efforts. Levey crisscrossed the globe, persuading financial institutions and companies to curtail or end business in Iran. That, in turn, made it easily for countries to later impose sanctions on Iran because increasingly fewer companies were doing business there.

“There’s no question that the Obama administration and Congress added to the measures — ultimately with the oil sanctions,” said Zarate, who wrote a book about the effort titled “Treasury’s War: The Unleashing of a New Era of Financial Warfare.”  “To suggest however that there were no sanctions or financial pressure — and no coalition — before 2009 is wholly inaccurate. It’s a political distortion of history.”

Zarate’s book details how the Bush administration searched for ways to weaken Iran’s ability to operate in the oil markets without spooking the markets and raising prices. In November 2008, the Treasury Department revoked authorization for “U-turn financial transactions” involving Iran, which essentially meant that Iran could not have dollar-clearing transactions for its oil through New York. In the book, Zarate describes how targeting the oil sector was a card to hold in reserve, but the ban on U-turn transactions signaled the start of a broader oil squeeze implemented under Obama.

As an example of the continuity between administrations, a State Department cable released by the anti-secrecy group WikiLeaks shows how, barely six weeks into the administration, a Treasury official, Daniel Glaser, gave a classified briefing to officials from 27 European countries on March 2-3, 2009. He said that under Obama the United States remained committed to the “dual track approach” to Iran. The cable quoted Glaser as saying:

“To be sure, ‘engagement’ would be an important aspect of a comprehensive strategy to dissuade Iran from acquiring nuclear weapons. However, ‘engagement’ alone is unlikely to succeed. Diplomacy’s best chance of success requires all elements combining pressure and incentives to work simultaneously, not sequentially. Our shared challenge is to work together in finding the right mix of measures. Time was not on our side. The international community must urgently choose between several bad options facing us in 2009; none of these options were without cost. …The dynamic nature of the international financial system required that targeted financial sanctions against Iran must be continually adjusted to maintain, let alone increase, pressure on Iran.”

Glaser, who has worked at Treasury since 2004, is Obama’s assistant Treasury secretary for terrorist financing and is deeply involved in the sanctions effort against Iran.

“The Bush administration led in convincing the Security Council to impose the first three U.N.S.C. Chapter VII sanctions resolutions against Iran between 2006 and 2008. Bush also began the financial sanctions effort that Obama later took even further,” said R. Nicholas Burns, a career Foreign Service officer who was undersecretary of state under Bush.  “So, the basic strategy of penalizing and pressuring Iran was begun by Bush and was continued by Obama. Condi Rice, Stu Levy and I all spent an enormous amount of time convincing the Europeans, Russians and Chinese to join us.”

“I think President Obama has been skillful and effective in pressuring Iran and getting us to negotiations,” said Burns, who praised Obama’s West Point speech as “sincere and well said” in an interview in The New York Times. “But, he didn’t start the economic and financial sanctions process. I actually see a remarkable symmetry between Obama and Bush on Iran.  It is a good [and rare] example of bipartisan continuity.”

The Pinocchio Test

We realize that these are just a few lines out of a major speech. But the framing of the Iranian issue leaves a misleading impression. After all, the Iranian program continued to grow at a rapid pace through much of the Obama administration, at least until the recent negotiations. And the groundwork and the strategy for the coalition that imposed sanctions on Iran was laid in the Bush administration. So the “bad stuff” continued under Obama and the “good stuff” started before him.

We wavered on whether this statement merits Two or Three Pinocchios. On the one hand, one could argue that this is one of those “half-true” statements worthy of Two Pinocchios. But the more we looked into it, this was a remarkably uncharitable and partisan description of an effort that really is a model of bipartisan cooperation. It certainly took some wordsmithing to narrow the reference to sanctions on the “Iranian economy.”

It would have taken only a little humility — substituting “at the beginning of my presidency” with “building on the efforts of my predecessor” — to have made this statement significantly more accurate.

Three Pinocchios

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