U.S. Sanctions Iran's Main Shipping Company

Sources: Financial Times, U.S. Imposes Fresh Sanctions on Iran; BBC News, U.S. Sanctions Target Iran Carrier; International Herald Tribune, Iran Calls U.S. Sanctions on Shipping Line Illegal

The United States announced new sanctions against Iran’s largest shipping company over its alleged support for Tehran’s nuclear program. The U.S. Treasury alleges that the Islamic Republic of Iran Shipping Lines (IRISL) facilitated shipments of military-related cargo to Iran’s Defense Ministry and Armed Forces Logistics, the organization in control of Iran’s ballistic missile research. Washington also alleges that the company falsifies documents and uses deceptive schemes to hide its involvement in illicit commerce.

Previous sanctions from the U.S. were enforced on entities that worked directly on Iran’s nuclear and missile program, but recently Washington and several European countries have taken steps against Iran’s financial sector, notably banning business with Bank Melli, Iran’s largest bank. Although the ban against Bank Melli has increased the cost of financing in Iran, it is unlikely that the sanctions against IRISL will have much practical effect because the company has no dealings with American companies and no bank accounts or assets in the U.S. However, Washington has indicated that it will discourage international companies from doing business with IRISL.

Iran responded to the new round of sanctions by condemning them as “illegal and unjustifiable,” insisting that IRISL had never engaged in any illicit activities and all consignments carried by its ships have been verified by authorities in departing and destination ports. Further, Iran’s Mission to the U.N. said in a statement that the Iranian government now reserves the right to “seek compensation for the damages that may be incurred to its citizens as a result of such unfounded accusations and unlawful unilateral measures.”

Discussion: Do you think that this new round of sanctions will increase the cost of imported refined oil, as Iran ships in to meet more than a third of domestic demand? If so, was this a “smart” sanction by the U.S. government? Do you think that pressure on Iran’s financial sector will serve its purpose of encouraging Tehran to terminate its nuclear program? If the U.S. can convince other nations and international companies to follow suit, how do think Tehran will react?