New Iran Nuclear Deal Will Create 'Sanctions Evasion Hub for Putin,' Experts Say

Russian president Vladimir Putin and Iranian supreme leader Ali Khamenei (Alexei Druzhinin/AFP via Getty Images)
March 15, 2022

A new nuclear deal will create a "sanctions evasion hub for Vladimir Putin based in Iran," according to a new policy brief circulating around Capitol Hill and obtained by the Washington Free Beacon.

With a nuclear deal likely to be announced in the coming days, the Foundation for Defense of Democracies (FDD), a think tank critical of the agreement, says a new deal will allow Putin to circumvent tough Western sanctions that have been put in place since Russia invaded Ukraine.

"Policymakers should understand why this deal will establish a sanctions evasion hub for Vladimir Putin based in Iran—dramatically undermining international attempts to halt Russia's invasion of Ukraine and deter further aggression," according to the document, which FDD has furnished to lawmakers in the House and Senate. "In addition to looking for a sanctions-free channel for trade, Russia might use this opportunity to learn from Iran’s decades of sanctions circumvention expertise and better prepare to offset future financial pressure from the West."

The policy brief could help derail an agreement before it even goes into effect. Republicans in the House and Senate have already threatened to dismantle the deal and ensure that Iran does not get massive sanctions relief promised by the Biden administration. A majority of Republican leaders in both chambers warn that any deal reached without congressional approval will be dead on arrival. The information about how Russia will be able to use Iran as a hub for its sanctions-busting activities is likely to strengthen Republican opposition, particularly as Moscow wages an unprovoked war in Ukraine that has isolated its economy from the international banking system.

Russia has emerged as one of the major interlocutors in agreement negotiations, along with China, and there are concerns on Capitol Hill that both countries are using the deal to strengthen their nuclear and military trade ties with Iran.

While U.S. and European sanctions have targeted Russia's financial sector, there are still major gaps in these measures. Countries that have not yet leveled sanctions on Russia, such as China and India, can still do business with Moscow. As the Biden administration mulls the imposition of further sanctions that could restrict this activity, Russia is eyeing Iran as a base to conduct sanctions-busting operations, according to the document.

"Russia is well aware that the United States and Europe are eyeing such secondary sanctions and is looking to preemptively establish a financial beachhead from which Moscow can freely operate and evade future sanctions pressure," according to the policy brief. "Washington should draw from its experience in expanding the scope of secondary and financial sanctions on Iran to close this loophole that exists in the Russia sanctions regime."

One senior Republican congressional aide who has viewed the document said the information exposes how the Biden administration is removing key sanctions on Iran that will ultimately benefit Russia—undermining international efforts to isolate the country.

"The Biden administration may be ready to collude with Putin on an Iran deal, but Congress and the American public aren't," said the source, who was not authorized to speak on record. "Iran wants to do significant business with Russia, which means Biden will have to gut sanctions on Putin to protect the Iranians. He'll be spending the next three years vetoing congressional legislation imposing sanctions on Putin just to preserve his deal, assuming he even can."

As negotiations with Iran over a new nuclear deal come to a conclusion, there are indications that such a deal will prevent the United States reimposing sanctions on Iranian financial institutions—making them ripe for Russia to use as a workaround as it seeks to evade penalties on its economy.

"The new Russian-brokered Iran Deal stipulates that the United States cannot reimpose sanctions on those Iranian banks—or else Iran is authorized to expand its uranium enrichment activities," the document says. "In other words, the Russian-brokered Iran nuclear deal already guarantees Russia can use a sanctions-free Iran as a sanctions-evasion oasis. Russia and Iran have a long history of scheming to evade U.S. sanctions—and Iran will be able to apply its own lessons learned to aid Putin."

The deal also will allow Russia to continue building out Iran's civilian nuclear program, including at least two nuclear plants and a power plant located in Bushehr. These projects are being helmed by Russia's Rosatom firm, providing it with revenue as sanctions crush the Russian economy.

"The deal may also guarantee Russia financial compensation for storing stockpiles of Iranian enriched uranium—with the deal authorizing Russia to return that stockpile to Iran should any party allege the United States has broken its commitments," according to the document. "The United States will be greenlighting Russo-Iranian nuclear extortion of the United States."