New U.S. Sanctions on Iran Hit Ballistic Missile Program, Regime's Cash

Trump admin rolls back relief granted under Obama's nuclear deal

Iranian President Hassan Rouhani
Iranian President Hassan Rouhani / Getty Images
May 10, 2019

In announcing another round of sanctions on Iran this week, the Trump administration took unprecedented steps to roll back a series of cash windfalls authorized by the Obama administration that have lined the extremist regime's pockets and enabled it to make strides in its ballistic missile technology, according to policy experts.

President Donald Trump, on the anniversary this week of leaving the landmark nuclear deal, issued another salvo of sanctions that target Iran's lucrative iron, steel, aluminum, and copper sectors. Each of these arenas has helped Iran's hardline regime stockpile billions in cash as the country's economy teeters on the brink.

The sanctions represent "the first significant expansion of sectoral sanctions since 2013," according to veteran foreign policy analysts at the Foundation for Defense of Democracies, or FDD, a think-tank that enjoys close ties with the Trump administration.

The sanctions will pressure Iran's Revolutionary Guards Corps, or IRGC, the regime's paramilitary fighting force that also controls significant portions of the country's economy, mainly those like the precious metals sector that can be used for military purposes.

The Trump administration shows no signs of slowing down with its sanctions, angering the Islamic Republic and fueling a range of hostile military moves that have put U.S. military assets in the region on high alert.

"This [new] designation significantly increases pressure on Iran's economy by targeting industries from which Iran derives significant income," according to FDD, which examined how the new sanctions could impact Iran's multi-billion dollar energy sector. "It also enhances the administration's targeting of materials necessary to support Iran's nuclear and ballistic missile programs, and provides for the first significant expansion of sectoral sanctions since 2013."

In addition to generating billions for the Iranian regime, these sectors play a critical roll in fueling Iran's nuclear and ballistic missile programs. The sanctions will make it more difficult for the Iranian regime to trade in these commodities and use raw materials for its military.

"The industrial metals sector is also a supplier of raw and processed materials for military uses, including as part of Iran's ballistic missile and nuclear program; the sector is heavily penetrated by the Islamic Revolutionary Guard Corps," according to FDD's analysis. "Iran has large reserves of copper—the second largest in the world by some estimates—which is used for reduced‐visibility treatments in missiles to protect them from detection and interception."

Additionally, "aluminum products contribute to the missile program by increasing the performance of solid- and liquid-rocket propellant. Iran's largest aluminum producer—the Iran Aluminum Company, or IRALCO—also had a crucial role in the country's nuclear program by supplying aluminum alloys to manufacture centrifuges," FDD noted.

With sanctions on Iran's crude oil trade beginning to strain the regime, the new sanctions on Iran's metal sector seek to cut off another source of revenue. Iran exported nearly six billion in industrial metal products from March 2018 to 2019, a significant portion of the $44 billion it made from all non-oil imports.

"The industrial metal sectors now subject to U.S. sanctions—iron and steel, aluminum, and copper—generated $5.5 billion of exports, or 94 percent of the total for industrial metals," according to FDD's analysis of Iran's economy. "Since these metals comprise vital inputs for other key industries in Iran, such as the construction and automotive sectors, which generate nearly 10 percent of Iran's GDP, the sanctions-related disruption of trade will have a far-reaching effect on other parts of Iran's economy."

"The lion's share of industrial metal exports came from the steel and iron industry, with almost 79 percent of the total exports by value. Second in line is copper, with 12 percent," FDD found. "Iran also exported $207 million of aluminum, comprising 3.5 percent of the total export value."

The sanctions on Iran's metal sector appear to be part of a larger effort by the Trump administration to choke Iran's most vital economic sectors, which are also closely tied to the country's military industry.

This week's sanctions mark "the first time since June 2013 that the United States has expanded sectoral sanctions against Iran," according to FDD. "Previously, the Trump administration had only restored the sectoral sanctions waived by the Obama administration as part of the nuclear deal. Now, any individual or entity doing business in Iran must ensure that they are not doing business in the newly proscribed sectors, further limiting businesses from investing in Iran."

In the coming weeks, the administration could decide to sanction Iran's mining, construction, and engineering sectors in order to further erode the country's sources of income.

Published under: Iran , Sanctions