U.S. Sanctions Put Iran in Cash Crunch, Iran Envoy Says

Iranian president Hassan Rouhani
Iranian president Hassan Rouhani / Getty Images
October 30, 2020

The Iranian government has access to just $10 billion in hard currency, complicating the hardline regime’s efforts to fund wars across the Middle East, its terror proxy groups such as Hezbollah, and its nuclear program, according to the Trump administration’s top Iran envoy.

While Iran has around $100 billion stored in various international accounts, U.S. sanctions have frozen most of these funds, leaving the regime with around $10 billion in cash and limiting Tehran’s ability to fuel its global terror operation. With active wars and terrorism operations in Yemen, Syria, Iraq, and Lebanon, Tehran’s resources are closer than ever to running dry, according to Elliott Abrams, the Trump administration’s special envoy for Iran.

"A lot of money is tied up in various ways by our sanctions," Abrams told the Washington Free Beacon in an interview. "So, the amount that is really accessible [to Iran] is much lower" than the amount currently stored in international bank accounts. While Iran has not publicly disclosed its financial status, the coronavirus pandemic has forced it to inject nearly $1 billion into its ailing economy. With inflation at an all-time high and revenues at an all-time low, the International Monetary Fund predicts that Iran may only be left with $85 billion in cash by the end of the year, much of which remains frozen.

In the final months of President Donald Trump’s first term, the United States is pressing forward with a range of sanctions on Iran’s oil sector, nuclear sector, terrorist proxy groups, and financial networks, according to Abrams. Many of these sanctions, however, hang in the balance ahead of the contested presidential election next week. Democratic challenger Joe Biden has vowed to reenter the nuclear deal with Iran, paving the way for Iran to receive major sanctions relief that would refill its government coffers. Iranian leaders have already staked out a hardline position, insisting that Tehran be granted significant cash windfalls before reentering the deal with a Biden administration.

The United States shows no sign of backing down from its "maximum pressure" campaign on Iran. Secretary of State Mike Pompeo’s State Department is sanctioning Iran’s oil trade—a significant source of revenue for the regime—and warning banks across the globe that if they deal with Iran, they will run afoul of American sanctions laws. This is likely to deprive the regime of further resources and send a firm message to the global banking system that Iran is not open for business under the Trump administration.

On Thursday, the administration announced the completion of a months-long operation to intercept several shipments of anti-tank and other advanced missiles sent by Iran’s Revolutionary Guard Corps to terrorist fighters in Yemen. In conjunction with the Department of Justice, Abrams also spearheaded the seizure of 1.1 million barrels of Iranian oil bound for Venezuela, representing the U.S. "government’s largest-ever civil seizures of fuel and weapons from Iran," according to the State and Justice Departments. The United States sold the seized oil and donated the profits to a fund maintained for American victims of terrorism.

Iran’s oil sector is a high-profile source of revenue for the regime that the United States has been targeting for the past several years. Much of this oil is being illicitly shipped to China and Venezuela, which has grown increasingly close to Iran under the leadership of dictator Nicolas Maduro.

The State Department has been going after "shipping companies, insurers, ship captains" to dismantle Iran’s oil trade, according to Abrams. That effort has reduced Iran’s oil revenues and forced it to sell crude oil on the cheap to countries such as China and Venezuela. The most recent seizure of Iranian crude by the United States cost the regime millions in profits.

Still, the Trump administration remains locked in a diplomatic stalemate with its European allies over the implementation of sanctions and a United Nations arms embargo on Iran. The United States invoked a mechanism known as "snapback" in August that reinstated all international sanctions on Iran that were lifted as part of the nuclear agreement. European powers, including France, Germany, and the United Kingdom, refused to support the move, generating confusion over the state of global sanctions on Tehran.

Asked about the U.S. disagreement with the European Union, Abrams said that American sanctions still have the power to stop businesses from dealing with Iran—despite the rhetoric coming out of Europe.

"Statements by diplomats and politicians, including foreign ministers, to the effect that these sanctions are not really in effect, or that they won’t be followed, or that they won’t work, are meaningless," Abrams said. "Foreign ministers don’t actually abide by or refuse to abide by sanctions."

Sanctions are meant to deter the global business and banking communities, Abrams said.

"The decisions are made all over the world by 10 to 30,000 individuals—business leaders, bankers, financiers—and they look at a proposed transaction and … call their lawyer who says, ‘Don’t be an idiot,’" he said. "They sometimes look at transactions and say, 'The legal fees will be higher than our profits.' It doesn't matter frankly what foreign ministers say. It matters what businessmen and people in finance do."

Jack Beyrer contributed to this report.

Published under: Elliott Abrams , Iran