Restricting Rogue-State Revenue: Strengthening Energy Sanctions on Russia, Iran... (EventID=116636)

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Connect with the House Financial Services Committee Get the latest news: https://democrats-financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/HouseFinanci... Follow us on Twitter: https://twitter.com/FSCDems ___________________________________ On Tuesday, December 12, at 2:00 p.m. (ET) Subcommittee on National Security, Illicit Finance, and International Financial Institutions Chair Congressman Luetkemeyer and Ranking Member Congresswoman Beatty will host a hearing entitled, “Restricting Rogue-State Revenue: Strengthening Energy Sanctions on Russia, Iran, and Venezuela." ___________________________________ Witnesses for this one-panel hearing will be: • The Honorable Marshall Billingslea, Senior Fellow, Hudson Institute • Dr. Anna Mikulska, Senior Fellow, Kleiman Center for Energy Policy at the University of Pennsylvania • Dr. Ryan Berg, Director, Americas Program, Center for Strategic and International Studies • Ms. Claire Jungman, Chief of Staff, United Against Nuclear Iran • Mr. Adam Smith, Partner, Gibson, Dunn & Crutcher LLP ___________________________________ Iran Background The U.S. began imposing sanctions on Iran in the early 1980s, after the U.S. Embassy in Tehran was seized in 1979. In 1995, as Tehran continued to express support for extremism and terrorism and engage in the development of weapons of mass destruction (WMD), the U.S. expanded its sanctions regime. These sanctions and Executive Orders (EOs) aimed to isolate the Iranian regime from the financial benefits and resources of the U.S. and its trading partners. Since then, additional sanctions have been imposed on Iran in industries including energy/oil, metals, banking, military and defense development, and petrochemicals. Energy Overview Iran is home to the third-largest oil reserves (12% of world reserves) and second-largest natural gas reserves in the world. In 2021, Iran was OPEC’s fifth-largest crude oil producer and the third-largest natural gas producer. Hydrocarbon exports are a significant source of Iranian government revenue and of Iranian GDP. During the U.S. ‘maximum pressure’ campaign in 2019, Iran’s oil revenues “fell from $100 billion to $8 billion a year.” However, rising global oil prices and increased exports associated with the reversal of the maximim pressure campaign, Iran’s oil companies export revenues grew back to approximately $40 billion in 2021. Similarly, over the past three years, Iran’s foreign reserves have increased by more than a factor of 10. Among other things, the Iranian regime benefitted from more than $80 billion in oil sales (mostly to China). One-off actions provide further liquidity, such as the $10 billion sanctions waiver allowing Iraq to pay Iran up to $10 billion in back payments for electricity purchases, and a waiver to release $6 billion of Iranian oil revenue frozen in South Korean banks as part of the exchange of American hostages for Iranian criminals earlier this year. However, these payments are not made directly to Iran but rather to offshore accounts from which distributions are made when withdrawals are authorized for use on non-sanctioned goods, such as humanitarian goods like food and medicine. China is Iran’s biggest oil purchaser and Iran is China’s third-largest oil provider –trailing Russia and Saudi Arabia. Iran “offers steep discounts for its oil to persuade Chinese refiners to accept the risk of dealing with sanctioned Iranian entities,” according to an Iranian sanctions specialist with the Washington Institute for Near East Policy. While these discounts keep money coming into the country, the sales do not solve Iran’s deep economic issues. Iran evades U.S. oil sanctions by chartering ghost fleets, reflagging cargo ships, rebranding its crude oil as another country’s, forging documents hiding the origin and insurance of cargo ships, among other tactics. Iran has become so adept at evading sanctions that they are aiding and abetting oil sanctions evasion by other countries, such as Venezuela and Russia. Current Sanctions Landscape U.S. sanctions on Iran are intended to: 1) block Iranian government assets in the United States, 2) ban nearly all U.S. trade with Iran (except food and agricultural commodities, medicine, medical supplies, and other humanitarian-related goods), and 3) prohibit foreign assistance and arms sales. These sanctions target Iran’s energy sector, financial sector, shipping, construction, mining, textiles, automotive, and manufacturing, the arms trade, and components of Iran’s government. Beyond humanitarian exemptions, Treasury has issued general licenses to authorize otherwise prohibited transactions for specific purposes, including providing telecommunications services and equipment to thwart the Iranian government’s attempts to cut off internet access. Russia... ___________________________________ Hearing page: https://democrats-financialservices.house.gov/events/eventsingle.aspx?EventID=411027