New Act Underscores Importance of Comprehensive Assessment of Sanctions' Effectiveness
GAO-10-928T, Jul 29, 2010
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This testimony discusses our work on the implementation of U.S. sanctions against Iran. It discusses the continuing challenges the United States faces in (1) deterring the illegal transshipment of U.S. goods to Iran, (2) restricting foreign investment in Iran's energy sector, and (3) assessing the overall effectiveness of U.S. sanctions. In addition, it discusses how the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (signed into law on July 1, 2010) addresses these challenges. The United States has imposed multiple sanctions against Iran to deter it from developing its nuclear program, supporting terrorism, and abusing human rights. The United States has banned most U.S. trade and investment with Iran and prohibited firms from knowingly transshipping U.S. goods to Iran through other nations. The United States has also acted to limit Iran's ability to explore for, extract, refine, or transport its petroleum resources. The Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 expands existing sanctions against Iran and requires the Administration to report on information related to the sanctions. This testimony is drawn from prior GAO work related to sanctions against Iran. We conducted this work in accordance with all sections of GAO's Quality Assurance Framework and generally accepting government auditing standards, as appropriate.
Iran is obtaining U.S. military and dual-use goods (civilian goods with potential military applications) that are illegally transshipped through intermediaries in third-party nations, most notably the United Arab Emirates, Malaysia, and Singapore. U.S. agencies have conducted investigations to uncover Iranian procurement networks and prosecuted at least 30 firms and individuals between 2007 and 2009. The Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 requires the President to designate a country as a Destination of Diversion Concern if certain criteria are met. Moreover, the President shall impose a licensing requirement upon certain U.S. exports to the designated country unless the President makes a number of determinations, including determining that it is appropriate to provide technical assistance to strengthen the country's export control systems. Summary At least 41 foreign firms had commercial activity in Iran's energy sector between 2005 and 2009. Of these firms, seven had contracts with the U.S. government valued at almost $880 million. The Iran Sanctions Act of 1996 (ISA) provides for sanctions against persons (firms and individuals) who invest more than $20 million in Iran's energy sector in any 12-month period. However, the United States has not sanctioned firms under the ISA for investing in Iran's energy sector. The Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 requires the President to investigate reports of certain sanctionable activity where credible evidence is received and make a determination in writing to Congress whether such activity has indeed occurred. The President would then be expected either to impose or waive sanctions. We previously recommended that the Administration improve the disparate data collected on Iran sanctions, establish a baseline of information on Iran sanctions, and conduct an overall assessment of the sanctions' impact in achieving U.S. foreign policy goals. Recent congressional action has expanded sanctions against Iran and imposed new reporting requirements on the Administration. These actions underscore the importance of comprehensive assessments of the effectiveness of U.S. sanctions against Iran.