Trump Policies on Economic Sanctions Could Affect Many Countries and U.S. Compliance Officers – Part 1: How Trump Could Change Sanctions Policy on Iran

December 8, 2016
By Anna Sayre, Legal Content Writer, SanctionsAlert.com

Last November 8, when the American voters chose Donald J. Trump as the 45th President of the United States, few persons knew the full range of power and discretion that he will have at his disposal to cajole, punish, persuade and hurt nations that offend the norms he establishes or that may be specified by U.S. law or foreign policy. The billionaire and former reality TV performer faces international challenges that he never confronted in his hotel and resort business from which he derives his principal income from the licensing of his name.

The question for sanctions compliance officers in the United States, the United Kingdom and other countries is, what type of economic sanctions policies can the Trump Administration be expected to establish and implement? And, what compliance duties and responsibilities in the economic sanctions and trade controls fields are those policies likely to spawn?

SanctionsAlert.com set out to watch or listen to TV and radio interviews of Trump and his newly appointed cabinet members, scouring YouTube, the Apple Store and SoundCloud. We focused on future officials in the Trump administration who are most likely to influence sanctions or export controls policy.

This article and the related ones to follow will endeavor to unravel their comments and assertions regarding economic sanctions and export controls policies to shed light on what may be the Trump administration’s position in the next four years.

In this first part, we examine Mr. Trump’s comments and expected policies on Iran.

Power of the U.S. President to influence sanctions policy

 In contrast to the leaders of some other countries, the U.S. President has substantial power to enforce, strengthen, and waive sanctions with a stroke of a pen. Although sanctions may be authorized by laws enacted by Congress, the majority of sanctions imposed by the Treasury Department’s Office of Foreign Assets Control (OFAC) come from the exercise of Presidential national emergency powers and executive orders of the President. The International Emergency Economic Powers Act (IEEPA), grants the U.S. President broad authority to respond to “unusual or extraordinary threat[s]” to national security, foreign policy, or the economy of the U.S.  The President exercises this authority simply by officially declaring what he/she believes to be a ‘national emergency’.

Following the terrorist attacks of 9/11, the President’s IEEPA powers were expanded by the USA PATRIOT Act of October 2001, which strengthened security controls across the board in an omnibus fashion. Among other things, the Act allows the assets of a foreign national or a “specially designated national or entity” that supports or engages in terrorism to be blocked without a prior hearing or clear evidence of wrongdoing pending the outcome of the investigation into the suspected conduct.

Iran and the future of the JCPOA

Mr. Trump has repeatedly expressed an extreme aversion to the nuclear agreement with Iran, otherwise known as the Joint Comprehensive Plan of Action (JCPOA), which was negotiated by the Obama Administration.

The JCPOA is not a treaty and therefore does not need Congressional approval to be revoked. It is an agreement put into force largely through presidential executive orders. The agreement partially suspends nuclear-related sanctions on Iran. In exchange for the partial lifting of these sanctions by the U.S., EU and UN, Iran agreed to dismantle its nuclear infrastructure.

‘Double and triple up the sanctions’

During the presidential campaign Mr. Trump repeatedly underscored his opposition to the JCPOA.

In one radio interview in July 2015, Trump revealed his views on the Iran agreement: “Well, it’s just insulting, it’s such a bad deal…. That I can tell you. It’s pathetic. It’s disgraceful, it’s incompetent. (…) They should have doubled up the sanctions. I mean double and triple up the sanctions, and had them come. They are dancing in the streets of Iran right now. It’s… an absolute disgrace.”

‘Jihadist Stimulus Bill’

Trump agreed with Texas Senator Ted Cruz’s definition of the JCPOA as the “Jihadist Stimulus Bill”, calling it a “very accurate” description. Trump continued: “It’s a very bad thing for the U.S., perhaps even worse for Israel…. It is so bad for Israel, it is so dangerous for Israel…. If you look at it, basically they are going to have nuclear weapons and you are going to have proliferation all over the Middle East, and probably beyond that. It is going to lead to nuclear proliferation, without question.”

On the campaign trail

In the 2016 campaign, candidate Trump showed his distaste for the JCPOA:

  • frequently describing it as a “horrible deal”;
  • vowing to “tear up” the landmark nuclear agreement in his first few days in office;
  • calling the agreement “one of the worst deals ever made by any country in history” in the first presidential debate; and
  • telling the American Israel Public Affairs Committee … that “my No. 1 priority is to dismantle the disastrous deal with Iran”.

According to David DeMartino, Managing Partner at Compliance Professional Resources, LLC, “Trump has gone on record certainly indicating the Iran deal was not a sound deal for the U.S. Clearly the possibility exists that it gets renegotiated, perhaps with stricter sanctions.”

The influence of the U.S. Congress

Despite these hard views about the JCPOA, many Washington Members of Congress have expressed their strong objections to scrapping the deal. In November, 76 national security experts and former government officials signed a letter urging Trump to maintain the agreement. More recently, some of the agreement’s most ardent critics, such as Congressional Republicans and groups that initially opposed the deal, have told Trump to “go slowly” and consider alternatives to pressuring Iran.

However, the recent votes by overwhelming majorities by the U.S. House of Representatives and Senate to extend the 10-year sanctions against Iran indicate Congress’s desire to preserve the power to reinstate sanctions on Iran if it defaults on the terms of the JCPOA.

Possible opportunities for Iran

Some analysts say Trump’s views on the conflict in Syria could present new opportunities for Iran. While he has criticized the Iran nuclear deal, he has also said that the U.S. should stop backing Syrian rebels and focus on fighting Islamic State, which would effectively shift support to Iran’s ally, Syrian president, President Bashar al-Assad. According to the New York Times, Mohammad Marandi, an associate professor of North American studies at the University of Tehran, says if this occurs it “will be good for Iran, the region and the world.”

In the next part of this series, we’ll examine Mr. Trump’s comments and expected policies on China.

This article was posted on SanctionsAlert.com on December 8, 2016, and edited on January 16, 2017.

 

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