Iran: U.S. Concerns and Policy Responses
Prepared for Members and Committees of Congress
The Bush Administration has characterized Iran as a “profound threat to U.S. national security
interests,” a perception generated primarily by Iran’s nuclear program and its military assistance
to armed groups in Iraq and Afghanistan, to the Palestinian group Hamas, and to Lebanese
Hezbollah. The Bush Administration’s approach has been to try to prevent a nuclear breakout by
Iran by applying coordinated international economic pressure on Iran while also offering it
potential cooperation should it comply with the international demands to suspend its enrichment
of uranium. The incorporation of diplomacy and engagement into the overall U.S. strategy led the
Administration to approve the participation of a high-level State Department official at
multilateral nuclear talks with Iran on July 19, 2008, although that meeting, and subsequent
discussions, have not resulted in Iran’s acceptance of the international offer of incentives. To
strengthen its approach, the Bush Administration has maintained a substantial naval presence in
the Persian Gulf, which U.S. commanders insist would prevent any Iranian attempts to close the
crucial Strait of Hormuz for any extended period.
During 2006 and 2007, three U.N. Security Council resolutions (1737, 1747, and 1803) imposed
sanctions that ban weapons of mass destruction (WMD)-related trade with Iran; freeze the assets
of Iran’s nuclear and related entities and personalities; prevent Iran from transferring arms outside
Iran; ban or require reporting on international travel by named Iranians; call for inspections of
some Iranian sea and airborne cargo shipments; and call for restrictions on dealings with some
Iranian banks. Further U.N. Security Council sanctions are under consideration. Separate U.S.
efforts to persuade European governments to curb trade, investment, and credits to Iran; and to
convince foreign banks not to do business with Iran, are beginning to weaken Iran’s economy, th
compounding the effect of a sharp drop in oil prices in late 2008. Bills in the 110 Congress,
including H.R. 1400, S. 970, S. 3227, S. 3445, H.R. 7112, H.Con.Res. 362, and S.Res. 580 – th
versions of which are likely to be introduced in the 111 Congress – would tighten U.S. sanctions
Amid widespread recognition that most U.S. goals on Iran have not been accomplished, the
incoming Obama Administration, based on statements from President-elect Obama, is likely to
shift toward more consistent engagement with Iran and to de-emphasize potential U.S. military
action or efforts to promote democracy in Iran. Yet, there is a vigorous debate among experts over
whether such shifts would yield clearer results. The policy decisions come as Iran enters its run-
up to June 2009 presidential elections, which most U.S. experts hope will produce change to more
moderate leadership in Iran.
This report is updated regularly. For further information, seeCRS Report RS20871, The Iran
Sanctions Act (ISA), by Kenneth Katzman, CRS Report RS22323, Iran's Activities and Influence
in Iraq, by Kenneth Katzman, and CRS Report RL34544, Iran's Nuclear Program: Status, by
Paul K. Kerr.
Regime Structure, Stability, and Elections......................................................................................2
The 2005 Election of Mahmoud Ahmadinejad...................................................................4
March 2008 Majles Elections and June 2009 Presidential Elections..................................5
Human Rights and Dissent..............................................................................................................8
Dissidents .......................................................................................................................... 10
Exiled Opposition Groups: People’s Mojahedin Organization of Iran
Other Armed Groups..........................................................................................................11
The Son of the Former Shah.............................................................................................12
Iran’s Strategic Capabilities and Weapons of Mass Destruction Programs..................................12
Conventional Military/Revolutionary Guard/Qods Force.......................................................13
Nuclear Program and International Sanctions.........................................................................14
Establishment of “P5+1” Contact Group/June 2006 Incentive Package..........................17
Resolution 1747 and Results.............................................................................................18
Resolution 1803 and Additional Incentives......................................................................19
Chemical Weapons, Biological Weapons, and Missiles..........................................................21
Foreign Policy and Support for Terrorist Groups..........................................................................22
Relations with the Persian Gulf States..............................................................................22
Iranian Policy in Iraq........................................................................................................24
Supporting Palestinian Militant Groups............................................................................25
Central Asia and the Caspian............................................................................................28
India .......................................................................................................................... ........ 30
U.S. Policy Responses, Options, and Legislation..........................................................................30
Overview of Bush Administration Iran Policy........................................................................31
Containment and Possible Military Action.............................................................................32
Iranian Retaliatory Scenarios ...........................................................................................33
Containment and the Gulf Security Dialogue...................................................................34
Presidential Authorities and Legislation...........................................................................35
Funding ........................................................................................................................ ..... 37
Enga ge me nt ............................................................................................................................. 38
“Grand Bargain Concept”.................................................................................................39
Further International and Multilateral Sanctions....................................................................40
European/Japanese/Other Foreign Country Policy on Sanctions and Trade
Agreements .................................................................................................................... 42
World Bank Loans............................................................................................................43
Terrorism/Foreign Aid Sanctions......................................................................................43
Targeted Financial Measures by Treasury Department.....................................................45
U.S. Trade Ban/Subsidiaries.............................................................................................46
Subsidiaries ....................................................................................................................... 47
The Iran Sanctions Act (ISA)............................................................................................48 th
110 Congress Comprehensive Sanctions Legislation: ...................................................49
H.R. 1400, ........................................................................................................................49
Conclusion ..................................................................................................................................... 50
Figure 1. Structure of the Iranian Government..............................................................................52
Figure 2. Map of Iran....................................................................................................................54
Table 1. Major Factions and Personalities.......................................................................................3
Table 2. Factions in the Eighth Majles............................................................................................6
Table 3. Selected Economic Indicators............................................................................................7
Table 4. Human Rights Practices.....................................................................................................8
Table 5. Iran’s Conventional Military Arsenal..............................................................................14
Table 6. Summary of Provisions of U.N. Resolutions on Iran Nuclear Program (1737,
1747, and 1803)..........................................................................................................................20
Table 7. Iran’s Ballistic Missile Arsenal........................................................................................21
Table 8. Iran Democracy Promotion Funding...............................................................................37
Table 9. Entities Sanctioned Under U.N. Resolutions and U.S. Laws and Executive
Orders ......................................................................................................................... ................ 54
Author Contact Information..........................................................................................................59
uch of the debate over U.S. policy toward Iran has centered on the nature of the current
regime; some believe that Iran, a country of almost 70 million people, is a threat to
U.S. interests because hardliners in Iran’s regime dominate and set a policy direction M
intended to challenge U.S. influence and allies in the region. President Bush, in his January 29,
2002, State of the Union message, labeled Iran part of an “axis of evil” along with Iraq and North
The United States was an ally of the late Shah of Iran, Mohammad Reza Pahlavi (“the Shah”),
who ruled from 1941 until his ouster in February 1979. The Shah assumed the throne when
Britain and Russia forced his father, Reza Shah Pahlavi (Reza Shah), from power because of his
perceived alignment with Germany in World War II. Reza Shah had assumed power in 1921
when, as an officer in Iran’s only military force, the Cossack Brigade (reflecting Russian th
influence in Iran in the early 20 century), he launched a coup against the government of the
Qajar Dynasty. Reza Shah was proclaimed Shah in 1925, founding the Pahlavi dynasty. The
Qajars had been in decline for many years before Reza Shah’s takeover. That dynasty’s perceived
manipulation by Britain and Russia had been one of the causes of the 1906 constitutionalist
movement, which forced the Qajars to form Iran’s first Majles (parliament) in August 1906 and
promulgate a constitution in December 1906. Prior to the Qajars, what is now Iran was the center
of several Persian empires and dynasties, but whose reach shrunk steadily over time. Since the th
16 century, Iranian empires lost control of Bahrain (1521), Baghdad (1638), the Caucasus
(1828), western Afghanistan (1857), Baluchistan (1872), and what is now Turkmenistan (1894).
Iran adopted Shiite Islam under the Safavid Dynasty (1500-1722), which brought Iran out from a
series of Turkic and Mongol conquests.
The Shah was anti-Communist, and the United States viewed his government as a bulwark
against the expansion of Soviet influence in the Persian Gulf and a counterweight to pro-Soviet
Arab regimes and movements. Israel maintained a representative office in Iran during the Shah’s
time and the Shah supported a peaceful resolution of the Arab-Israeli dispute. In 1951, under
pressure from nationalists in the Majles (parliament) who gained strength in the 1949 Majles
elections, he appointed a popular nationalist parliamentarian, Dr. Mohammad Mossadeq, as Prime
Minister. Mossadeq was widely considered left-leaning, and the United States was wary of his
policies, which included his drive for nationalization of the oil industry. Mossadeq’s followers
began an uprising in August 1953 when the Shah tried to dismiss Mossadeq, and the Shah fled.
The Shah was restored in a successful CIA-supported uprising against Mossadeq.
The Shah tried to modernize Iran and orient it toward the West, but in so doing he also sought to
marginalize Iran’s Shiite clergy. He exiled Ayatollah Ruhollah Khomeini in 1964 because of
Khomeini’s active opposition, which was based on the Shah’s anti-clerical policies and what
Khomeini alleged was the Shah’s forfeiture of Iran’s sovereignty to the United States. Khomeini
fled to and taught in Najaf, Iraq, a major Shiite theological center that contains the Shrine of
Imam Ali, Shiism’s foremost figure. There, he was a peer of senior Iraqi Shiite clerics and, with
them, advocated direct clerical rule or velayat-e-faqih (rule by a supreme Islamic jurisprudent). In
1978, three years after the March 6, 1975, Algiers Accords between the Shah and Iraq’s Baathist
leaders, which settled territorial disputes and required each party to stop assisting each other’s
oppositionists, Iraq expelled Khomeini to France, from which he stoked the Islamic revolution.
Mass demonstrations and guerrilla activity by pro-Khomeini forces, allied with a broad array of
anti-Shah activists, caused the Shah’s government to collapse in February 1979. Khomeini
returned from France and, on February 11, 1979, declared an Islamic Republic of Iran, as
enshrined in the constitution that was adopted in a public referendum in December 1979 (and
amended in 1989). Khomeini was strongly anti-West and particularly anti-U.S., and relations
between the United States and the Islamic Republic turned hostile even before the November 4,
About a decade after founding the Islamic republic, Ayatollah Ruhollah Khomeini died on June 3,
1989. The regime he established, consisting of some elected and some appointed positions, has
appeared relatively stable, but faces chronic but low-level unrest in areas inhabited by minorities,
and substantial unpopularity among many intellectuals, students, labor groups, and women. Upon
his death, one of his disciples, Ayatollah Ali Khamene’i, a two term president (1981-1989), was 1
selected Supreme Leader by an “Assembly of Experts” (an elected body). The fourth election for
the Assembly of Experts, which is empowered to oversee the work of the Supreme Leader and
replace him if necessary, as well as to amend the constitution, was held on December 15, 2006.
After that election, Akbar Hashemi-Rafsanjani, still a major figure having served two terms as
president himself (1989-1997), was named deputy leader of the Assembly. After the death of the
leader of the body, Rafsanjani was elected head of the Assembly in September 2007, defeating the
harder line Ayatollah Ahmad Jannati. (An organizational chart on the Iranian regime is at the end
of this paper.)
Khamene’i has vast formal powers as Supreme Leader—he is Commander in Chief of the armed
forces, giving him the power to appoint commanders and to be represented on the highest national
security body, the Supreme National Security Council, composed of top military and civilian 2
security officials. He appoints half of the twelve-member Council of Guardians; and the
members of Iran’s Supreme Judicial Council, but he does not appoint the cabinet, which is named
by the President and confirmed by the Majles (parliament). Headed by Jannati, the conservative-
controlled Council of Guardians reviews legislation to ensure it conforms to Islamic law, and it
screens election candidates. Khamene’i also has the power, under the constitution, to remove the
elected President if either the Supreme Judicial Council or the elected Majles (parliament) say the
President should be removed, with cause. The President runs the cabinet, which he appoints,
subject to parliament’s (Majles) confirmation; the current President is Mahmoud Ahmadinejad.
The Supreme Leader appoints members of the 42-member Expediency Council, set up in 1988 to
resolve legislative disagreements between the Majles and the Council of Guardians. Expediency
Council members serve five-year terms. The Council, appointed most recently in February 2007,
is still headed by Rafsanjani; its executive officer is former Revolutionary Guard commander-in-
chief Mohsen Reza’i.
1 The Assembly also has the power to amend Iran’s constitution.
2 The Council of Guardians consists of six Islamic jurists and six secular lawyers. The six Islamic jurists are appointed
by the Supreme Leader. The six lawyers on the Council are selected by the judiciary but confirmed by the Majles
Table 1. Major Factions and Personalities
Supreme Leader Ali Born in July 1939 to an Azeri (Turkic) family from Mashhad. Lost the use of his right arm in
Khamene’i an assassination attempt in June 1981. Has all the formal powers but not the undisputed
authority of his predecessor, founder of the revolution Ayatollah Ruhollah Khomeini.
Considered moderate-conservative despite frequent hardline rhetoric including on Israel.
Seeks to challenge U.S. hegemony and wants Israel defeated but respects U.S. military power
and fears military confrontation with United States. Generally supports the business
community (bazaaris), and opposes state intervention in the economy.
Akbar Hashemi-Key strategist of the regime, longtime advocate of “grand bargain” to resolve all outstanding
Rafsanjani issues with United States, although on Iran’s terms. A mid-ranking cleric, now leads both
Expediency Council and Assembly of Experts. Heads moderate-conservative faction known
as Executives of Construction. Was Majles (parliament) speaker during 1981-89 and
President 1989-1997. One of Iran’s richest men, family owns large share of Iran’s total
pistachio nut production.
President Mahmoud See box later in this paper.
Majles Speaker Ali Overwhelming winner for Majles seat from Qom on March 14, 2008 and selected Majles
Larijani Speaker on May 25 (237 out of 290 votes). Former state broadcasting head (1994-2004) and
Minister of Culture and Islamic Guidance (1993) , was head of Supreme National Security
Council and chief nuclear negotiator from August 2005 until October 2007 resignation.
Sought to avoid U.N. Security Council isolation. Politically close to Khamene’i, he still serves
on the Supreme National Security Council. Potential presidential contender in June 2009.
Mohammad Baqer Former Revolutionary Guard Air Force commander and police chief, but a moderate-
Qalibaf conservative and likely contestant in June 2009 presidential election. Encourages
comparisons of himself to Reza Shah, invoking an era of stability and strong leadership, while
also making use of modern media tools. Supporters won nine out of 15 seats on Tehran city
council in December 2006 elections, propelling him to current post as mayor of Tehran.
Recruited moderate conservatives for March 2008 Majles election.
Ayatollah Mohammad Founder of the hardline Haqqani school, and spiritual mentor of Ahmadinejad. Fared poorly
Taqi Mesbah-Yazdi in December 2006 elections for 86-seat “Assembly of Experts” that can amend the
constitution, oversee Khamene’i’s performance, and determine his successor, but did win a
seat. An assertive defender of the powers of the Supreme Leader and a proponent of an
“Islamic state” rather than the current “Islamic republic,” and advocates isolation from the
West. Some believe Mesbah-Yazdi harbors ambition to replace Khamene’i.
Mahmud Hashemi An Ayatollah, has headed the Supreme Judicial Council since 1999. Ally of Khamene’i and
Shahrudi Rafsanjani, has supported repeated crackdowns on independent media critical of the regime.
But, has cracked down on judicial corruption and on mistreatment of prisoners. Politically
close to Shiite Islamist parties in Iraq, he is hosting Moqtada Al Sadr, the radical young Iraqi
cleric who has been studying Islamic theology in Qom since late 2007.
Militant Clerics Longtime organization of hardline clerics headed by Ayatollah Mohammad Mahdavi-Kani. Not
Association to be confused with an organization with almost the same name, below.
Mohammad Khatemi/ Reformist president during 1997-2005 and is being strongly urged by colleagues to run again
Reformists for President in June 2009 elections as best hope for reformist camp. Elected May 1997, with
69% of the vote; re-elected June 2001with 77%. Rode wave of sentiment for easing social and
political restrictions among students, intellectuals, youths, and women that seeks reform but
not outright replacement of the Islamic republican regime. Khatemi supporters held about
70% of the 290 seats in the 2000-2004 Majles. Khatemi now heads International Center for
Dialogue Among Civilizations. Visited U.S. in September 2006 to speak at Harvard and the
Washington National Cathedral on “dialogue of civilizations.”
Society of Militant Reformist grouping once led by Mehdi Karrubi. Karrubi formed a separate “National Trust”
Clerics faction after losing 2005 presidential election.
Office of Staunch reformists. Originally strong Khatemi supporters, but turned against him for failing
Consolidation Unity to challenge hardliners, particularly after July 1999 violent crackdown on student riots, in
(Daftar Tahkim-e- which four students were killed. Generally dispersed and repressed under conservative
Vahdat) presidency of Ahmadinejad.
Islamic Iran The most prominent and best organized pro-reform grouping. Its leaders include Khatemi’s
Participation Front brother, Mohammad Reza Khatemi (a deputy speaker in the 2000-2004 Majles) and Mohsen
Mojahedin of the Composed mainly of left-leaning Iranian figures who support state control of the economy,
Islamic Revolution but want greater political pluralism and relaxation of rules on social behavior. Its leader is
Organization (MIR) former Heavy Industries Minister Behzad Nabavi.
After suffering several election defeats at the hands of Mohammad Khatemi and the reformists
during 1997-2000—and losing the grip on power they held while Khomeini was alive—the
conservative camp argued that the reformists were deviating too far from Khomeini’s principles,
and gained strength after the February 28, 2003, municipal elections, when reformists largely
boycotted. The conservatives gained additional strength from the February 20, 2004, Majles
elections, in which the Council of Guardians disqualified about 3,600 mostly reformist
candidates, including 87 members of the incumbent Majles, enabling the conservatives to win
about 155 out of the 290 seats on turnout of about 51%. The Administration and the Senate
(S.Res. 304, adopted by unanimous consent on February 12, 2004) criticized the elections as
unfair because of the screening.
As the reformist faction suffered setbacks, the conservatives prepared for the June 2005 3
presidential elections. After the Council of Guardians narrowed the field of candidates to 8 out of 4
the 1,014 persons who filed, Rafsanjani was considered the favorite against several opponents
more hardline than he is—three had ties to the Revolutionary Guard: Ali Larijani (see Table 1);
Mohammad Baqer Qalibaf (see Table 1); and Tehran mayor Mahmoud Ahmadinejad. In the June
17, 2005 first round, turnout was about 63% (29.4 million votes out of 46.7 million eligible
voters). With 21% and 19.5%, respectively, Rafsanjani and Ahmadinejad, who did unexpectedly
well because of tacit backing from Khamene’i and the Basij (an internal security force under the
Revolutionary Guard), moved to a run-off. Reformist candidates Mehdi Karrubi and Mostafa
Moin fared worse than expected and did not make the runoff. Ahmadinejad won a landslide
victory in the June 24 runoff, receiving 61.8% to Rafsanjani’s 35.7%. Turnout was 47%, less than
the first round. He took office on August 6, 2005.
Since taking office, Ahmadinejad has inflamed world opinion with several anti-Israel statements,
the first of which was stated at an October 26, 2005, Tehran conference entitled “A World
Without Zionism” that “Israel should be wiped off the map” and that “anybody who recognizes
3 Rafsanjani was constitutionally permitted to run because a third term would not have been consecutive with his
previous two terms.
4 In the 2001 presidential election, the Council permitted 10 out of the 814 registered candidates.
Israel will burn in the fire of the Islamic nations’ fury.” A similar point of contention was his
insistence on the holding of a December 2006 conference in Tehran questioning the Holocaust, a
theme he has returned to several times since, including at a September 2007 speech at Columbia
University, a forum where he also denied that Iran had any homosexuals. A U.N. Security Council
statement and Senate and House resolutions (H.Res. 523 and S.Res. 292), passed in their
respective chambers, condemned the statement. (On June 21, 2007, the House passed H.Con.Res.
21, calling on the United Nations Security Council to charge Ahmadinejad with violating the
1948 Convention on the Prevention and Punishment of the Crime of Genocide; the Convention
includes “direct and public incitement” to commit genocide as a punishable offense.)
Some Iranian leaders, both conservative and reformist, and portions of the population, appear
concerned that Ahmadinejad’s defiance of the international community on the nuclear issue—as
well as his frequent visits and meetings with such anti-U.S. figures as Venezuela’s Hugo
Chavez—is isolating Iran and potentially provoking confrontation with the United States. Several
experts believe that Supreme Leader Khamene’i, seeks to curb Ahmadinejad’s ability to provoke
confrontation with the United States. The first decision that strengthened this view was the
October 2005 grant of new governmental supervisory powers to the Expediency Council. In July
2006, Khamene’i created a ten-person advisory “Foreign Policy Committee” consisting of former
defense and foreign ministers. A shakeup in the nuclear negotiating team in October 2007
represented a further indication of splits in the leadership on that issue, especially because the
former negotiator (now Majles Speaker), Ali Larijani, continued to undertake official visits
representing the Supreme Leader. In April 2008, Ahmadinejad fired two cabinet ministers,
including the Interior Minister Mustafa Pour-Mohammadi who is close to Khamene’i. In a further
sign of rift and of the increasing damage to Iran’s economy that international sanctions are
inflicting, the Supreme Leader’s top foreign policy advisor, former Foreign Minister Ali Akbar
Velayati, said in July 2008 that Iran should consider Western offers to settle the nuclear issue.
However, Khamene’i’s public statements of support for Ahmadinejad since August 2008 could
indicate that the regime is rallying together to confront international demands. That month, he
praised Ahmadinejad for refusing to bow to international demands on the nuclear issue and said
the cabinet should make plans for another four years. Khamene’i defended Ahmadinejad again on
September 19, 2008, by saying that the political elite should cease its squabbling over the
comments of a Vice President that Iran considers itself a friend of the Israeli people. Still, on
November 4, 2008, the Majles impeached Interior Minister Ali Kordan for falsely claiming he
had an Oxford University degree. Sadeq Mahsouli, a former Revolutionary Guard official, was
confirmed as replacement on November 18, 2008. If one more Minister is fired or removed –
meaning half the cabinet changes during his term – Ahmadinejad would be constitutionally
required to submit the entire cabinet to a vote of confidence, although he could expand the
cabinet to avoid that consequence.
Ahmadinejad is assumed to be running for re-election in the June 12, 2009 presidential election,
even though his allies explained his several public absences in late October 2008 as due to his
exhaustion. Should Khamene’i openly or actively endorse him, that could prove decisive,
particularly against other conservatives such as Qalibaf and Larijani. A major unknown as of the
end of 2008 is whether Khatemi will run, as he is being urged by fellow reformists. Some reports
say that moderate-conservatives and reformists are meeting regularly to attempt to jointly mount
a successful challenge to Ahmadinejad.
Prior to the March 2008 Majles elections, it had appeared as though Ahmadinejad’s political
fortunes were declining to the point where he would not run or would not win re-election. In the
December 15, 2006, municipal elections, his supporters won only 3 out of the 15 seats on the
Tehran city council, with similar results in other cities. Ahmadinejad supporters did not fare as
poorly in the March 2008 Majles elections as some expected. In those elections, about 7,600
persons filed to run for the 290 total seats, of which 30 are in Tehran. Of these, about 2,000
mostly reformist candidates, including 103 Majles incumbents, were disqualified by the Council
of Guardians. Still, the selection of Ali Larijani, leader of the “moderate-conservative” faction, as
Majles Speaker, presented Ahmadinejad with a more critical Majles than was the case previously.
Still, Ahmadinejad is viewed as a favorite for re-election because he has maintained his appeal to
the lower classes and rural voters. He has raised wages and lowered interest rates for poorer
borrowers, cancelling some debts of farmers, and increased social welfare payments and
subsidies. He fired the technocratic Central Bank governor in September 2008 in favor of an
official who supports his move to provide direct subsidies to the bank accounts of poorer Iranians.
Some believe these moves have fed inflation, but rural Iranians see him as attentive to their
economic plight. In the urban areas, however, Ahmadinejad has been greatly weakened by the
June 2007 institution of rationing of gasoline—a move intended to curb consumption that forces
Iran to import refined gasoline. Iranians in the urban areas who sometimes use their cars as
unofficial taxis, but it did reduce dependence on imported gasoline (to about 25% from 40%). The
Oil Minister resigned in August 2007, probably because of the unpopularity of the program
among some. Further sentiment against him came in protests in November 2008 by bazaar
merchants in major cities against the imposition of sales taxation; the protests caused a
suspension of the imposition of the tax. Ahmadinejad apparently believed that his distributive
policies would be supported by high oil prices, but the fall in the price of oil in late 2008 has left
Ahmadinejad open to increased criticism for mismanagement of the economy. Some business
owners say the difficulty obtaining credit from foreign banks is hurting their ability to operate.
Table 2. Factions in the Eighth Majles
(Elected March 14-April 25, 2008)
Pro-Ahmadinejad Conservatives (United Front of Principalists) 117
Anti-Ahmadinejad Conservatives (Coalition of Principalists) 53
Reformists (39 seats in eighth Majles) 46
Seats annulled or voided 3
Nor has Ahmadinejad moved to correct economic structural imbalances, such as the dependence
on oil revenues, which account for about 20% of Iran’s gross domestic product (GDP), and its
extensive imports of refined gasoline. Major economic sectors or markets are controlled by the
quasi-statal “foundations” (bonyads), run by powerful former officials, and there are special
trading privileges for them and the bazaar merchants, a key constituency for some conservatives.
The same privileges reportedly apply to businesses run by the Revolutionary Guard, as discussed
First non-cleric to be president of the Islamic republic since the assassination of then president Mohammad Ali Rajai in
August 1981. About 54, he campaigned as a “man of the people,” the son of a blacksmith who lives in modest
circumstances, who would promote the interests of the poor and return government to the principles of the Islamic
revolution during the time of Ayatollah Khomeini. Has burnished that image as president through regular visits to
poorer, rural areas and through subsidies directed at the lower classes. His official biography says he served with the
“special forces” of the Revolutionary Guard, and he served subsequently (late 1980s) as a deputy provincial governor.
A part of the “Isargaran” faction composed of former Guard and Basij (volunteer popular forces) leaders and other
hardliners. U.S. intelligence reportedly determined he was not, as was thought by some, one of the holders of the 52
American hostages during November 1979-January 1981. Other accounts say Ahmadinejad believes his mission is to
prepare for the return of the 12th Imam— Imam Mahdi—whose return from occultation would, according to Twelver
Shiite doctrine, be accompanied by the establishment of Islam as the global religion. Earned clerical criticism in May
2008 for again invoking intervention by Imam Mahdi in present day state affairs. Regularly attends U.N. General
Assembly sessions in New York each September; attended again in 2008, giving interviews to American papers and
other media. In an October 2006 address, Ahmadinejad said, “I have a connection with God.” Sent letter of
congratulation to President-elect Barack Obama for his election victory. For more information, see CRS Report
RS22569, Iran: Profile of President Mahmoud Ahmadinejad, by Hussein D. Hassan.
Table 3. Selected Economic Indicators
Economic Growth 4.3% (2007 est.)
Per Capita Income $8,100/yr purchasing power parity
Proven Oil Reserves 135 billion barrels (highest after Russia and Canada)
Oil 4.1 million barrels per day (mbd)/ 2.4 mbd exports. Exports could shrink to zero by 2015-
Production/Exports 2020 due to accelerating domestic consumption.
Major Oil/Gas China—300,00 barrels per day (bpd); about 4% of China’s oil imports; Japan—600,000 bpd,
Customers about 12% of oil imports; other Asia (mainly South Korea)—450,000 bpd; Italy—300,000
bpd; France—210,000 bpd; Netherlands 40,000 bpd; other Europe—200,000 bpd; India—
150,000 bpd (10% of its oil imports; Africa—200,000 bpd. Turkey—gas: 8.6 billion cubic
Refined Gasoline Imports were $5 billion value per year in 2006, but now about $4 billion per year after
Import/ Suppliers rationing. 60% is supplied by European oil trader Vitol (Switzerland), although there have
been interruptions in the Iran-Vitol trading relationship. Other traders and suppliers include
BP; Total (France); Trafigura (Switzerland/Nethelands); Reliance Energy (India, Jamnagar
refinery); Russia’s Lukoil; Kuwait, UAE, Turkey, Venezuela (Petroleos de Venezuela),
Singapore, the Netherlands, China, Turkmenistan, and Azerbaijan. Iran planning at least eight
new or upgrade refinery projects to expand capacity to about 3 million barrels per day from
Major Export Japan ($9.9 billion); China ($9.2 billion); Turkey ($5.1 billion); Italy ($4.45 billion); South
Markets (2006) Korea ($4 billion); Netherlands ($3.2 billion); France ($2.7 billion); South Africa ($2.7
billion); Spain ($2.3 billion); Greece ($2 billion)
Major Imports From Germany ($5.6 billion); China ($5 billion); UAE ($4 billion); S. Korea ($2.9 billion); France
(2006) ($2.6 billion); Italy ($2.5 billion); Russia ($1.7 billion); India ($1.6 billion); Brazil ($1.3 billion); Japan ($1.3 billion).
Export Credit Germany $715 million, down from $2 billion in 2005; France—$3.8 billion, down from $5.7
Guarantees (2006) billion in 2005.
Major Non-Oil Renault (France) and Mercedes (Germany)-automobile production in Karaj, Iran—valued at
Investments $370 million; Renault (France), Peugeot (France) and Volkswagen (Germany)—auto parts
production; Turkey—Tehran airport, hotels; China—shipbuilding on Qeshm Island,
aluminum factory in Shirvan, cement plant in Hamadan; UAE financing Esfahan Steel
Company; India—steel plant, petrochemical plant; S. Korea—steel plant in Kerman Province;
S. Korea and Germany—$1.7 billion to expand Esfahan refinery.
Economic Growth 4.3% (2007 est.)
Trade With U.S. $320 million (trade is severely restricted by U.S. sanctions). Exports to U.S.—$173 million
(2007) (large categories: pomegranate juice, caviar, pistachio nuts, carpets, medicines, artwork).
Imports from U.S.—$146 million (food, medicines, tobacco products, seeds).
“Oil Stabilization $12.1 billion (August 2008, IMF estimate).
External Debt $19 billion (2005 est.)
Development 2003 (latest available): $136 million grant aid. Biggest donors: Germany ($38 million); Japan
Assistance Received ($17 million); France ($9 million).
Inflation 27+ (September 2008), according to Iranian economists.
Unemployment Rate 11%+
Source: CIA World Factbook, various press, IMF, Iran Trade Planning Division (2006), press.
The regime appears to have a relatively firm grip on power, in part because it vigorously
suppresses dissent. However, Iranian opinion is hard to gauge and even seemingly low level
unrest has the potential to spiral into a potential threat to the regime if, for example, the regime is
perceived as committing fraud in an election or if it mismanages a financial crisis. The Bush
Administration has highlighted Iran’s human rights abuses in order to build international
consensus to pressure Iran. The State Department’s human rights report for 2007, released March
11, 2008, said Iran’s already poor human rights record “worsened” during the year—a
formulation similar to that used in the report for 2006. The latest human rights report, the 2008
State Department “religious freedom” report (released September 19, 2008), and a report by the
U.N. Secretary General on October 1, 2008, cite Iran for widespread serious abuses, including
unjust executions, politically motivated abductions by security forces, torture, arbitrary arrest and
detention, and arrests of women’s rights activists. The Secretary General’s report later became the
basis of a U.N. General Assembly resolution, finalized on December 18, 2008 by a vote of 69-54,
citing Iran for these abuses and calling on it to allow visits by U.N. personnel investigating the
status of human rights practices in Iran. Subsequent to the passage of the resolution, Iranian
authorities raided the Tehran office of the Center for Defenders of Human Rights, headed by
Nobel Peace Prize laureate (2003) and Iran human rights activist lawyer Shirin Abadi.
Table 4. Human Rights Practices5
Group/ Regime Practice/Recent Developments
Ethnic and Persians are about 51% of the population, and Azeris (a Turkic people) are about 24%. Kurds are
Religious about 7% of the population, and about 3% are Arab. Of religions, Shiite Muslims are about 90% of
Breakdown the Muslim population and Sunnis are about 10%. About 2% of the population is non-Muslim,
including Christians, Zoroastrians (an ancient religion in what is now Iran), Jewish, and Baha’i.
Private Media Since 2000, judicial hardliners have closed hundreds of reformist newspapers, although many have
tended to reopen under new names. During March 26-March 2007, authorities banned more than
5 Sources: State Department reports on human rights and on religious freedom. http://www.state.gov/g/drl/rls/hrrpt/
Group/ Regime Practice/Recent Developments
20 publications. Iran also has blocked hundreds of pro-reform websites. During 2007, regime
increased controls over use of the internet because citizens have increasingly turned to that
medium as a source for news and political debate. In August 2007, the government closed a major
reformist daily newspaper, Shargh, which had previously been suspended repeatedly. In February
2008, the regime closed the main women’s magazine, Zanan (women in Farsi) for allegedly
highlighting gender inequality in Islamic law. In November 2008, the regime arrested famed Iranian
blogger Hossein Derakshan. Canadian journalist (of Iranian origin) Zahra Kazemi was detained in
2003 (for filming outside Tehran’s Evin prison) and allegedly beaten to death in custody. An
intelligence agent who allegedly conducted the beating was acquitted July 25, 2004.
Labor Unions/ Unions are technically not independent, but under a state-controlled “Workers’ House” umbrella.
Students/ However, some activists show independence and, in 2007, the regime arrested labor activists for teachers’ associations, bus drivers’ unions, and a bakery workers’ union. The regime reportedly
Other Activists also dissolved student unions and replaced them with regime loyalists following student criticism of
Ahmadinejad. H.Con.Res. 203 condemns Iran’s July 2007 arrests of several union officers. In
September 2008, Iran arrested several HIV/AIDs researchers for alleged anti-government activities.
Women Regime strictly enforcing requirement that women fully cover themselves in public, generally with a
garment called a chador, including through detentions. In March 2007, the regime arrested 31
women activists who were protesting the arrest in 2006 of several other women’s rights activists;
all but 3 of the 31 were released by March 9. In May 2006, the Majles passed a bill calling for
increased public awareness of Islamic dress, an apparent attempt to persuade women not to wear
Western fashion. The bill did not contain a requirement that members of Iran’s minority groups
wear badges or distinctive clothing. In April 2006, Ahmadinejad directed that women be allowed to
attend soccer matches, but the Supreme Leader reversed that move. Women can vote and run in
parliamentary elections, but their candidacies for president have routinely been barred by the
Council of Guardians. Iranian women can drive, and many work outside the home, including owning
and running their own businesses. There are 9 women in the 290-seat Majles (13 in the last Majles).
Religious Each year since 1999, the State Department religious freedom report has named Iran as a “Country
Freedom of Particular Concern” under the International Religious Freedom Act. No sanctions added, on the grounds that Iran is already subject to extensive U.S. sanctions. Continued deterioration in religious
freedom noted in the International Religious Freedom report for 2008 (September 19, 2008).
Baha’is Iran repeatedly cited for repression of the Baha’i community, which Iran’s Shiite Muslim clergy
views as a heretical sect. In the 1990s, several Baha’is were executed for apostasy (Bahman
Samandari in 1992; Musa Talibi in 1996; and Ruhollah Ruhani in 1998). Another, Dhabihullah
Mahrami, was in custody since 1995 and died of unknown causes in prison in December 2005. In
February 2000, Iran’s Supreme Court set aside the death sentences against three other Baha’is. A
wave of Baha’i arrests occurred in May 2006 and two-thirds of university students of the Baha’i
faith were expelled from university in 2007. Several congressional resolutions have condemned
Iran’s treatment of the Baha’is, including in 1982, 1984, 1988, 1990, 1992, 1994, 1996, 2000, and th
2006. In the 110 Congress, H.Res. 1008 condemns Iran’s treatment of the Baha’is (passed House
August 1, 2008).
Jews Along with Christians, a “recognized minority,” with one seat in the Majles, the 30,000-member
Jewish community (the largest in the Middle East aside from Israel) enjoys somewhat more
freedoms than Jewish communities in several other Muslim states. However, in practice the
freedom of Iranian Jews to practice their religion is limited, and Iranian Jews remain reluctant to
speak out for fear of reprisals. During 1993-1998, Iran executed five Jews allegedly spying for Israel.
In June 1999, Iran arrested 13 Jews (mostly teachers, shopkeepers, and butchers) from the Shiraz
area that it said were part of an “espionage ring” for Israel. After an April-June 2000 trial, ten of the
Jews and two Muslims accomplices were convicted (July 1, 2000), receiving sentences ranging from
4 to 13 years. An appeals panel reduced the sentences, and all were released by April 2003. On
November 17, 2008, Iran hanged businessman Ali Ashtari (a Muslim), who was arrested in 2006, for
allegedly providing information on Iran’s nuclear program to Israel.
Sunnis The cited reports note other discrimination against Sufis and Sunni Muslims, although abuses against
Sunnis could reflect that minority ethnicities, including Kurds, are mostly Sunnis. Regime has
repressed unrest since 2006 among the minority Azeri population, as well as Arabs in southern
Group/ Regime Practice/Recent Developments
province of Khuzestan.
Human The June 4, 2008 (latest annual), State Department “Trafficking in Persons” report continues to
Trafficking place Iran in Tier 3 (worst level) for failing to take action to prevent trafficking in persons. Girls
purportedly are trafficked for sexual exploitation within Iran and from Iran to Turkey, Pakistan, and
the Gulf states.
Juvenile Iran has executed six persons under the age of 18 in 2008. No other country has executed juvenile
Executions offenders in 2008. As a party to the International Covenant on Civil and Political Reights and the
Convention on the Rights of the Child, Iran is obligated to abolish such executions.
The regime is highly concerned about dissidents who previously held senior regime positions.
These dissidents are popular inside Iran, but their ascendancy, were it to occur, might not
fundamentally alter Tehran’s foreign or defense policies. One figure, Ayatollah Hossein Ali
Montazeri, was released in January 2003 from several years of house arrest, but he remains under
close watch. Montazeri was Khomeini’s designated successor until 1989, when Khomeini
dismissed him for allegedly protecting intellectuals and opponents of clerical rule.
Other dissidents have sought to challenge or expose the regime’s practices from inside Iran.
Journalist Akbar Ganji conducted hunger strikes to protest regime oppression; he was released on
schedule on March 18, 2006 after sentencing in 2001 to six years in prison for alleging high-level
involvement in 1999 murders of Iranian dissident intellectuals that the regime had blamed on
“rogue” security agents.
Of the groups seeking to replace rather than moderate the regime, one of the best known is the 6
People’s Mojahedin Organization of Iran (PMOI). Secular and left-leaning, it was formed in the
1960s to try to overthrow the Shah of Iran and advocated Marxism blended with Islamic tenets. It
allied with pro-Khomeini forces during the Islamic revolution and supported the November 1979
takeover of the U.S. Embassy in Tehran but was later driven into exile. Even though it is an
opponent of Tehran, since the late 1980s the State Department has refused contact with the PMOI
and its umbrella organization, the National Council of Resistance (NCR). The State Department 7
designated the PMOI as a foreign terrorist organization (FTO) in October 1997 and the NCR was
named as an alias of the PMOI in the October 1999 re-designation. The FTO designation was
prompted by PMOI attacks in Iran that sometimes kill or injure civilians—although the group
does not appear to purposely target civilians. In August 14, 2003, the State Department designated
the NCR offices in the United States an alias of the PMOI, and NCR and Justice Department
authorities closed down those offices.
6 Other names by which this group is known is the Mojahedin-e-Khalq Organization (MEK or MKO) and the National
Council of Resistance (NCR).
7 The designation was made under the authority of the Anti-Terrorism and Effective Death Penalty Act of 1996 (P.L.
The State Department report on international terrorism for 2007 asserts that the organization—
and not just a radical element of the organization as the group asserts—was responsible for the
alleged killing of seven American defense advisers to the former Shah in 1975-1976. The report
again notes the group’s promotion of women in its ranks and again emphasizes the group’s “cult-
like” character, including indoctrination of its members and separation of family members,
including children, from its activists. The group’s alliance with Saddam Hussein’s regime in the
The designation is up for formal review in October 2008, and, in July 2008, the PMOI formally
petitioned to the State Department that its designation be revoked, on the grounds that it
renounced any use of terrorism in 2001. The group is trying to build on recent legal successes in
Europe; in December 2006, a European Union (EU) court struck down EU’s freezing of the
PMOI’s assets in Europe. In May 2008, a British appeals court determined that the group should
no longer be considered a terrorist organization on the grounds that the British government did
not provide “any reliable evidence that supported a conclusion that PMOI retained an intention to
resort to terrorist activities in the future.” In June 2003, France arrested about 170 PMOI
members, including its co-leader Maryam Rajavi (wife of PMOI founder Masoud Rajavi, whose
whereabouts are unknown). She was released and remains based in France, and is occasionally
received by European parliamentarians and other politicians. Press reports say that some
Administration officials want the group removed from the FTO list and want a U.S. alliance with 8
it against the Tehran regime. In November 2002, a letter signed by about 150 House Members 9
was released, asking the President to remove the PMOI from the FTO list.
Those advocating that policy take heart from the U.S. decision in July 2004 to grant the Ashraf th
detainees “protected persons” status under the 4 Geneva Convention, meaning they will not be
extradited to Tehran or forcibly expelled as long as U.S. forces have a mandate to help secure
Iraq. U.S. forces attacked PMOI military installations in Iraq during Operation Iraqi Freedom and
negotiated a ceasefire with PMOI military elements in Iraq, requiring the approximately 3,350
PMOI fighters to remain confined to their Ashraf camp near the border with Iran. Its weaponry is
in storage, guarded by U.S. and U.S.-allied personnel. Another 350 PMOI fighters have taken
advantage of an arrangement between Iran and the ICRC for them to return home if they disavow
further PMOI activities. Another 200 are in the process of leaving Ashraf if a host country could
be found. However, the U.S.-led mandate will be replaced on January 1, 2009 by a bilateral U.S.-
Iraq agreement. The group fears that this agreement, which limits U.S. military prerogatives in
Iraq, will give Iraq security control over Ashraf and thereby enable the pro-Iranian Prime Minister
Nuri al-Maliki to implement his threats to expel the group or even to turn its members over to
Some armed groups are operating in Iran’s border areas, and are generally composed of ethnic or
religious minorities. One such group is Jundullah, composed of Sunni Muslims primarily from
the Baluchistan region bordering Pakistan. Since mid-2008, it has conducted several successful
attacks on Iranian security personnel, claiming revenge for the poor treatment of Sunnis in Iran.
An armed Kurdish group operating out of Iraq is the Free Life Party, known by its acronym
8 Cloud, David. “U.S., Iran Hit Bumpy Terrain on Road to Rapprochement.” Wall Street Journal, May 12, 2003.
9 “Removal of Iran Group From Terror List Sought.” Washington Post, November 23, 2002.
PJAK. Another militant group, the “Ahwazi Arabs,” operates in the largely Arab inhabited areas
of southwest Iran, bordering Iraq.
Some Iranian exiles, as well as some elites still in Iran, want to replace the regime with a
constitutional monarchy led by Reza Pahlavi, the U.S.-based son of the late former Shah and a
U.S.-trained combat pilot. However, he does not appear to have large-scale support inside Iran. In
January 2001, the Shah’s son, who is about 50 years old, ended a long period of inactivity by
giving a speech in Washington, DC, calling for unity in the opposition and the institution of a
constitutional monarchy and democracy in Iran. He has since broadcast messages into Iran from 10
Iranian exile-run stations in California. His political adviser is MIT-educated Shariar Ahy. No
U.S. assistance has been provided to exile-run stations. The conference report on the FY2006
regular foreign aid appropriations, P.L. 109-102, stated the sense of Congress that the
Administration consider such support.
Numerous Iranians-Americans in the United States want to see a change of regime in Tehran.
Many of them are based in California, where there is a large Iranian-American community, and
there are about 25 small-scale radio or television stations that broadcast into Iran. Some well-
known U.S.-based activists include The Abdorrahman Boroumand Foundation; and the Iran
Human Rights Documentation Center (IHDC). The center is run by persons mostly of Iranian
origin and affiliated with Yale University’s Griffin Center for Health and Human Rights. It is
documenting abuses in Iran, using contacts with Iranians in Iran. Another exile is Amir Abbas
Fakravar, a leader of the student dissidents who emerged in the July 1999 anti-regime student
Some organizations, such as The National Iranian American Council (NIAC), are not necessarily
seeking influence inside Iran. The mission of NIAC, composed largely of Iranian-Americans, is
to promote discussion of U.S. policy and the group has advocated engagement with Iran.
The Bush Administration’s “National Security Strategy” document released March 16, 2006 said
the United States “may face no greater challenge from a single country than from Iran.” The
perception is based largely on Iran’s growing weapons of mass destruction (WMD) programs and 11
its ability to exert influence in the region counter to U.S. objectives. Iran’s national security
goals are to protect itself from foreign, primarily U.S., interference or attack, and to be able to
protect and defend the Shiite Islamic world that Iran sees as oppressed by the more numerous and
dominant Sunnis. Iran’s advanced and other conventional weaponry is deemed to pose a less
10 Kampeas, Ron. “Iran’s Crown Prince Plots Nonviolent Insurrection from Suburban Washington.” Associated Press,
August 26, 2002.
11 See http://www.whitehouse.gov/nsc/nss/2006/.
significant threat than its WMD, but Iran’s forces could still, in some cases, threaten U.S. forces
and allies in the Gulf region.
Iran’s armed forces are extensive; they are widely considered relatively combat ineffective
against a well-trained, sophisticated military such as that of the United States or a regional power
such as Turkey, but believed sufficiently effective to deter or fend off conventional threats from
Iran’s weaker neighbors such as post-war Iraq, Turkmenistan, Azerbaijan, and Afghanistan. Iran’s
forces lack the logistical ability to project power much beyond Iran’s borders. Iran’s armed forces
have few formal relationships with foreign militaries, but Iran and India have a “strategic
dialogue” and some Iranian naval officers reportedly are being trained in India. Iran and Turkey
have agreed in principle (April 2008) to jointly fight terrorism along their border. Most of Iran’s
other military-to-military relationships, such as with Russia, Ukraine, Belarus, North Korea, and a
few others, generally center on Iranian arms purchases or upgrades.
The Islamic Revolutionary Guard Corps (IRGC),12 which also controls the Basij (mobilization)
volunteer militia that enforces adherence to Islamic customs, is generally loyal to the hardliners
politically and is clearly more politically influential than is Iran’s regular military, which is larger
but was held over from the Shah’s era. The two forces, the Guard and the regular military,
technically report to a Joint Headquarters. As further evidence of the Guard’s pre-eminence,
Chairman of the Joint Chiefs of Staff Admiral Mike Mullen said on November 29, 2007 that the
IRGC Navy was given responsibility to patrol the entire Persian Gulf, and that the regular Navy is
patrolling the Strait of Hormuz and Gulf of Oman.
IRGC leadership developments are significant because of the political influence of the IRGC. On
September 2, 2007, Khamene’i replaced Rahim Safavi with Mohammad Ali Jafari as Commander
In Chief of the Guard; Jafari is considered a hardliner against political dissent and is reputedly
close to the Supreme Leader and less so to Ahmadinejad. In December 2007, Jafari briefly took
direct control of the Basij, which operates from thousands of positions in Iran’s institutions, and
indicated he would increase its role in monitoring and suppressing dissent. Later, the Basij
command was given to senior Guard leader Mohammad Baqr Zolqadr, who had been serving as
deputy Interior Minister, although command reshuffles in July 2008 (integrating the Basij more
closely with provincially-based IRGC units) furthered the view that the Basij is playing a more
active role in uncovering suspected plotting by Iran’s minorities and others. More information on
Iran’s military and how it might perform against the United States is discussed under “military
The Guard has a unit, the Qods (Jerusalem) Force, that operates outside Iran to assist pro-Iranian
movements with weapons, training, and finances. For the role of the Guard/Qods Force in
external activities, see below under “Foreign Policy and Terrorism.” The IRGC is also
increasingly involved in Iran’s economy, acting through a network of contracting businesses it has
set up, most notably Ghorb (also called Khatem ol-Anbiya, Persian for “Seal of the Prophet”).
Active duty IRGC senior commanders reportedly serve on Ghorb’s board of directors.
12 For a more extensive discussion of the IRGC, see Katzman, Kenneth. “The Warriors of Islam: Iran’s Revolutionary
Guard,” Westview Press, 1993.
In the 110th Congress, a provision of H.R. 1400 (passed by the House on September 25), S. 970,
and the FY2008 defense authorization bill (P.L. 110-181, Senate amendment adopted September
6, 2007 by vote of 76-22) calls for the Revolutionary Guard to be designated a foreign terrorist
organization, or FTO. On October 21, 2007, the Administration took a somewhat lesser step by
naming the IRGC, the Ministry of Defense, several of Guard commanders, the Guard’s
construction firms, and several Iranian banks, as proliferation entities under Executive Order
13382. The Qods Force was named as a “specially designated global terrorist entity” under
Executive Order 13224. Both orders freeze the U.S.-based assets and prevent U.S. transactions
with the named entities, but these entities are believed to have virtually no U.S.-based assets that
could be frozen. The U.S. action might have substantial effect on the IRGC and its business
entities if U.S. partner countries and others adopt similar sanctions. (A list of designated entities is
in a table at the end of this paper.)
Table 5. Iran’s Conventional Military Arsenal
Military Tanks Surface-Air Combat Ships Budget
Personnel Missiles Aircraft (billions
545,000 (regular military and 1,693 150 280 200 6.6
Revolutionary Guard Corps (incl. I-Hawk plus (incl. 25 MiG-(incl. 10 Chinese-made
(IRGC). IRGC is about one-480 T-some Stinger 29 and 30 Su-Hudong, 40 Boghammer,
third of total force. 72) 24) 3 frigates) Also has 3 Kilo
“Qods Forces” of IRGC. Approximately 10,000-15,000 total in the Qods Force, which promotes Iran’s regional
and global objectives through advisory support to pro-Iranian factions in Lebanon, Iraq, Persian Gulf states,
Afghanistan, and Central Asia. Also operates worldwide intelligence network to give Iran possible terrorist option and
to assist in procurement of WMD-related technology.
Ship-launched cruise missiles. Iran is able to arm its patrol boats with Chinese-made C-802 cruise missiles. Iran
also has Chinese-supplied HY-2 Seerseekers emplaced along Iran’s coast.
Midget Subs. Iran is said to possess several, possibly purchased assembled or in kit form from North Korea. Iran
claimed on Nov. 29, 2007 to have produced a new small sub equipped with sonar-evading technology.
Anti-aircraft missile systems. Russia has sold and now delivered to Iran (January 2007) 30 anti-aircraft missile
systems (Tor M1), worth over $1 billion. In September 2006, Ukraine agreed to sell Iran the Kolchuga radar system
that can improve Iran’s detection of combat aircraft. In December 2007, Russia agreed to sell the even more capable
S-300 (also known as SA-20 “Gargoyle”) air defense system, purportedly modeled after the U.S. Patriot system, which
U.S. officials say would greatly enhance Iran’s air defense capability. Amid unclear or weak denials by Iranian and
Russian officials, U.S. officials told journalists on December 11, 2008 that Iran has indeed contracted for the missile. It
is reportedly due for delivery by March 2009 and to be operational by June 2009. In August 2008, Iran denied buying
the system at all.
Since 2005, Iran and the international community have verged on a crisis over Iran’s nuclear
program as Iran has flouted international demands that it curb its nuclear program. The Bush
Administration believes Iran intends to develop a nuclear weapon from that program, and
Administration policy has been to prevent that outcome. On November 7, 2008, President-elect
Obama said that his Administration, too, will seek to prevent a nuclear-armed Iran. The Obama
Administration will be taking office just after the International Atomic Energy Agency (IAEA)
reported on November 19, 2008 that Iran has enriched about 1,400 pounds of uranium,
considered enough for a nuclear weapon, although only if enriched to 90%. Iran’s enrichment
thus far has been 5%, which is a level that would permit only civilian uses.
International scrutiny of Iran’s nuclear program intensified in 2002, when Iran confirmed PMOI
allegations that it was building two facilities that could potentially be used to produce fissile
material useful for a nuclear weapon: a uranium enrichment facility at Natanz and a heavy water 13
production plant at Arak, considered ideal for the production of plutonium. It was revealed in
technology and designs. The International Atomic Energy Agency (IAEA), despite intensified
inspections of Iran’s facilities since late 2002, has said it cannot verify that Iran’s current program
is purely peaceful, and several of its reports (January 31, 2006, February 27, 2006, May 26, 2008,
and September 15, 2008) say it found documents that show a possible involvement of Iran’s
military in procuring technology for Iran’s program. One such effort is called the “Green Salt”
project, involving testing of relevant high explosives and of missile re-entry vehicles. Iran says
many of these documents that the IAEA says it has are likely forged, but a September 15, 2008,
IAEA report added that Iran had still not completely addressed these IAEA concerns. A
September 16, 2008, IAEA Board meeting also reportedly included an IAEA presentation
showing that Iran had tried to refit its main long-range missile to carry a nuclear payload. A 15
National Intelligence Estimate (unclassified key judgments), released December 3, 2007, cast
doubt on the most alarming interpretations of Iran’s program (as well as on that of a previous NIE
issued in May 2005), saying that Iran had—but in late 2003 halted—a covert nuclear weapons
program as a result of increased international scrutiny.
Iranian leaders continue to assert that Iran’s nuclear program is for electricity generation and that
enrichment is its “right” as a party to the NPT. Iran says its oil resources are finite and that
enriching uranium to make nuclear fuel is allowed under the 1968 Nuclear Non-Proliferation 16
Treaty, to which Iran is a party. An analysis was published by the National Academy of Sciences
challenging the U.S. view that Iran is petroleum rich and therefore has no need for a nuclear
power program. According to the analysis, the relative lack of investment is causing a decline in 17
Iranian oil exports to the point where Iran might have negligible exports of oil by 2015. U.S.
officials say that Iran’s gas resources make nuclear energy unnecessary.
Despite Iran’s professions that WMD is inconsistent with its ideology, the NIE says it is likely
that Iran will eventually try to develop a nuclear weapon. Iran’s factions appear to agree on the
utility of a nuclear weapons capability as a means of ending its perceived historic vulnerability to
invasion and domination by great powers, and as a symbol of Iran as a major nation. Others
believe a nuclear weapon represents the instrument with which Iran intends to intimidate its
neighbors and dominate the Persian Gulf region. There are also fears Iran might transfer WMD to
extremist groups or countries.
13 In November 2006, the IAEA, at U.S. urging, declined to provide technical assistance to the Arak facility on the
grounds that it was likely for proliferation purposes.
14 Lancaster, John and Kamran Khan. “Pakistanis Say Nuclear Scientists Aided Iran.” Washington Post, January 24,
15 Text at http://www.dni.gov/press_releases/20071203_release.pdf
16 For Iran’s arguments about its program, see Iranian paid advertisement “An Unnecessary Crisis—Setting the Record
Straight About Iran’s Nuclear Program,” in the New York Times, November 18, 2005. P. A11.
17 Stern, Roger. “The Iranian Petroleum Crisis and United States National Security,” Proceedings of the National
Academy of Sciences of the United States of America. December 26, 2006.
There is still major disagreement over the urgency of the issue. The Administration’s key concern
is that Iran is expanding its ability to produce enriched uranium. The NIE assessed that Iran will
likely be technically capable of producing enough highly enriched uranium for a nuclear weapon
some time during 2010-2015. According to the IAEA report of November 19, 2008, Iran
continues to run a 3,000 centrifuge “IR-1” (type of centrifuge) enrichment line, as well as up to
The Administration is somewhat less concerned with Russia’s work, under a January 1995
contract, on an $800 million nuclear power plant at Bushehr. Russia insisted that Iran sign an
agreement under which Russia would provide reprocess the plant’s spent nuclear material; that
agreement was signed on February 28, 2005. The plant was expected to become operational in
that Iran first comply with the U.N. resolutions discussed below. In December 2007, perhaps to
signal disagreement with further pressure on Iran, Russia began fueling the reactor, and Iran says
it expects the plant to become operational in 2009. As part of Russia’s work with Iran, Russia has
trained 1,500 Iranian nuclear engineers.
In 2003, France, Britain, and Germany (the “EU-3”) opened a separate diplomatic track to curb
Iran’s program. On October 21, 2003, Iran pledged, in return for peaceful nuclear technology, to
(1) fully disclose its past nuclear activities, (2) to sign and ratify the “Additional Protocol” to the
NPT (allowing for enhanced inspections), and (3) to suspend uranium enrichment activities. Iran
signed the Additional Protocol on December 18, 2003, although the Majles has not ratified it. Iran
abrogated the agreement after the IAEA reports of November 10, 2003, and February 24, 2004,
stated that Iran had violated its NPT reporting obligations over an 18-year period. (The NIE
released on December 3, 2007 appears to indicate that it was in conjunction with this October
In the face of the U.S. threat to push for Security Council action, the EU-3 and Iran reached a
more specific November 14, 2004, “Paris Agreement,” committing Iran to suspend uranium
enrichment (which it did as of November 22, 2004) in exchange for renewed trade talks and other 18
aid. EU-3—Iran negotiations on a permanent nuclear pact began on December 13, 2004, and
related talks on a trade and cooperation accord (TCA) began in January 2005. On March 11,
2005, the Bush Administration announced it would support the talks, but not join them, by
dropping U.S. objections to Iran’s application to the World Trade Organization (which it did in
May 2005) and to consider sales of U.S. civilian aircraft parts to Iran.
The Paris Agreement broke down just after Ahmadinejad’s election; Iran rejected as insufficient
an EU-3 offer to assist Iran with peaceful uses of nuclear energy and provide limited security
guarantees in exchange for Iran’s (1) permanently ending uranium enrichment; (2) dismantling 19
the Arak heavy water reactor; (3) no-notice nuclear inspections; and (4) a pledge not to leave the
18 For text of the agreement, see http://www.iaea.org/NewsCenter/Focus/IaeaIran/eu_iran14112004.shtml.
19 In November 2006, the IAEA, at U.S. urging, declined to provide technical assistance to the Arak facility on the
grounds that it was likely for proliferation purposes.
NPT (it has a legal exit clause). On August 8, 2005, Iran broke the IAEA seals and began uranium
“conversion” (one step before enrichment) at its Esfahan facility. On September 24, 2005, the
IAEA Board voted to declare Iran in non-compliance with the NPT and to refer the issue to the 20
Security Council, but no time frame was set for the referral. The Administration supported a
November 2005 Russian proposal to Iran to establish a facility in Russia at which Iranian
uranium would be enriched, thereby enabling Iran to claim it had retained its right to enrich. Iran
did not accept the proposal. In January 2006, Iran resumed enrichment activities, and on February 21
for ceasing enrichment.
Taking a multilateral approach, the Administration offered on May 31, 2006, to join the nuclear
talks with Iran if Iran first suspends its uranium enrichment. Such talks would center on a
package of incentives and possible sanctions—formally agreed to on June 1, 2006—by a newly
formed group of negotiating nations, the so-called “Permanent Five Plus 1” (P5+1: United States,
Russia, China, France, Britain, and Germany). EU representative Javier Solana formally
presented the P5+1 offer to Iran on June 6, 2006. (The package is formally outlined in Annex I to
U.N. Resolution 1747.)
• Negotiations on an EU-Iran trade agreements and acceptance of Iran into the World
• Easing of U.S. sanctions to permit sales to Iran of commercial aircraft or aircraft
• Sale to Iran of a light-water nuclear reactor and guarantees of nuclear fuel (including
a five year buffer stock of fuel), and possible sales of light-water research reactors for
medicine and agriculture applications.
• An “energy partnership” between Iran and the EU, including help for Iran to
modernize its oil and gas sector and to build export pipelines.
• Support for a regional security forum for the Persian Gulf, and support for the
objective of a WMD free zone for the Middle East.
• The possibility of eventually allowing Iran to resume uranium enrichment if it
complies with all outstanding IAEA requirements and can prove that its nuclear program
is purely peaceful.
20Voting in favor: United States, Australia, Britain, France, Germany, Canada, Argentina, Belgium, Ghana, Ecuador,
Hungary, Italy, Netherlands, Poland, Portugal, Sweden, Slovakia, Japan, Peru, Singapore, South Korea, India. Against:
Venezuela. Abstaining: Pakistan, Algeria, Yemen, Brazil, China, Mexico, Nigeria, Russia, South Africa, Sri Lanka,
Tunisia, and Vietnam.
21 Voting no: Cuba, Syria, Venezuela. Abstaining: Algeria, Belarus, Indonesia, Libya, South Africa.
22 See http://daccessdds.un.org/doc/UNDOC/GEN/N06/290/88/PDF/N0629088.pdf?OpenElement.
• Denial of visas for Iranians involved in Iran’s nuclear program and for high-ranking
• A freeze of assets of Iranian officials and institutions; a freeze of Iran’s assets abroad;
and a ban on some financial transactions.
• A ban on sales of advanced technology and of arms to Iran; and a ban on sales to Iran
of gasoline and other refined oil products.
• An end to support for Iran’s application to the WTO.
Iran did not immediately give a formal response to the incentive offer. On July 31, 2006, the
Security Council voted 14-1 (Qatar voting no) for U.N. Security Council Resolution 1696, giving
Iran until August 31, 2006, to fulfill the longstanding IAEA nuclear demands (enrichment
suspension, etc). Purportedly in deference to Russia and China, it was passed under Article 40 of
the U.N. Charter, which makes compliance mandatory, but not under Article 41, which refers to
economic sanctions, or Article 42, which would authorize military action. It called on U.N.
member states not to sell Iran WMD-useful technology. On August 22, 2006, Iran submitted a
formal response to the June 6 offer proposal. Iran’s response (not fully disclosed) reportedly did
not offer to suspend uranium enrichment, instead proposing broader engagement with the West
and guarantees that the United States would not seek regime change.
With the backing of the P5+1, chief EU negotiator Javier Solana negotiated with Iran to try
arrange a temporary enrichment suspension, but talks ended on September 28, 2006, without
agreement. After almost four months of negotiations, the Security Council agreed to U.N.
Security Council Resolution 1737. It was passed unanimously on December 23, 2006, under
Chapter 7, Article 41 of the U.N. Charter. It prohibits sale to Iran—or financing of such sale—of
technology that could contribute to Iran’s uranium enrichment or heavy-water reprocessing
activities. It also required U.N. member states to freeze the financial assets of 10 named Iranian
nuclear and missile firms and 12 persons related to those programs (see Table 8). It did not
mandate the banning of travel by these personalities, but called on member states not to admit
them. It also provided an exemption, sought by Russia, for the Bushehr reactor.
Resolution 1737 demanded enrichment suspension by February 21, 2007. An IAEA report sent to
Board member countries that day said Iran continued its enrichment activities. On March 24,
23 One source purports to have obtained the contents of the package from ABC News: http://www.basicint.org/pubs/
• added 10 military/WMD-related entities; 3 Revolutionary Guard entities; 8 persons,
and 7 Revolutionary Guard commanders listed in Table 8. Bank Sepah is among the
• banned arms transfers by Iran, a provision targeted at Iran’s alleged arms supplies to
Lebanese Hezbollah and to Shiite militias in Iraq.
• required all countries to report to the United Nations when the sanctioned Iranian
persons travel to their territories.
• called for (but did not require) countries to avoid selling arms or dual use items to
Iran and to avoid any new lending or grants to Iran.
Resolution 1747 demanded Iran suspend enrichment by May 24, 2007. The IAEA report of May
23, 2007 stated that Iran did not comply. However, suggesting that Iran wanted to avoid further
isolation, in August 2007, Iran agreed to sign with the IAEA an agreement to clear up outstanding
questions on Iran’s past nuclear activities by the end of 2007. On that basis, the P5+1 grouping—
along with the EU itself—agreed to a joint statement on September 28, 2007 in which all the
undersigned, including Russia and China, said they would negotiate another sanctions resolution
if there is no progress reported by the IAEA in implementing the August 2007 agreement or in
separate continued negotiations with EU representative Javier Solana. The IAEA report was
circulated on November 15, 2007, saying that Iran had provided additional information on its past
programs, but Solana characterized a November 30, 2007, meeting with new Iranian negotiator
Sayid Jallili as “disappointing,” suggesting no progress.
After several months of negotiations, Resolution 1803 was adopted by a vote of 14-0 (Indonesia
abstaining) on March 3, 2008. It: (1) bans sales of dual use items to Iran; (2) authorizes, but does
not require, inspections of cargo (carried by Iran Air Cargo and Islamic Republic of Iran Shipping
Line) suspected of shipping WMD-related goods; (3) imposes a firm travel ban on five Iranians
named in Annex II to the Resolution and requires reports on international travel by 13 individuals
named in Annex I; (4) calls for, but does not require, a prohibition on financial transactions with
Iran’s Bank Melli and Bank Saderat; and (5) adds 12 entities to those sanctioned under Resolution
1737. However, the provisions do not directly address civilian trade or investment. The
Administration nonetheless hailed the Resolution as demonstrating that the international
community remained unified in insisting Iran curb its nuclear program. (On June 23, 2008, the
EU, acting under Resolution 1803, froze the assets of Bank Melli and several IRGC entities and
Resolution 1803 also stated that “China, France, Germany, the Russian Federation, the United
Kingdom and the United States are willing to take further concrete measures on exploring an
overall strategy of resolving the Iranian nuclear issue through negotiation on the basis of their
June 2006 proposals.” Appearing to want to preserve a unified front, the Bush Administration
agreed to expand the June 2006 incentive package to induce Iranian cooperation. The P5+1 met
on April 16, 2008, in Shanghai, China but it was not until a meeting in London on May 2, 2008,
that the powers agreed on a “refreshed” package of incentives to augment those in the June 2006
package. According to press reports (the exact offer was not made public), the powers included,
beyond that in the June 2006 proposal, an offer of political cooperation with Iran, and enhanced
incentives on energy cooperation. EU envoy Solana presented the package (which included a
signature by Secretary of State Rice) on June 14, 2008, but Iran was non-committal.
Perhaps sensing that the United States is succeeding in increasing financial and diplomatic
pressure on Iran, Iranian Foreign Minister Mottaki indicated on July 2, 2008, that Iran might be
ready to negotiate on the revived June 2008 incentive package by first accepting a proposed six
week “freeze for freeze”—the P5+1 would freeze further sanctions efforts and Iran would freeze
any further expansion of uranium enrichment (though not suspend outright). To try to take
advantage of what seemed to be divisions within Iran on whether to negotiate a settlement, the
Administration decided to send Undersecretary of State for Political Affairs William Burns to join
Solana and the other P5+1 representatives at a meeting in Geneva on July 19, 2008 to receive
Iran’s response to the “freeze for freeze” idea. Again, Iran did not supply a direct answer either
then, or by an extended deadline of August 2, 2008, instead focusing on elements of a final
As a result of the lack of progress, the P5+1 began attempting to agree on another sanctions
resolution. Ideas reportedly under consideration included adding more Iranian banks to those with
which business would be banned, or banning insurance for Iran’s tanker fleet. On August 7, 2008,
separately from any U.N. action but intended to increase pressure on Iran, the EU not only
implemented those sanctions specified in Resolution 1803, including the authority to inspect
suspect shipments, but also called on its member states to refrain from providing new credit
guarantees on exports to Iran. However, the August 2008 crisis between Russia and Georgia set
back U.S.-Russia relations, and Russia opposed a new resolution to sanction Iran. In an effort to
demonstrate to Iran continued unity, the Council did adopt (September 27, 2008) Resolution
1835. It called on Iran to comply with previous resolutions, but it reaffirmed a willingness to
continue to negotiate a solution with Iran and did not impose any new sanctions.
With Iran still not complying, the P5+1 met again on October 21, 2008, and in Paris on
November 13, 2008, but without agreement, the P5+1 met again but did not reach consensus on
imposing new sanctions on Iran. Furthermore, the November 19, 2008 IAEA report said Iran had
blocked an IAEA effort to conduct an inspection at the Arak heavy water plant. The potential for
additional sanctions is further discussed in the section on multilateral and international sanctions
Table 6. Summary of Provisions of U.N. Resolutions on Iran Nuclear Program
(1737, 1747, and 1803)
Require Iran to suspend uranium enrichment
Prohibit transfer to Iran of nuclear, missile, and dual use items to Iran, except for use in light water reactors
Prohibit Iran from exporting arms or WMD-useful technology
Freeze the assets of 40 named Iranian persons and entities, including Bank Sepah, and several Iranian front companies
Require that countries exercise restraint with respect to travel of 35 named Iranians and ban the travel of 5 others
Calls on states not to export arms to Iran or support new business with Iran
Calls for vigilance with respect to the foreign activities of all Iranian banks, particularly Bank Melli and Bank Saderat
Calls on countries to inspect cargoes carried by Iran Air Cargo and Islamic Republic of Iran Shipping Lines if there are
indications they carry cargo banned for carriage to Iran.
Official U.S. reports and testimony continue to state that Iran is seeking a self-sufficient chemical
weapons (CW) infrastructure, and that it “may have already” stockpiled blister, blood, choking,
and nerve agents—and the bombs and shells to deliver them. This raises questions about Iran’s
compliance with its obligations under the Chemical Weapons Convention (CWC), which Iran
signed on January 13, 1993, and ratified on June 8, 1997. These officials and reports also say that
Iran “probably maintain[s] an offensive [biological weapons] BW program ... and probably has
the capability to produce at least small quantities of BW agents.”
Largely with foreign help, Iran is becoming self-sufficient in the production of ballistic missiles
and, by U.S. accounts, already has the largest inventory of ballistic missiles in the Middle East.
Tehran appears to view its ballistic missiles as an integral part of its strategy to deter or retaliate
against forces in the region, including U.S. forces. To reinforce that point, during July 9-10, 2008,
Iran conducted several highly publicized test launches of a variant of the Shahab missile that Iran
says has a 1,250 mile range, putting most key U.S. allies in the region at risk; other missiles were
tested on those days as well. Some analyses suggested Iran might have falsified photos and other
accounts of exactly how many missiles were tested and their capabilities. Iran claimed a
successful test of a “Sijil” solid-fuel missile, with a range of 1,200 miles, on November 12, 2008.
However, Iran’s technical capabilities are a matter of some debate among experts. As of August
19, 2008, the Bush Administration has reached agreements with Poland and the Czech Republic
to establish a missile defense system to counter Iranian ballistic missiles. These agreements were
reached over Russia’s opposition, which was based on the belief that the missile defense system
would be used to neutralize Russian capabilities.
Table 7. Iran’s Ballistic Missile Arsenal
Shahab-3 800 mile range. Two of first three tests (July 1998, July 2000, and September 2000) reportedly
(“Meteor”) unsuccessful. After successful test in June 2003, Iran called missile operational (capable of hitting Israel).
Despite claims, some U.S. experts say the missile not completely reliable—some observers said Iran
detonated in mid-flight a purportedly more accurate version on August 12, 2004. On May 31, 2005,
Iran announced it had tested a solid-fuel version.
Shahab-4 1,200 mile range. In October 2004, Iran announced it had extended range of the Shahab-3 to 1,200
miles, and it added in early November 2004 that it is capable of “mass production” of it. Agence France
Presse report (February 6, 2006) said January 2006 test succeeded. Related missiles claimed produced
by Iran—both of about 1,200 mile range, include the “Ashoura” (claimed in November 2007); the
“Ghadr” (displayed at military parade in September 2007); and the “Sijil,” tested on November 12,
2008 (solid fuel). If claims are accurate, large portions of the Near East and Southeastern Europe
would be in range, including U.S. bases in Turkey. On March 31, 2006, Iran claimed to have tested a
missile, possibly a Shahab-4, with separately targeted warheads. Tested again in July 2008, but number
of other tests and degree of success uncertain.
BM-25 1,500 mile range. On April 27, 2006, Israel’s military intelligence chief said that Iran had received a
shipment of North Korean-supplied BM-25 missiles. Missile said to be capable of carrying nuclear
warheads. The Washington Times appeared to corroborate this reporting in a July 6, 2006, story, which
asserted that the North Korean-supplied missile is based on a Soviet-era “SS-N-6” missile.
ICBM U.S. officials believe Iran might be capable of developing an intercontinental ballistic missile (3,000 mile
range) by 2015. In February 2008 Iran claimed to have launched a probe into space, suggesting its
missile technology might be improving to the point where an Iranian ICBM is an increasingly realistic
Shahab-3 800 mile range. Two of first three tests (July 1998, July 2000, and September 2000) reportedly
(“Meteor”) unsuccessful. After successful test in June 2003, Iran called missile operational (capable of hitting Israel).
Despite claims, some U.S. experts say the missile not completely reliable—some observers said Iran
detonated in mid-flight a purportedly more accurate version on August 12, 2004. On May 31, 2005,
Iran announced it had tested a solid-fuel version.
Other On September 6, 2002, Iran said it successfully tested a 200 mile range “Fateh 110” missile (solid
Missiles propellent), and Iran said in late September 2002 that it had begun production. Iran also possesses a
few hundred short-range ballistic missiles, including the Shahab-1 (Scud-b), the Shahab-2 (Scud-C), and
the Tondar-69 (CSS-8).
Space Iran claimed to have launched a rocket capable of carrying a satellite into space (August 17, 2008). U.S.
Vehicle officials quoted in press articles said that the second stage of the rocket failed.
Warheads Wall Street Journal report of September 14, 2005, said that U.S. intelligence believes Iran is working to
adapt the Shahab-3 to deliver a nuclear warhead. Subsequent press reports say that U.S. intelligence
captured an Iranian computer in mid-2004 showing plans to construct a nuclear warhead for the 24
Shahab. The IAEA is seeking additional information from Iran.
Iran’s foreign policy is a product of the ideology of Iran’s Islamic revolution, blended with long-
standing national interests, and is intended largely to overturn the “status quo” in the Middle East
that Iran believes favors the United States, Israel, and Sunni Muslim regimes. The State
Department report on international terrorism for 2007, released April 30, 2008, again stated (as it
has for more than a decade) that Iran “remained the most active state sponsor of terrorism” in
2007, and it again attributed the terrorist activity primarily to the Revolutionary Guard
[presumably the Qods Force]. The report focused particular attention on Iran’s lethal support to 25
Shiite militias in Iraq as well as on shipments to Taliban fighters in Afghanistan. On October 27,
2008, the deputy commander of the Basij became the first top Guard leader to public
acknowledge that Iran supplies weapons to “liberation armies” in the region, a reference to pro-
Iranian movements discussed below.
The Persian Gulf monarchy states (Gulf Cooperation Council, GCC: Saudi Arabia, Kuwait,
Bahrain, Qatar, Oman, and the United Arab Emirates) fear the growing strategic influence of Iran
but they do not openly support U.S. conflict with Iran that might cause Iran to retaliate against
Gulf state targets. At the same time, since the mid-1990s, Iran has tried to blunt Gulf state fears of
Iran by curtailing activity, conducted during the 1980s and early 1990s, to sponsor Shiite Muslim
extremist groups in these states, all of which are run by Sunni governments. Iran undertook this
activity through the Qods Force and the MOIS. Iran found, to its detriment, that subversion
caused the Gulf states to ally closely with the United States. In part to counter Iran’s perceived
growing influence in the Gulf, in December 2006 the summit of the GCC leaders announced that
the GCC states might jointly study their own development of “peaceful nuclear technology.” On
24 Broad, William and David Sanger. “Relying On Computer, U.S. Seeks to Prove Iran’s Nuclear Aims.” New York
Times, November 13, 2005.
25 U.S. Department of State. Country Reports on Terrorism 2007. Released April 30, 2008. http://www.state.gov/s/ct/
the other hand, seeking to avoid further tensions with Iran, the GCC leaders invited Ahmadinejad
to speak at the December 2-3, 2007, summit of the GCC leaders in Doha, Qatar, marking the first
time an Iranian president has been invited since the GCC was formed in 1981. His speech
reiterated a consistent Iranian theme that the Gulf countries, including Iran, should set up their
own security structure without the help of “outside powers” but also called for a “new chapter” in
• Saudi Arabia. Many observers closely watch the relationship between Iran and Saudi
Arabia because of Saudi alarm over the emergence of a pro-Iranian government in Iraq
and Iran’s ascendancy in Lebanon. Saudi Arabia sees itself as leader of the Sunni Muslim
world and views Shiite Muslims as heretical and disloyal internally. The Saudis, who do
not want a repeat of Iran’s sponsorship of disruptive and sometimes violent
demonstrations at annual Hajj pilgrimages in Mecca in the 1980s and 1990s—or an
increase in Iranian support for Saudi Shiite dissidents—are receptive to easing tensions
with Iran. They hosted Ahmadinejad in the Kingdom in March 2007 and again for the
Hajj in December 2007. The Saudis continue to blame a pro-Iranian movement in the
Kingdom, Saudi Hezbollah, for the June 25, 1996, Khobar Towers housing complex 26
bombing, which killed 19 U.S. airmen. After restoring relations in December 1991
(after a four-year break), Saudi-Iran ties progressed to high-level contacts during
Khatemi’s presidency, including Khatemi visits in 1999 and 2002.
• United Arab Emirates (UAE) concerns about Iran never fully recovered from the
April 1992 Iranian expulsion of UAE security forces from the Persian Gulf island of Abu
Musa, which it and the UAE shared under a 1971 bilateral agreement. (In 1971, Iran, then
ruled by the U.S.-backed Shah, seized two other islands, Greater and Lesser Tunb, from
the emirate of Ras al-Khaymah, as well as part of Abu Musa from the emirate of
Sharjah.) The UAE (particularly the federation capital, Abu Dhabi, which takes a harder
line than Dubai, which has an Iranian-origin resident community as large as 300,000 and
business ties to Iran) wants to refer the dispute to the International Court of Justice (ICJ),
but Iran insists on resolving the issue bilaterally. The UAE has not pressed the issue
vigorously in recent years, although it formally protested Iran’s setting up of a maritime
and ship registration office on Abu Musa in July 2008. The UAE insists the islands
dispute be kept on the agenda of the U.N. Security Council (which it has been since
December 1971). The United States supports UAE proposals but takes no formal position
on sovereignty. As an indicator of the degree to which the issue has faded, in May 2007
the UAE received Ahmadinejad (the highest level Iranian visit since the 1979 revolution)
and allowed him to lead an anti-U.S. rally of a reported several hundred Iranian-origin
residents of Dubai at a soccer stadium there.
• Qatar is wary that Iran might seek to encroach on its large North Field (natural gas),
which it shares with Iran (called South Pars on Iran’s side) and through which Qatar earns
large revenues for natural gas exports. Qatar’s fears were heightened on April 26, 2004,
when Iran’s deputy Oil Minister said that Qatar is probably producing more gas than “her
right share” from the field and that Iran “will not allow” its wealth to be used by others.
26 Walsh, Elsa. “Annals of Politics: Louis Freeh’s Last Case.” The New Yorker, May 14, 2001. The June 21, 2001,
federal grand jury indictments of 14 suspects (13 Saudis and a Lebanese citizen) in the Khobar bombing indicate that
Iranian agents may have been involved, but no indictments of any Iranians were announced. In June 2002, Saudi
Arabia reportedly sentenced some of the eleven Saudi suspects held there. The 9/11 Commission final report asserts
that Al Qaeda might have had some as yet undetermined involvement in the Khobar Towers attacks.
These concerns might have prompted Qatar to invite Ahmadinejad to the December 2007
GCC summit in Qatar and to push for his invitation to the summit in December 2008.
• Bahrain is about 60% Shiite, many of whom are of Persian origin, but its government
is dominated by the Sunni Muslim Al Khalifa family. In 1981 and again in 1996, Bahrain
publicly accused Iran of supporting Bahraini Shiite dissidents (the Islamic Front for the
Liberation of Bahrain, Bahrain-Hezbollah, and other Bahraini dissident groups) in efforts
to overthrow the ruling Al Khalifa family. Bahraini fears that Iran would try to interfere
in Bahrain’s November 25, 2006, parliamentary elections by providing support to Shiite
candidates did not materialize, although the main Shiite opposition coalition won 18 out
of the 40 seats of the elected body. Tensions flared in July 2007 when an Iranian
newspaper claimed Bahrain is part of Iran—that question was the subject of the 1970
U.N.-run referendum in which Bahrainis opted for independence. Still, Bahrain has
sought not to antagonize Iran and has apparently allowed Iran’s banks to establish a
presence in Bahrain’s vibrant banking sector. On March 12, 2008, the Treasury
Department sanctioned the Bahrain-based Future Bank under Executive order 13382 that
sanctions proliferation entities. Future Bank purportedly is controlled by Bank Melli.
The U.S. military ousting of Saddam Hussein benefitted Iran strategically,27 and U.S.-Iran
differences in Iraq have widened to the point where some describe the competition as a U.S.-Iran
“proxy war” inside Iraq. The Defense Department’s September 2008 “Measuring Stability” report
on Iraq said that “malign” Iranian influence in Iraq poses the most significant long-term threat to
Iraqi stability. This and the State Department terrorism report for 2007, released April 30, 2008,
complement the statements of U.S. officials that the Qods Force is providing arms (including
highly lethal “explosively forced projectiles,” EFPs, that have killed over 200 U.S. soldiers in
Iraq), training, guidance, and financing to “special groups” of Shiite militias involved in sectarian
violence and anti-U.S. activities. The New York Times reported on May 5, 2008, that Lebanese
Hezbollah militants, who are Arabs, are providing some of the training to the Iraq militants at
training camps near Tehran; in August 2008, the U.S.-led coalition arrested nine Hezbollah
operatives allegedly involved in funneling arms to Shiite militiamen. Secretary of State Rice said
in late December 2008 that the U.S. has pressure has contributed to a recently-observed lessening
of Iranian interference in Iraq.
In June 2008, Maliki visited Iran for the third time since he became Prime Minister, this time
reportedly to reassure Iran that a proposed U.S.-Iraq defense pact would not be directed against
Iran. The agreement was passed by the Iraqi parliament on November 27, 2008 and takes effect as
of January 1, 2009. The passage represented a failure by Iran to scuttle it entirely, but some
Iranian leaders have softened public opposition to the pact because the revised version says that
the United States cannot use Iraq as a base to attack other countries. An expected visit by Maliki
to Iran on/about January 1, 2009 was cancelled due to unspecified causes, but possibly because
Maliki did not want to incur Iranian criticism over the U.S.-Iraq pact.
Iran also has signed a number of agreements with Iraq on transportation, energy cooperation, free
flow of Shiite pilgrims, border security, intelligence sharing, and other cooperation; several more
27 This issue is covered in greater depth in CRS Report RS22323, Iran's Activities and Influence in Iraq, by Kenneth
agreements, including a $1 billion credit line for Iranian exports to Iraq, were signed during
Ahmadinejad’s March 2-3, 2008, visit to Iraq; implementing agreements were signed in April
The “Iraq Study Group” (Recommendations 9, 10, and 11) in its December 2006 report,
recommended U.S. dialogue with Iran but President Bush initially appeared to reject that idea.
The Administration might have later judged that its 2007 “troop surge” and other military moves
in the Gulf (extra aircraft carrier deployments) strengthened the U.S. position, and the
Administration supported a March 10, 2007, regional conference in Iraq attended by Iran and
Syria. Further regional talks on Iraq (“Expanded Neighbors of Iraq” process) were held in Egypt
during May 3-4, 2007. A November 2, 2007 ministerial on Iraq was held in Istanbul and there was
an April 22, 2008, Expanded Neighbors meeting in Kuwait. Another meeting attended by Iran and
the United States, to review the Iraq Compact, was in Sweden on May 29, 2008. No substantive
U.S.-Iran talks took place at any of these regional meetings on Iraq.
The Administration has held potentially more significant bilateral talks with Iran on the Iraq
issue. The first such meeting, in Baghdad, was on May 28, 2007; the two sides met at the home of
Prime Minister Nuri al-Maliki, who opened the meeting. According to Ambassador Crocker (the
Iranian side was represented by the Iranian Ambassador to Iraq), the two sides agreed on broad
principles for Iraq’s political evolution and stability, but the United States would judge the
dialogue by the indications, discussed above, of Iranian cooperation in stopping military supply
of Shiite militias. Another round of talks was held on July 24, 2007, resulting in an agreement to
establish a working group to discuss ways to stabilize Iraq. This group met for the first time on
August 6, 2007. Because of signs that Iran had slowed weapons flows into Iraq, another round of
talks was tentatively scheduled for December 18, 2007, but Iran repeatedly postponed the talks
because of differences over the agenda and the level of talks (Iran wants them to be at the
ambassador level). On May 5, 2008, Iran indefinitely suspended this dialogue, possibly because
Iran feels confident of its influence in Iraq.
A provision of the FY2008 defense authorization bill (P.L. 110-181) requires a report to Congress
on Iran’s interference in Iraq, but it does not authorize or recommend use of U.S. force to stop
these actions. On January 9, 2008, the Treasury Department took action against suspected Iranian
and pro-Iranian operatives in Iraq by designating four individuals and one organization as a threat
to stability in Iraq under the July 17, 2007 Executive Order 13438, which freezes the assets and
bans transactions with named individuals. The named entities, which includes a senior Qods
Forces leader, are in the tables on sanctioned entities.
Iran’s support for Palestinian militant groups has long concerned U.S. Administrations,
particularly since doing so gives Tehran an opportunity to try to obstruct Israeli-Palestinian peace
prospects. Ahmadinejad’s various statements on Israel were discussed above, although other
Iranian leaders have made similar statements in the past. In the 1990s, Khamene’i called Israel a
“cancerous tumor” and made other statements suggesting that he seeks Israel’s destruction. In
December 2001, Rafsanjani said that it would take only one Iranian nuclear bomb to destroy
Israel, whereas a similar strike against Iran by Israel would have far less impact because Iran’s
population is large. Iran has sometimes openly incited anti-Israel violence, including hosting
conferences of anti-peace process organizations (April 24, 2001, and June 2-3, 2002). During his
presidency, Khatemi refrained from inflammatory statements against Israel and conversed with
Israel’s president at the 2005 funeral of Pope John Paul II. The Iranian Foreign Ministry,
considered a bastion of moderates, has repeatedly stated that Iran’s official position is that it
would not seek to block an Israeli-Palestinian settlement but that the peace process is too
weighted toward Israel to result in a fair settlement.
The State Department report on terrorism for 2007 (mentioned above) again accuses Iran of
providing “extensive” funding, weapons, and training to Hamas, Palestinian Islamic Jihad (PIJ),
the Al Aqsa Martyr’s Brigades, and the Popular Front for the Liberation of Palestine-General
Command (PFLP-GC). All are named as foreign terrorist organizations (FTO) by the State
Department for their use of violence to undermine the Arab-Israeli peace process. Some saw
Iran’s regional policy further strengthened by Hamas’s victory in the January 25, 2006,
Palestinian legislative elections, and even more so by Hamas’s June 2007 armed takeover of the
Gaza Strip, from which it periodically launches rockets on some Israeli towns. The Hamas gains
potentially position it to block moves toward peace, and Hamas continues to oppose a two-state
solution with Israel. On December 29, 2008, Khamene’i said that Muslims worldwide were
“duty-bound” to defend Palestinians in the Gaza Strip against the Israeli bombardment against the
Hamas-run leadership there. Iran reportedly is sending humanitarian relief to Gaza as of
December 31, 2008, although the shipments could be subjected to stoppage by Israeli naval
assets. However, Hamas activists downplay Iranian influence, asserting that Iran is mostly Shiite, 28
while Hamas members are Sunni Muslims. Hamas was reputed to receive about 10% of its
budget in the early 1990s from Iran, although since then Hamas has cultivated funding from
wealthy Persian Gulf donors and supporters in Europe and elsewhere.
Iran again demonstrated its hard line on the peace process when it criticized the participation of
Iran’s ally, Syria, at the major U.S.-sponsored Middle East peace meeting in Annapolis, Maryland
on November 27, 2007. The meeting, in part, represented a U.S. attempt to isolate Iran and other
hardline opponents of an Israeli-Palestinian peace agreement.
Iran has maintained a close relationship with Hezbollah since the group was formed in 1982 by
Lebanese Shiite clerics who were sympathetic to Iran’s Islamic revolution and belonged to the
Lebanese Da’wa Party. Hezbollah was responsible for several acts of anti-U.S. and anti-Israel 29
terrorism in the 1980s and 1990s. Hezbollah’s attacks on Israeli forces in southern Lebanon
contributed to an Israeli withdrawal in May 2000, but, despite United Nations certification of
Israel’s withdrawal, Hezbollah maintained military forces along the border. Hezbollah continued
to remain armed and outside Lebanese government control, despite U.N. Security Council
Resolution 1559 (September 2, 2004) that required its dismantlement. In refusing to disarm,
Hezbollah says it was resisting Israeli occupation of small tracts of Lebanese territory (Shib’a
28 CNN “Late Edition” interview with Hamas co-founder Mahmoud Zahar, January 29, 2006.
29 Hezbollah is believed responsible for the October 1983 bombing of the U.S. Marine barracks in Beirut, as well as
attacks on U.S. Embassy Beirut facilities in April 1983 and September 1984, and for the hijacking of TWA Flight 847
in June 1985 in which Navy diver Robert Stetham was killed. Hezbollah is also believed to have committed the March
17, 1992, bombing of Israel’s embassy in that city, which killed 29 people. Its last known terrorist attack outside
Lebanon was the July 18, 1994, bombing of a Jewish community center in Buenos Aires, which killed 85. On October
31, 2006, Argentine prosecutors asked a federal judge to seek the arrest of Rafsanjani, former Intelligence Minister Ali
Fallahian, former Foreign Minister Ali Akbar Velayati, and four other Iranian officials for this attack.
Neither Israel nor the United States opposed Hezbollah’s progressively increased participation in
peaceful Lebanese politics. In March 2005, President Bush indicated that the United States might
accept Hezbollah as a legitimate political force in Lebanon if it disarms. In the Lebanese
parliamentary elections of May—June 2005, Hezbollah expanded its presence in the parliament
to 14 out of the 128-seat body, and it gained two cabinet seats. As a matter of policy, the United
States does not meet with any Hezbollah members, even those in the parliament or cabinet.
Hezbollah is a designated FTO, but that designation bars financial transactions by the group and
does not specifically ban meeting with members of the group.
Whether or not Iran instigated Lebanese Hezbollah to provoke the July August 2006 crisis, Iran
has long been its major arms supplier. Hezbollah fired Iranian-supplied rockets on Israel’s
northern towns during the fighting. As part of a package of aid to Hezbollah said to exceed $100
million per year, reported Iranian shipments to Hezbollah over the past five years have included
the “Fajr” (dawn) and Khaybar series of rockets that were fired at the Israeli city of Haifa (30
miles from the border), and over 10,000 Katyusha rockets that were fired at cities within 20 miles 30
of the Lebanese border. Iran also supplied Hezbollah with an unmanned aerial vehicle (UAV),
the Mirsad, that Hezbollah briefly flew over the Israel-Lebanon border on November 7, 2004, and
April 11, 2005; at least three were shot down by Israel during the conflict. On July 14, 2006,
Hezbollah apparently hit an Israeli warship with a C-802 sea-skimming missile probably provided
by Iran. (See above for information on Iran’s acquisition of that weapon from China.) Iran also
purportedly provided advice during the conflict; about 50 Revolutionary Guards Qods Force
personnel were in Lebanon (down from about 2,000 when Hezbollah was formed, according to a
Washington Post report of April 13, 2005) when the conflict began; that number might have
increased during the conflict to help Hezbollah operate the Iranian-supplied weaponry.
Even though Hezbollah reduced its overt military presence in southern Lebanon in accordance
with the conflict-related U.N. Security Council Resolution 1701 (July 31, 2006), Hezbollah was
perceived as a victor in the war for holding out against heavy Israeli air-strikes and some ground
action. The outcome boosted Hezbollah’s political leverage. Iran supported Hezbollah’s demands
and provided it with leverage by resupplying it with rockets, reportedly increasing its stockpile to 31
27,000 rockets, more than double what Hezbollah had at the start of the 2006 war. Among the
deliveries are 500 Iranian-made “Zelzal” (Earthquake) missiles with a range of 186 miles, enough
to reach Tel Aviv from south Lebanon. Iran also has made at least $150 million available for
Hezbollah to distribute to Lebanese citizens (mostly Shiite supporters of Hezbollah) whose homes 32
were damaged in the Israeli military campaign.
Perhaps emboldened by the supplies, Hezbollah, perhaps for the first time, used its military wing
for internal Lebanese political purposes. In mid May 2008, Hezbollah fighters took over large
parts of Beirut in response to an attempt by the U.S. and Saudi-backed Lebanese government to
curb Hezbollah’s media and commercial operations. The success of its fighters contributed to a
Qatar-brokered settlement on May 21, 2008, in which the government rescinded its actions
against Hezbollah and agreed to give Hezbollah and its allies enough seats in a new cabinet to be
able to veto government decisions. Hezbollah agreed to the compromise candidate of Lebanese
Army commander Michel Suleiman to become the new president; he has been sworn in. The new
30“Israel’s Peres Says Iran Arming Hizbollah.” Reuters, February 4, 2002.
31 Rotella, Sebastian. “In Lebanon, Hezbollah Arms Stockpile Bigger, Deadlier.” Los Angeles Times, May 4, 2008.
32 Shadid, Anthony. “Armed With Iran’s Millions, Fighters Turn to Rebuilding.” Washington Post, August 16, 2006.
cabinet, in which Hezbollah has one cabinet seat but its allies have seven others, giving
Hezbollah its long-sought veto power, was appointed in June 2008.
Prior to the 2006 conflict, in the 109th Congress, two resolutions (H.Res. 101 and S.Res. 82)
passed their respective chambers. They urged the EU to classify Hezbollah as a terrorist
organization; S.Res. 82 called on Hezbollah to disband its militia as called for in U.N. Security
Council Resolution 1559 (September 2, 2004).
Iran’s policy in Central Asia has thus far emphasized Iran’s rights to Caspian Sea resources,
particularly against Azerbaijan. That country’s population, like Iran’s, is mostly Shiite Muslim,
but its leadership is secular. In addition, Azerbaijan is ethnically Turkic, and Iran fears that
Azerbaijan nationalists might stoke separatism among Iran’s large Azeri Turkic population, which
demonstrated some unrest in 2006. These factors could explain why Iran has generally tilted
toward Armenia, which is Christian, even though it has been at odds with Azerbaijan over
territory and control of ethnic Armenians. In July 2001, Iranian warships and combat aircraft
threatened a British Petroleum (BP) ship on contract to Azerbaijan out of an area of the Caspian
that Iran considers its own. The United States called that action provocative, and it is engaged in
border security and defense cooperation with Azerbaijan directed against Iran (and Russia). The
United States successfully backed construction of the Baku-Tblisi-Ceyhan oil pipeline, intended
in part to provide alternatives to Iranian oil. Along with India and Pakistan, Iran has been given
observer status at the Central Asian security grouping called the Shanghai Cooperation
Organization (SCO – Russia, China, Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan). In
April 2008, Iran applied for full membership in the organization, which opposes a long-term U.S.
presence in Central Asia.
Iran is trying to restore some of its traditional sway in eastern, central, and northern Afghanistan
where Persian-speaking Afghans predominate. Iran long opposed the regime of the Taliban in
Afghanistan on the grounds that it oppressed Shiite Muslim and other Persian-speaking
minorities. Iran nearly launched a military attack against the Taliban in September 1998 after
Taliban fighters captured and killed nine Iranian diplomats based in northern Afghanistan, and
Iran provided military aid to the Northern Alliance factions. During the major combat phase of
the post-September 11 U.S.-led war in Afghanistan, Iran offered search and rescue of any downed
service-persons and the trans-shipment to Afghanistan of humanitarian assistance. In March 2002,
Iran expelled Gulbuddin Hikmatyar, an Afghan militant leader; it froze his Iran-based assets in
After the Taliban’s fall, Iran aided minority factions still referred to as the “Northern Alliance”
that were prominent in the post-Taliban governing coalition. After 2004, Iran’s influence waned
somewhat as Northern Alliance figures were marginalized in Afghan politics. To compensate, Iran
has funded projects in Afghanistan that total about $500 million since 2001 (close to a pledged
amount in international donors conferences), mostly in neighboring Herat. Iranian-funded Shiite
theological seminaries are being built in Kabul and elsewhere, perhaps an indication of Iran’s
33 See CRS Report RL30588, Afghanistan: Post-War Governance, Security, and U.S. Policy, by Kenneth Katzman.
continuing efforts to support Afghanistan’s Shiite (Hazara) minority, and Iran has funded several
media outlets in Afghanistan catering to Shiites.
There are indications that Iran will work even with Sunni radical movements if doing so provides
Iran with leverage against the United States. The State Department terrorism report for 2007
accuses the Qods Force of supplying various munitions, including 107mm rockets, to Taliban and
other militants in Afghanistan; some Taliban commanders openly say they are obtaining Iranian
weapons. On April 17, 2007, U.S. military personnel in Afghanistan captured a shipment of
Iranian weapons that purportedly was bound for Taliban fighters. On June 6, 2007 and again on
September 6, 2007, NATO officers said they directly intercepted Iranian shipments of heavy
arms, C4 explosives, and advanced roadside bombs (explosively forced projectiles, or EFPs, such
as those found in Iraq) to Taliban fighters in Afghanistan. U.S. commanders in Afghanistan
maintain that the intercepted shipments are large enough that the Iranian government would have
to have known about them.
Iran is not a natural ally of Al Qaeda, largely because Al Qaeda is an orthodox Sunni Muslim
organization. The 9/11 Commission report said several of the September 11 hijackers and other
plotters, possibly with official help, might have transited Iran, but the report does not assert that
the Iranian government cooperated with or knew about the plot. Another bin Laden ally, Abu
Musab al-Zarqawi, killed by U.S. forces in Iraq on June 7, 2006, reportedly transited Iran after
the September 11 attacks and took root in Iraq, becoming an insurgent leader there.
However, Iran might see possibilities for tactical alliance with Al Qaeda, and U.S. officials have
said since January 2002 that Iran has not prosecuted or extradited senior Al Qaeda operatives
(spokesman Sulayman Abu Ghaith, top operative Sayf Al Adl, and Osama bin Laden’s son, 3435
Saad) who are believed to be in Iran. U.S. officials blamed these figures for the May 12, 2003,
bombings in Riyadh, Saudi Arabia against four expatriate housing complexes on these operatives, 36
saying they have been able to contact associates outside Iran. In testimony before the Senate
Committee on Foreign Relations on March 29, 2007, then Undersecretary of State Nicholas
Burns accused Iran of violating U.N. Security Council Resolutions 1267 and 1373, which require
sharing information on Al Qaeda.
Iran asserted on July 23, 2003, that it had “in custody” senior Al Qaeda figures. However, if that
is not their status, the explanation could be that hardliners in Iran might want to use Al Qaeda
activists as leverage against the United States and its allies. Some say Iran might want to
exchange them for a U.S. hand-over of People’s Mojahedin activists under U.S. control in Iraq.
Possibly attempting to show that it is an adversary and not an ally of Al Qaeda, on July 16, 2005, 37
Iran’s Intelligence Minister said that 200 Al Qaeda members are in Iranian jails.
34 Gertz, Bill. “Al Qaeda Terrorists Being Held by Iran.” Washington Times, July 24, 2003.
35 Keto, Alex. “White House Reiterates Iran Is Harboring Al Qaeda.” Dow Jones Newswires, May 19, 2003.
36 Gertz, Bill. “CIA Points to Continuing Iran Tie to Al Qaeda.” Washington Times, July 23, 2004.
37 “Tehran Pledges to Crack Down on Militants.” Associated Press, July 18, 2005.
A growing concern has been Iran’s developing relations with countries and leaders in Latin
America considered adversaries of the United States, particularly Cuba and Venezuela’s Hugo
Chavez. In February 2006, Secretary Rice referred to Venezuela and Cuba as “sidekicks” of Iran
because of their votes in the IAEA against referring Iran to the Security Council. On October 30,
2007, Secretary of Homeland Security Michael Chertoff said that Iran’s relationship with
Venezuela is an emerging threat because it represents a “marriage” of Iran’s extremist ideology
with “those who have anti-American views.” Chavez has visited Iran on several occasions,
offering Iran additional gasoline during Iran’s fuel shortages in 2007 as well as joint oil and gas
projects. The two countries have established direct air links, and 400 Iranian engineers have
reportedly been sent to Venezuela to work on infrastructure projects there. The State Department
terrorism report for 2006 said that Cuba maintains “close relationships with other state sponsors
of terrorism such as Iran.” In October 2007, Uruguayan parliamentary investigators said they
blocked an attempt by the government to buy arms from Iran, using a diversion through 38
Venezuela. Iran is also trying to extend its influence in Latin America by offering Bolivia $1
billion in aid and investment, according to an Associated Press report of November 23, 2008.
Iran and India have cultivated good relations with each other in order to enable each to pursue its
own interests and avoid mutual conflict. The two backed similar anti-Taliban factions in
Afghanistan during 1996-2001 and have a number of mutual economic and even military-to-
military relationships and projects, discussed further in CRS Report RS22486, India-Iran
Relations and U.S. Interests, by K. Alan Kronstadt and Kenneth Katzman: India-Iran Relations
and U.S. Interests, by K. Alan Kronstadt and Kenneth Katzman. One aspect of the relationship
involves not only the potential building of a natural gas pipeline from Iran, through Pakistan, to
India, but also the supplies of gasoline to Iran. A key supplier is Reliance Industries Ltd., which
by some accounts supplies up to 40% of Iran’s imports of gasoline. In December 2008, some
Members of Congress expressed opposition to a decision by the Export-Import Bank to provide
up to $900 million in loan guarantees to Reliance, because of its relationship with Iran. Another
source of U.S. concern has been visits to India by some Iranian naval personnel.
The February 11, 1979 fall of the Shah of Iran, a key U.S. ally, opened the long and deep rift in
U.S.-Iranian relations. On November 4, 1979, radical “students” seized the U.S. Embassy in
Tehran and held its diplomats hostage until minutes after President Reagan’s inauguration on
January 20, 1981. The United States broke relations with Iran on April 7, 1980 (just after the
failed U.S. military attempt to rescue the hostages) and the two countries have had only limited 39
official contact since. The United States tilted toward Iraq in the 1980-1988 Iran-Iraq war,
including U.S. diplomatic attempts to block conventional arms sales to Iran, providing battlefield
38 Arostegui, Martin. “Uruguay Caught Buying Iran Arms.” Washington Times, October 12, 2007.
39 An exception was the abortive 1985-1986 clandestine arms supply relationship with Iran in exchange for some
American hostages held by Hezbollah in Lebanon (the so-called “Iran-Contra Affair”). Iran has an interest section in
Washington D.C. under the auspices of the Embassy of Pakistan; it is staffed by Iranian-Americans. The U.S. interest
section in Tehran has no American personnel; it is under the Embassy of Switzerland.
intelligence to Iraq40 and, during 1987-1988, direct skirmishes with Iranian naval elements in the
course of U.S. efforts to protect international oil shipments in the Gulf from Iranian mines and
other attacks. In one battle on April 18, 1988 (“Operation Praying Mantis”), Iran lost about a
quarter of its larger naval ships in a one-day engagement with the U.S. Navy, including one
frigate sunk and another badly damaged. Iran strongly disputed the U.S. assertion that the July 3,
1988, U.S. shoot-down of Iran Air Flight 655 by the U.S.S. Vincennes over the Persian Gulf
(bound for Dubai, UAE) was an accident.
In his January 1989 inaugural speech, President George H.W. Bush laid the groundwork for a
rapprochement, saying that, in relations with Iran, “goodwill begets goodwill,” implying better
relations if Iran helped obtain the release of U.S. hostages held by Hezbollah in Lebanon. Iran
reportedly did assist in obtaining their releases, which was completed in December 1991, but no
thaw followed, possibly because Iran continued to back groups opposed to the U.S.-sponsored
Middle East peace process, a major U.S. priority.
Upon taking office in 1993, the Clinton Administration moved to further isolate Iran as part of a
strategy of “dual containment” of Iran and Iraq. In 1995 and 1996, the Clinton Administration and
Congress added sanctions on Iran in response to growing concerns about Iran’s weapons of mass
destruction, its support for terrorist groups, and its efforts to subvert the Arab-Israeli peace
process. The election of Khatemi in May 1997 precipitated a U.S. shift toward engagement; the
Clinton Administration offered Iran official dialogue, with no substantive preconditions. In
January 1998, Khatemi publicly agreed to “people-to-people” U.S.-Iran exchanges as part of his
push for “dialogue of civilizations, but he ruled out direct talks. In a June 1998 speech, then
Secretary of State Albright stepped up the U.S. outreach effort by calling for mutual confidence
building measures that could lead to a “road map” for normalization of relations. Encouraged by
the reformist victory in Iran’s March 2000 parliamentary elections, Secretary Albright, in a March
17, 2000, speech, acknowledged past U.S. meddling in Iran, announcing some minor easing of
the U.S. trade ban with Iran, and promised to try to resolve outstanding claims disputes. In
September 2000 U.N. “Millennium Summit” meetings, Albright and President Clinton sent a
positive signal to Iran by attending Khatemi’s speeches.
It has been Bush Administration policy to prevent Iran from obtaining a nuclear weapons
capability, believing that a nuclear Iran would be even more assertive in attempting to undermine
U.S. objectives in the Middle East than it already is. The Bush Administration has undertaken
multi-faceted efforts to limit Iran’s strategic capabilities through international diplomacy and
sanctions—both international sanctions as well as sanctions enforced by its allies, outside
Security Council mandate. At the same time, the Administration has engaged in bilateral
diplomacy with Iran on specific priority issues, such as stabilizing Afghanistan and Iraq. The
policy framework is supported by maintenance of a large U.S. conventional military capabilities
in the Persian Gulf and through U.S. alliances with Iran’s neighbors.
At times, the Bush Administration has considered or, to some extent, pursued harder line options.
Some Administration officials, reportedly led by Vice President Cheney, believe that existing
measures will not curb the threat posed by Iran and that policy should focus on possible military
40 Sciolino, Elaine. The Outlaw State: Saddam Hussein’s Quest for Power and the Gulf Crisis. New York: John Wiley
and Sons, 1991. p. 168.
confrontation with Iran or on U.S. efforts to change Iran’s regime.41 Legislation in the 110th
Congress indicated support for increasing U.S. sanctions and for steps to compel other foreign 42
companies to curtail their business dealings with Iran.
The Bush Administration policy of preventing a nuclear Iran is apparently shared by President-
elect Barack Obama, according to his post-election statements. On the other hand, he and his
cabinet nominees have not indicated an affinity for military or regime-change options to
accomplish those goals, but rather for stepped up engagement with Iran and with U.S. partners to
present Iran with clear alternatives to its policies. Some commentators express support for a view
articulated by former CENTCOM Commander John Abizaid who asserted in 2006 that the United
States “can live with” a nuclear Iran.
A key question in Congress and among U.S. allies and other countries has been whether or not to
use military action to delay or halt Iran’s nuclear program. Although some Members publicly
oppose most forms of military action against Iran, others fear that diplomacy and sanctions might
not succeed and that preventing Iran from acquiring a working nuclear device is paramount. In
discussing possible military options against Iran’s nuclear facilities, President Bush has 43
repeatedly maintained that “all options are on the table.” At the same time, he said during his
trip to Europe in June 2008 that he had left in place for the next Administration the “multilateral
[diplomatic] framework” discussed above, suggesting that he is not leaning toward military action
against Iran before leaving office. Comments in July 2008 by Joint Chiefs Chairman Admiral
Mike Mullen to the effect that the U.S. military “does not need a third war” in the region also
indicate little Administration inclination to preventively strike Iran. A U.S. ground invasion to
remove Iran’s regime has not, at any time, appeared to be under serious consideration in part
because of the heavy strains on U.S. forces from the Afghanistan and Iraq conflicts.
Proponents of U.S. air and missile strikes against suspected nuclear sites argue that military
action could set back Iran’s nuclear program because there are only a limited number of key
targets, and these targets are known to U.S. planners and could be struck, even those that are 44
hardened or buried. Estimates of the target set range from 400 nuclear and other WMD-related
targets, to potentially a few thousand targets whose destruction would cripple Iran’s economic
and military infrastructure. At least 75 targets are underground or hardened. Those who take an
expansive view of the target set argue that the United States would need to reduce Iran’s potential
for retaliation by striking not only nuclear facilities but also Iran’s conventional military,
particularly its small ships and coastal missiles.
41 Cooper, Helene and David Sanger. “Strategy on Iran Stirs New Debate at White House.” New York Times, June 16,
42 The FY2007 defense authorization law (P.L. 109-364) called for a report by the Administration on all aspects of U.S.
policy and objectives on Iran (and required the DNI to prepare a national intelligence estimate on Iran, which was
released on December 3, 2007 as discussed above).
43 Fletcher, Michael and Keith Richburg. “Bush Tries to Allay E.U. Worry Over Iran.” Washington Post, February 23,
44 For an extended discussion of U.S. air strike options on Iran, see Rogers, Paul. Iran: Consequences Of a War. Oxford
Research Group, February 2006.
Still others argue that there are military options available that do not involve air or missile strikes.
Some say that a naval embargo or related embargo is possible that could pressure Iran into
reconsidering its stand on the nuclear issue. Such action is “demanded” in H.Con.Res. 362 (see
more on this bill below). Others say that the imposition of a “no-fly zone” over Iran might also
serve that purpose. Either action could still be considered acts of war, and could escalate into
Most U.S. allies in Europe, not to mention Russia and China, oppose military action. These states
tend to agree with experts who maintain that the United States is not necessarily aware of or
militarily able to reach all relevant sites; other opponents believe any benefits would be minor, or
only temporary, and that the costs of a strike are too high. Some believe that a U.S. strike would
cause the Iranian public to rally around Iran’s regime, setting back U.S. efforts to promote change
within Iran. On the other hand, some European and other diplomats say that France and Britain
might back or even join a military strike if Iran were to begin an all-out drive toward a nuclear
Israeli officials view a nuclear armed Iran as an existential threat and have repeatedly refused to
rule out the possibility that Israel might strike Iran’s nuclear infrastructure. Speculation about this
possibility increased on June 7, 2008, when Israeli deputy prime minister Shaul Mofaz said that
an attack on Iran is becoming “unavoidable” because it continues to refuse to curb its nuclear
program. Speculation increased further in mid-June 2008 when Israeli officials confirmed reports
that Israel had practiced a long range strike such as that which would be required to hit Iranian
nuclear sites. Although Israeli strategists say this might be a viable option, several experts doubt
that Israel has the capability to make such action sufficiently effective to justify the risks. U.S.
military leaders are said by observers to oppose an Israeli strike because such would inevitably
draw the United States into a conflict with Iran yet without the degree of planning, preparation, or
capability that would make a similar U.S. action a success.
Some officials and experts warn that a U.S. military strike on Iran could provoke unconventional
retaliation, using the equipment discussed in the section on “conventional military capabilities,”
that could be difficult to counter. At the very least, such conflict is likely to raise world oil prices
significantly out of fear of an extended supply disruption. Others say such action would cause
Iran to withdraw from the NPT and refuse any IAEA inspections. Other possibilities include
firing missiles at Israel—and Iran’s July 2008 missile tests could have been intended to
demonstrate this retaliatory capability—or directing Lebanese Hezbollah or Hamas to fire rockets
Iran has acquired a structure and doctrine for unconventional warfare that partly compensates for
its conventional weakness. Then CENTCOM commander Gen. John Abizaid said in March 2006
that the Revolutionary Guard Navy, through its basing and force structure, is designed to give
Iran a capability to “internationalize” a crisis in the Strait of Hormuz. On January 30, 2007, his
replacement at CENTCOM, Admiral William Fallon, said that “Based on my read of their
military hardware acquisitions and development of tactics ... [the Iranians] are posturing
themselves with the capability to attempt to deny us the ability to operate in [the Strait of
45 See also, Washington Institute for Near East Policy. The Last Resort: Consequences of Preventive Military Action
Against Iran, by Patrick Clawson and Michael Eisenstadt. June 2008.
Hormuz].” (General David Petraeus is scheduled to assume CENTCOM command in September
2008.) During a visit to the Gulf, Vice President Cheney warned Iran on May 11, 2007, not to try
to restrict sea traffic, saying “[The United States] will keep the sea lanes open.” In July 2008 Iran
again claimed it could close the Strait in a crisis but the then commander of U.S. naval forces in
the Gulf, Admiral Kevin Cosgriff, backed by Joint Chiefs Chairman Mullen, said U.S. forces
could quickly reopen the waterway.
Iran has nonetheless tried to demonstrate that it is a capable force in the Gulf. It has conducted at
least five major military exercises since August 2006, including exercises simultaneous with U.S.
exercises in the Gulf in March 2007. Iran has repeatedly stated it is capable of closing the Strait
of Hormuz and would do so, if attacked. In early 2007, Iranian ships were widening their patrols,
coming ever closer to key Iraqi oil platforms in the Gulf. In February 2007, Iran seized 15 British
sailors that Iran said were patrolling in Iran’s waters, although Britain says they were in Iraqi
waters performing coalition-related searches. They were held until April 5, 2007. On January 6,
2008, the U.S. Navy reported a confrontation in which five IRGC Navy small boats approached
three U.S. Navy ships to the point where they manned battle stations. The IRGC boats veered off
before any shots were fired, but the Bush Administration called it a “provocative act” and filed a
formal protest with Tehran. The IRGC could have been testing U.S. rules of engagement
following the U.S. sanctions imposed on the IRGC and its subunits. Another incident occurred in
April 2008 when a ship under U.S. contract fired a shot to warn off Iranian boats in the Gulf. In
October 2008, Iran announced it is building several new naval bases along the southern coast,
including at Jask, indicating enhanced capability to threaten the entry and exit to the Strait of
If there were a conflict in the Gulf, some fear that Iran might try to use large numbers of boats to
attack U.S. ships, or to lay mines, in the Strait. In April 2006, Iran conducted naval maneuvers,
including test firings of what Iran claims are underwater torpedos that can avoid detection,
presumably for use against U.S. ships in the Gulf, and a surface-to-sea radar-evading missile
launched from helicopters or combat aircraft. U.S. military officials said the claims might be an
exaggeration. The Gulf states fear that Iran will fire coastal-based cruise missiles at their oil
loading or other installations across the Gulf, as happened during the Iran-Iraq war.
The Bush Administration has tried to implement policies that strengthen U.S. regional allies and
thereby contain Iran strategically. An assertive military containment component of policy was
signaled in the January 10, 2007, Iraq “troop surge” statement by President Bush. In that
statement, he announced that the United States was sending a second U.S. aircraft carrier group 46
into the Gulf, extending deployment of Patriot anti-missile batteries in the Gulf, reportedly in
Kuwait and Qatar, and increasing intelligence sharing with the Gulf states. Secretary of Defense
Gates said at the time that he saw the U.S. buildup as a means of building leverage against Iran
that could be useful in bolstering U.S. diplomacy. An April 2008 deployment of a second carrier
group to the Gulf was, according to Secretary Gates, a “reminder” to Iran of U.S. capabilities in
46 Shanker, Thom. “U.S. and Britain to Add Ships to Persian Gulf in Signal to Iran,” New York Times, December 21,
The U.S. Gulf deployments build on a containment strategy inaugurated in mid-2006 by the State
Department, primarily the Bureau of Political-Military Affairs (“Pol-Mil”). The State Department
effort represented an effort to revive some of the U.S.-Gulf state defense cooperation that had
begun during the Clinton Administration but had since languished as the United States focused on
the post-September 11 wars in Afghanistan and Iraq. In a December 8, 2007 speech in Bahrain,
Secretary Gates said the “Gulf Security Dialogue” has six key pillars, including:
• Defense cooperation (with the Gulf states).
• Developing a shared assessment and agenda on Iraq.
• Regional stability, especially with respect to Iran.
• Energy infrastructure security.
One goal of the initiative is on boosting Gulf state capabilities fueled speculation about major
new weapons sales to the GCC states. The emphasis of the sales is to improve Gulf state missile
defense capabilities, for example by sales of the upgraded Patriot Advanced Capability-3 (PAC-47
3), as well as to improve border and maritime security equipment through sales of combat
littoral ships, radar systems, and communications gear. The initial sales, including PAC-3 related
sales to UAE and Kuwait, and Joint Direct Attack Munitions (JDAMs) to Saudi Arabia and UAE
were notified to Congress in December 2007 and January 2008. A sale to UAE of the very
advanced “THAAD” (Theater High Altitude Area Defense) anti-missile system is planned,
according to press reports in September 2008.
A decision to take military action might raise the question of presidential authorities. In the 109th
Congress, H.Con.Res. 391, introduced on April 26, 2006, called on the President to not initiate
military action against Iran without first obtaining authorization from Congress. A similar bill, th
H.Con.Res. 33, was introduced in the 110 Congress. Other bills requiring specific congressional
authorization for use of force against Iran (or prohibiting U.S. funds for that purpose) include
S.Res. 356, H.J.Res. 14, H.R. 3119, S.Con.Res. 13, S. 759, and H.R. 770. An amendment to H.R.
1585, the National Defense Authorization Act for FY2008, was defeated 136 to 288. A provision
that sought to bar the Administration from taking military action against Iran without
congressional authorization was taken out of an early draft of an FY2007 supplemental
appropriation (H.R. 1591) to fund additional costs for Iraq and Afghanistan combat (which was
vetoed on May 1, 2007). Other provisions, including requiring briefings to Congress about
military contingency planning related to Iran’s nuclear program, is in the House-passed FY2009
defense authorization bill (H.R. 5658).
A major feature of policy for part of 2006—promotion of “regime change”—later appeared to
recede. Senior U.S. officials say that the democracy promotion programs discussed below are
47 “New Persian Gulf Security Effort Expected to Fuel Arms Sales in FY-07.” Inside the Pentagon, November 9, 2006.
intended to promote political evolution in Iran and change regime behavior, not to overthrow the
regime. Still, several high-ranking U.S. officials, purportedly including Vice President Cheney,
maintained that only a change of regime would permanently reduce the threat posed by Iran. A
few accounts, such as “Preparing the Battlefield” by Seymour Hersh in the New Yorker (July 7
and 14, 2008) say that President Bush authorized U.S. covert operations to destabilize the 48
regime, involving assistance to some of the ethnic-based armed groups discussed above. CRS
has no way to confirm assertions in the Hersh article that up to $400 million was appropriated and
used to aid the groups mentioned.
There has been some support in the United States for regime change since the 1979 Islamic
revolution; the United States provided some funding to anti-regime groups, mainly pro-49
monarchists, during the 1980s. The Administration’s attraction to this option became apparent
after the September 11, 2001, attacks, when President Bush’s described Iran as part of an “axis of
evil” in his January 2002 State of the Union message. President Bush’s second inaugural address
(January 20, 2005) and his State of the Union messages of February 2, 2005, and January 31,
our nation hopes one day to be the closest of friends with a free and democratic Iran.” Indications
of affinity for this option include increased public criticism of the regime’s human rights record
as well as the funding of Iranian pro-democracy activists. However, the Administration shifted
away from this option as a strategy employing multilateral sanctions and diplomacy took form in
President-elect Obama has not expressed support for a regime change option.
Legislation in the 109th Congress exemplified the preference of some Members for regime change th
in Iran by authorizing funding for democracy promotion, among other provisions. In the 109
Congress, H.R. 282 passed the House on April 26, 2006, by a vote of 397-21. A companion, S.
333, was introduced in the Senate. The Administration supported the democracy-promotion
sections of these bills. Major provisions were included in H.R. 6198, which was introduced on
September 27, 2006, passed by both chambers, and signed September 30, 2006 (P.L. 109-293).
Entitled the Iran Freedom Support Act, it authorizes funds (no specific dollar amount) for Iran
democracy promotion and modifies the Iran Sanctions Act.
Many question the prospects of U.S.-led Iran regime change through democracy promotion or
other means, short of all-out-U.S. military invasion, because of the weakness of opposition
groups. Providing overt or covert support to anti-regime organizations, in the view of many
experts, would not make them materially more viable or attractive to Iranians. The regime
purportedly also conducts extensive regime surveillance of democracy activists or other internal
dissidents. Iran has been arresting civil society activists by alleging they are accepting the U.S.
democracy promotion funds, while others have refused to participate in U.S.-funded programs,
fearing arrest. The highest profile such arrest came in May 2007 – Iranian-American scholar
Haleh Esfandiari, of the Woodrow Wilson Center in Washington, DC, was subsequently
48 Ross, Brian and Richard Esposito. Bush Authorizes New Covert Action Against Iran. http://blogs.abcnews.com/
49 CRS conversations with U.S. officials responsible for Iran policy. 1980-1990. After a period of suspension of such
assistance, in 1995, the Clinton Administration accepted a House-Senate conference agreement to include $18-$20
million in funding authority for covert operations against Iran in the FY1996 Intelligence Authorization Act (H.R.
1655, P.L. 104-93), according to a Washington Post report of December 22, 1995. The Clinton Administration
reportedly focused the covert aid on changing the regime’s behavior, rather than its overthrow.
imprisoned for several months. 50 Others argue that reformist groups such as students, women,
labor leaders, intellectuals, and others might be able to galvanize regime change unexpectedly
despite the repression; all of these groups have conducted various small protests during the past
The State Department is the implementer of U.S. democracy promotion programs. In 2006, the
Administration began increasing the presence of Persian-speaking U.S. diplomats in U.S.
diplomatic missions around Iran, in part to help identify and facilitate Iranian participate in U.S.
democracy-promotion programs. The Iran unit at the U.S. consulate in Dubai has been enlarged
significantly, and new “Iran-watcher” positions have been added to U.S. diplomatic facilities in
Baku, Azerbaijan; Istanbul, Turkey; Frankfurt, Germany; London; and Ashkabad, Turkmenistan, 51
all of which have large expatriate Iranian populations and/or proximity to Iran. An enlarged
(six-person) “Office of Iran Affairs” has been formed at State Department, and it is reportedly
engaging in contacts with U.S.-based exile groups such as those discussed earlier. The State
Department has used funds provided in recent appropriations to support pro-democracy programs
run by 26 organizations based in the United States in Europe; the Department refuses to name
grantees for security reasons. Part of the program is to promote people-to-people exchanges
which might help alter the image of the United States in Iran; to date the State Department has
sponsored exchanges with about 150 Iranian academics, professionals, athletes, artists, and
medical professionals. The Department has also formed a Persian-language website. Iran asserts
that funding democracy promotion represents a violation of the 1981 “Algiers Accords” that
settled the Iran hostage crisis and provide for non-interference in each others’ internal affairs.
As shown below, $67 million has been appropriated for Iran democracy promotion ($19.6 million
through DRL and $48.6 million through the Bureau of Near Eastern Affairs/USAID). Of that, as
of October 2008, $42.7 million has been obligated, and $20.8 million disbursed. Additional funds,
discussed in the chart below, have been appropriated for cultural exchanges, public diplomacy,
and broadcasting to Iran.
Table 8. Iran Democracy Promotion Funding
FY2004 Foreign operations appropriation (P.L. 108-199) earmarked $1.5 million for “educational, humanitarian
and non-governmental organizations and individuals inside Iran to support the advancement of democracy
and human rights in Iran.” The State Department Bureau of Democracy and Labor (DRL) gave $1 million
to the IHDC organization, see above; $500,000 to National Endowment for Democracy (NED).
FY2005 $3 million from FY2005 foreign aid appropriation (P.L. 108-447) for democracy promotion. Priority areas:
political party development, media development, labor rights, civil society promotion, and human rights.
FY2006 $11.15 for democracy promotion from regular FY2006 foreign aid appropriation (P.L. 109-102). $4.15
regular million administered by DRL and $7 million for the Bureau of Near Eastern Affairs.
50 Three other Iranian Americans were arrested and accused by the Intelligence Ministry of actions contrary to national
security in May 2007: U.S. funded broadcast (Radio Farda) journalist Parnaz Azima (who was not in jail but was not
allowed to leave Iran); Kian Tajbacksh of the Open Society Institute funded by George Soros; and businessman and
peace activist Ali Shakeri. Several congressional resolutions called on Iran to release Esfandiari (S.Res. 214, agreed to
by the Senate on May 24; H.Res. 430, passed by the House on June 5; and S.Res. 199). All were released by October
51 Stockman, Farah. “‘Long Struggle’ With Iran Seen Ahead.” Boston Globe, March 9, 2006.
FY2004 Foreign operations appropriation (P.L. 108-199) earmarked $1.5 million for “educational, humanitarian
and non-governmental organizations and individuals inside Iran to support the advancement of democracy
and human rights in Iran.” The State Department Bureau of Democracy and Labor (DRL) gave $1 million
to the IHDC organization, see above; $500,000 to National Endowment for Democracy (NED).
FY2006 Total of $66.1 million (of $75 million requested) from FY2006 supplemental (P.L. 109-234): $20 million
supp. for democracy promotion ($5 million above request); $5 million for public diplomacy directed at the
Iranian population (amount requested); $5 million for cultural exchanges (amount requested); and $36.1
million for Voice of America-TV and “Radio Farda” broadcasting ($13.9 million less than request). Of all
FY2006 funds, the State Department said on June 4, 2007 that $16.05 million was obligated for democracy
promotion programs, as was $1.77 million for public diplomacy and $2.22 million for cultural exchanges
(bringing Iranian professionals and language teachers to the United States). Broadcasting funds provided
through the Broadcasting Board of Governors; began under Radio Free Europe/Radio Liberty (RFE/RL), in 52
partnership with the VOA, in October 1998. Farda (“Tomorrow” in Farsi) received $14.7 million of
FY2006 funds; now broadcasts 24 hours/day. VOA Persian services (radio and TV) combined cost about
$10 million per year. VOA-TV began on July 3, 2003, and now is broadcasting to Iran 12 hours a day.
FY2007 FY2007 continuing resolution provided $6.55 million for Iran (and Syria) to be administered through DRL.
$3.04 million was used for Iran. No funds were requested.
FY2008 $60 million (of $75 million requested) is contained in Consolidated Appropriation (H.R. 2764, P.L. 110-
161), of which $21.6 million is ESF for pro-democracy programs, including non-violent efforts to oppose
Iran’s meddling in other countries. $7.9 million is “Development Funds” for use by DRL. Appropriation
also fully funds additional $33.6 million requested for Iran broadcasting: $20 million for VOA Persian
service; and $8.1 million for Radio Farda; and $5.5 million for exchanges with Iran.
FY2009 Request is for $65 million in ESF “to support the aspirations of the Iranian people for a democratic and
open society by promoting civil society, civic participation, media freedom, and freedom of information.”
S. 3288 (FY09 foreign operations appropriation) provides $20 million for democracy promotion in Iran to
counter Iranian influence in Lebanon and the West Bank and Gaza.
Throughout 2008, the Bush Administration placed increased emphasis on direct diplomacy with
Iran on the nuclear and other issues. However, the issue of the degree of engagement, the level,
whether any pre-conditions would attend such engagement, and the timing—particularly whether
before or after Iran’s June 2009 election—are debated among experts and advisers to President-
elect Obama. Particularly during his campaign, the President-elect indicated support for enhanced
efforts to engage Iran directly. Observing that inclination, Ahmadinejad sent President-elect
Obama a letter of congratulation upon his election and called for “fundamental and fair” changes
to U.S. policy on Iran. It was the first such congratulatory message from Iran since the revolution.
However, Ahmadinejad subsequently said that Iran would judge the Obama Administration by its
Iran policies; other Iranian leaders said that outreach by the Obama Administration might
On specific steps toward greater engagement, the Bush Administration said it considered opening
a new interests section in Iran staffed by U.S. personnel in Tehran, which would mostly process
Iranian visas and help facilitate U.S.-Iran people-to-people contacts. The Bush Administration
said in November 2008 that it would leave this decision to the Obama Administration, which
52The service began when Congress funded it at $4 million in the FY1998 Commerce/State/Justice appropriation (P.L.
105-119). It was to be called Radio Free Iran but was never formally given that name by RFE/RL.
appears inclined toward that step as well. Some Iranian leaders, including Ahmadinejad, have said
they might accept a U.S. interests section, but others have said this will not be approved by the
Iranian side. A potential factor in the interests section decision could be a storming of a British
diplomatic facility by 50 Iranian students on December 30, 2008, protesting what they said was
Britain’s bias toward Israel. The Obama Administration reportedly is also considering th
establishing a special coordinator for U.S. policy toward Iran. (In the 110 Congress, H.R. 5056
called on the President to name an envoy to conduct negotiations with Iran on outstanding issues.)
Prior to 2008, the Bush Administration directly engaged Iran on specific issues (Afghanistan and
Iraq), viewing such dialogue as helpful to the stabilization missions in those countries. The
United States had a dialogue with Iran on Iraq and Afghanistan from late 2001 until May 2003,
when the United States broke off the talks following the May 12, 2003, terrorist bombing in
Riyadh. At that time, the United States and Iran publicly acknowledged that they were conducting 53
direct talks in Geneva on those two issues, the first confirmed direct dialogue between the two
countries since the 1979 revolution. The United States briefly resumed some contacts with Iran in
December 2003 to coordinate U.S. aid to victims of the December 2003 earthquake in Bam, Iran,
including a reported offer to send a high-level delegation to Iran. Iran rebuffed that offer. Recent
meetings on Iraq were discussed above.
Regarding a broader dialogue with Iran on nuclear and other issues, since 2006—and prior to the
July 2008 decision to have Undersecretary Burns attend the July 19 nuclear issues meeting—the
Bush Administration maintained it would join multilateral nuclear talks, or even potentially
engage in direct bilateral talks, only if Iran first suspends uranium enrichment. Some believe the
Administration position was based on a view that offering to participate in a nuclear dialogue
with Iran would later increase international support for sanctions and other pressure mechanisms
by demonstrating the willingness of the Administration to resolve the issue diplomatically. Others
believe that this precondition lessened the likelihood of a positive response by Iran and should be
unambiguously dropped. In a related form of the option, former senior U.S. diplomat Thomas
Pickering and other experts said in April 2008 that U.S. and Iranian former officials and
academics have been meeting to discuss formulas under which Iran might continue to enriched
uranium to non bomb-grade levels under monitoring.
As part of the U.S. declared openness to talk with Iran if it complies on nuclear issues, the
Administration indicated that it considers Iran a great nation and respects its history; such themes
have been prominent in speeches by President Bush such as at the Merchant Marine Academy on
June 19, 2006, and his September 18, 2006, speech to the U.N. General Assembly. Secretary of
State Rice said in late January 2008 that the United States does not consider Iran a “permanent
enemy.” An amendment by Senator Biden (adopted June 2006) to the FY2007 defense
authorization bill (P.L. 109-364) supported the Administration’s offer to join nuclear talks with
Some argue that the issues that divide the United States and Iran cannot be segregated, and that
the key to resolving the nuclear issue is striking a “grand bargain” on all outstanding issues. The
Bush Administration did not offer Iran an unconditional, direct U.S.-Iran bilateral dialogue on all
issues of U.S. concern: nuclear issues, Iranian support of militant movements, involvement in
53 Wright, Robin. “U.S. In ‘Useful’ Talks With Iran.” Los Angeles Times, May 13, 2003.
Iraq, and related issues. Some view this as a “missed opportunity,” saying that U.S. officials
rebuffed a reported overture from Iran just before the May 12, 2003, Riyadh bombing to negotiate
all outstanding U.S.-Iran issues as part of a so-called “grand bargain” that has been reported in
various press articles. The Washington Post reported on February 14, 2007 (“2003 Memo Says
Iranian Leaders Backed Talks”), that the Swiss Ambassador to Iran in 2003, Tim Guldimann, had
informed U.S. officials of a comprehensive Iranian proposal for talks with the United States.
However, State Department officials and some European diplomats based in Tehran at that time
question whether that proposal represented an authoritative communication from the Iranian
government. Others argue that the offer was unrealistic because an agreement would have
required Iran to abandon key tenets of its Islamic revolution, including support for Hezbollah.
There are some indications that the Supreme Leader is potentially receptive to restoring relations
with the United States. On January 3, 2008, he said he would support resumed relations with the
United States at the right time and under the right circumstances, but not at the present because
the United States would use relations to insert spies into Iran.
Should Iran continue to refuse any proposed compromises on its nuclear program, the following
represent sanctions that the Security Council might impose, along with some discussion of key
positions expressed by some Security Council or other nations on those ideas. Administration
officials say these or other additional sanctions might also be considered by a “coalition” of
countries, outside Security Council authorization—a possibility that reportedly was discussed at a
meeting of Security Council permanent members at the U.S. State Department on September 21, 54
action on the grounds that doing so would undermine the Security Council process. Among the
further U.N. or multilateral sanctions widely discussed are the following:
• Mandating Reductions in Diplomatic Exchanges with Iran or Prohibiting Travel by
Iranian Officials. As noted above, Resolution 1803 imposes a ban on travel by some
named Iranian officials. One option is to expand the list of those Iranians whose travel
abroad would be banned. A further option is to limit sports or cultural exchanges with
Iran, such as Iran’s participation in the World Cup soccer tournament. However, many
experts oppose using sporting events to accomplish political goals.
• Banning International Flights to and from Iran. Bans on flights to and from Libya
were imposed on that country in response to the finding that its agents were responsible
for the December 21, 1988, bombing of Pan Am 103 (now lifted). There are no
indications that a passenger aircraft flight ban is under consideration among the P5+1. As
noted above, inspections of Iranian international cargo flights and shipping is authorized
in Resolution 1803.
• A Ban on Exports to Iran of Refined Oil Products or of Other Products. Some
members of the U.N. Security Council oppose this sanction as likely to halt prospects for
a diplomatic solution to Iran’s nuclear program, and the sanction does not appear to be
under current Security Council consideration. A gas exports ban would almost certainly
54 Wright, Robin. “U.S., Europeans Planning Own Iran Sanctions.” Washington Post, September 22, 2007.
55 Berlin Says U.S. and France Guilty of Hypocrisy. Spiegel Online, September 24, 2007. http://www.spiegel.de/
hurt Iran’s economy because Iran does not refine enough gasoline to meet demand and
must import gasoline, although some experts believe Iran would be able to circumvent
this sanction by offering premium prices to suppliers. Some countries that supply
gasoline to Iran, such as those listed in Table 3, might oppose this sanction. A bill, H.R.
H.Con.Res. 362 and S.Res. 580 call for (but do not mandate) that sanction.
• Financial and Trade Sanctions, Such as a Freeze on Iran’s Financial Assets Abroad.
Existing U.N. resolutions do not freeze all Iranian assets abroad, and such a broad freeze
does not appear to be under Security Council consideration at this time. Resolution 1803
authorizes countries to curtail banking relationships with Iran’s Bank Melli and Bank
Saderat. A future resolution could add more Iranian banks to those under sanction, or
even entirely ban transactions with any Iranian banks. Fearing that possibility, Iran
reportedly moved $75 billion out of European banks in May 2008.
• Limiting Lending to Iran by Banks or International Financial Institutions. Another
option is to ban lending to Iran by international financial institutions, or to mandate a
reduction of official credit guarantees. British Prime Minister Brown indicated British
support a limitation of official credits on November 12, 2007. As discussed below, EU
countries and their banks have begun taking these steps, even without a specific U.N.
• Banning Worldwide Investment in Iran’s Energy Sector. This option would represent
an internationalization of the U.S. “Iran Sanctions Act,” which is discussed below and in
CRS Report RS20871, The Iran Sanctions Act (ISA), by Kenneth Katzman. In his
November 12, 2007 comments, Brown expressed support for a worldwide financing of
energy projects in Iran as a means of cutting off energy development in Iran. Others
oppose this step at a time of relatively high world energy prices.
• Banning Insurance for Iranian Shipping. One option, reportedly under consideration
by the P5+1, is to ban the provision of insurance for Iran’s tanker fleet. Shipments of
Iranian oil require insurance against losses from military action, accidents, or other
causes. A broad ban on provision of such insurance could make it difficult for Iran to
Islamic Republic of Iran Shipping Lines to operate and force Iran to rely on more
expensive shipping options. Iran said in September 2008 that it would have ways to
circumvent the effect of this sanction if it is imposed.
• Imposing a Worldwide Ban on Sales of Arms to Iran. Resolution 1747 called for—but
did not require—U.N. member states to exercise restraint in selling arms to Iran. A future
resolution might mandate such an arms sales ban. Another option under discussion is to
eliminate the Resolution 1737 exemption from sanctions for the Bushehr nuclear reactor
project, although Russian support for such a move is in doubt.
• Imposing an International Ban on Purchases of Iranian Oil or Other Trade. This is
widely considered the most sweeping of sanctions that might be imposed, and would be
unlikely to be considered in the Security Council unless Iran was found actively
developing an actual nuclear weapon. Virtually all U.S. allies conduct extensive trade
with Iran, and would oppose sanctions on trade in civilian goods with Iran. A ban on oil
purchases from Iran is unlikely to be imposed because world oil prices remain nearly
$100 per barrel and could go far higher if such sanctions were imposed on Iran.
Although the United States and its allies are now mostly aligned on Iran policy, some
philosophical differences remain. Most U.S. allies still favor engagement and incentives—not just
economic or political punishments—as tools to change Iran’s behavior. During 1992-1997, when
the United States was tightening its own sanctions against Iran, the European Union (EU)
countries maintained a policy of “critical dialogue” with Iran, and the EU and Japan refused to
join the 1995 U.S. trade and investment ban on Iran. The European dialogue with Iran was
suspended in April 1997 in response to the German terrorism trial (“Mykonos trial”) that found
high-level Iranian involvement in killing Iranian dissidents in Germany, but resumed in May 1998
during Khatemi’s presidency.
With Iran defiant on nuclear issues, the European countries, Japan, and other countries have
moved closer to the U.S. position. The EU is no longer negotiating new trade agreements and
other economic interaction with Iran, but rather it has begun to implement some sanctions that
exceed those mandated in Security Council resolutions. For example, several EU countries are
discouraging their companies from making any new investments in or soliciting any new business
with Iran. In addition, several EU countries report that civilian trade with Iran is down because
Iran’s defiance on the nuclear issue is introducing more perceived risk to trading with Iran.
Negotiations with Iran on a “Trade and Cooperation Agreement” (TCA) are no longer being held;
such an agreement would have lowered the tariffs or increased quotas for Iranian exports to the
EU countries. During the active period of talks, which began in December 2002, there were
working groups focused not only on the TCA terms and proliferation issues but also on Iran’s
human rights record, Iran’s efforts to derail the Middle East peace process, Iranian-sponsored
terrorism, counter-narcotics, refugees, migration issues, and the Iranian opposition PMOI.
Similarly, there is insufficient international support to grant Iran membership in the World Trade
Organization (WTO) until there is progress on the nuclear issue. Iran first attempted to apply to
join the WTO in July 1996. On 22 occasions after that, representatives of the Clinton and then the
Bush Administration blocked Iran from applying (applications must be by consensus of the 148
members). As discussed above, as part of an effort to assist the EU-3 nuclear talks with Iran, the
Administration announced on March 11, 2005, that it would drop opposition to Iran’s applying
for WTO membership. At a WTO meeting in May 2005, no opposition to Iran’s application was
registered, and Iran formally began accession talks.
As noted above, some EU countries say they have reduced credit guarantee exposure to Iran since
Resolution 1737 was passed in December 2006. The table at the beginning of this paper lists
some countries that have dramatically cut back credit guarantees for Iran. Previously, the EU
countries and their banks maintained that financing for purely civilian goods is not banned by any
U.N. resolution and that exporters of such goods should not be penalized. In the 1990s, European
and Japanese creditors—over U.S. objections—rescheduled about $16 billion in Iranian debt.
These countries (governments and private creditors) rescheduled the debt bilaterally, in spite of
Paris Club rules that call for multilateral rescheduling. Iran’s improved external debt led most
European export credit agencies to restore insurance cover for exports to Iran. In July 2002, Iran
tapped international capital markets for the first time since the Islamic revolution, selling $500
million in bonds to European banks.
The EU and Japan appear to have made new international lending to Iran contingent on Iran’s
response to international nuclear demands. This represents a narrowing of past differences
between the United States and its allies on this issue. Acting under provisions of successive
foreign aid laws, in 1993 the United States voted its 16.5% share of the World Bank against loans
to Iran of $460 million for electricity, health, and irrigation projects, but the loans were approved.
To block that lending, the FY1994-FY1996 foreign aid appropriations (P.L. 103-87, P.L. 103-306,
and P.L. 104-107) cut the amount appropriated for the U.S. contribution to the Bank by the
amount of those loans. The legislation contributed to a temporary halt in new Bank lending to
Iran. During 1999-2005, Iran’s moderating image had led the World Bank to consider new loans
over U.S. opposition. In May 2000, the United States’ allies outvoted the United States to approve
$232 million in loans for health and sewage projects. During April 2003-May 2005, a total of
$725 million in loans were approved for environmental management, housing reform, water and
sanitation projects, and land management projects, in addition to $400 million in loans for th
earthquake relief. (A provision of H.R. 1400 and S. 970, introduced in the 110 Congress, would
impose a new restriction on U.S. contributions to the World Bank in proportion to the Bank’s
lending to Iran.)
Any international or multilateral sanctions would add to the wide range of U.S. sanctions in place 56
since the November 4, 1979, seizure of the U.S. hostages in Tehran. Some experts believe that,
even before U.S. allies have begun to impose some sanctions on Iran, U.S. sanctions alone were 57
slowing Iran’s economy. However, a report on U.S. sanctions by the Government Accountability
Office (GAO), published December 2007 (GAO-08-58: Iran Sanctions: Impact in Furthering U.S.
Objectives Is Unclear and Should Be Reviewed ) found that the extent of the impact on Iran is
“difficult to determine.” The GAO studied said that, despite the U.S. sanctions, Iran’s global trade
has continued to expand from 1987 (when sanctions first began to be imposed) to 2006, and that
Iran had signed $20 billion in energy investment deals with foreign firms, although these
agreements might not ultimately be carried out, as discussed below.
In January 1984, following the October 1983 bombing of the U.S. Marine barracks in Lebanon
(believed perpetrated by Hezbollah) Iran was added to the “terrorism list.” The list was
established by Section 6(j) of the Export Administration Act of 1979, sanctioning countries
determined to have provided repeated support for acts of international terrorism.
• The terrorism list designation restricts sales of U.S. dual use items (Export
Administration Act, as continued by executive order), and, under other laws, bans direct
U.S. financial assistance (Foreign Assistance Act, FAA) and arms sales (Arms Export
Control Act), and requires the United States to vote to oppose multilateral lending to the
designated countries (Anti-Terrorism and Effective Death Penalty Act of 1996, P.L. 104-
56 On November 14, 1979, President Carter declared a national emergency with respect to Iran, renewed every year
57 “The Fight Over Letting Foreigners Into Iran’s Oilfields.” The Economist, July 14, 2001.
132). Waivers are provided under these laws, but successive foreign aid appropriations
laws since the late 1980s ban direct assistance to Iran (loans, credits, insurance,
Eximbank credits) without providing for a waiver.
• Section 307 of the FAA (added in 1985) names Iran as unable to benefit from U.S.
contributions to international organizations, and require proportionate cuts if these
institutions work in Iran. No waiver is provided for.
• Under the Anti-Terrorism and Effective Death Penalty Act, the President is required
to withhold U.S. foreign assistance to any country that provides to a terrorism list country
foreign assistance or arms. Waivers are provided.
• U.S. sanctions laws do not bar disaster aid and the United States donated $125,000,
through relief agencies, to help victims of two earthquakes in Iran (February and May
(The World Bank provided some earthquake related lending as well.) The United States
provided $5.7 million in assistance (out of total governmental pledges of about $32
million, of which $17 million have been remitted) to the victims of the December 2003
earthquake in Bam, Iran, which killed as many as 40,000 people and destroyed 90% of
Bam’s buildings. The United States flew in 68,000 kilograms of supplies to Bam with
U.S. military aircraft.
• Executive Order 13324 (September 23, 2001) authorizes the President to freeze the
assets of and transactions with entities determined to be supporting international
terrorism. Iranian entities named and sanctioned under this order are in the tables at the
end of this paper.
Iran is prevented from receiving advanced technology from the United States under relevant and 58
Iran-specific anti-proliferation laws. The Iran-Iraq Arms Nonproliferation Act (P.L. 102-484)
requires denial of license applications for exports to Iran of dual use items, and imposes sanctions
on foreign countries that transfer to Iran “destabilizing numbers and types of conventional
weapons,” as well as WMD technology. The Iran Nonproliferation Act (P.L. 106-178, now called
the Iran-Syria Non-Proliferation Act, or ISNA) authorizes sanctions on foreign entities that assist
Iran’s WMD programs. It bans U.S. extraordinary payments to the Russian Aviation and Space
Agency in connection with the international space station unless the President can certify that the
agency or entities under its control had not transferred any WMD or missile technology to Iran 59
within the year prior. (A provision of a Continuing Resolution for FY2009, which would fund
the U.S. government until March 2009, essentially waives this law to allow NASA to continue to
use Russian vehicles to access the International Space Station.)
Reflecting a Bush Administration decision to impose sanctions for violations, the Bush
Administration has sanctioned numerous entities as discussed below. These entities were
sanctioned under the INA, the Iran-Iraq Arms Non-Proliferation Act of 1992 (P.L. 102-484), and
58 Such laws include the Atomic Energy Act of 1954 and the Energy Policy Act of 2005 (P.L. 109-58).
59 The provision contains certain exceptions to ensure the safety of astronauts, but it nonetheless threatened to limit
U.S. access to the international space station after April 2006, when Russia started charging the United States for th
transportation on its Soyuz spacecraft. Legislation in the 109 Congress (S. 1713, P.L. 109-112) amended the provision
in order to facilitate continued U.S. access and extended INA sanctions provisions to Syria.
another law, the Chemical and Biological Warfare Elimination Act of 1991, for sales to Iran.
Those entities are listed in Table 8.
As with previous years’ appropriations, the FY2008 foreign aid appropriation (H.R. 2764,
included in the omnibus appropriation, P.L 110-161) punishes the Russian Federation for assisting
Iran by withholding 60% of any U.S. assistance to the Russian Federation unless it terminates
technical assistance to Iran’s nuclear and ballistic missiles programs. A provision of H.R. 1400
and of S. 970 would restrict nuclear cooperation with Russia, under the Atomic Energy Act of
1954, if it continues to assist Iran’s nuclear or advanced conventional weapons capabilities. (The
two bills refer to different sections of the Atomic Energy Act, however.)
Executive Order 13382 (June 28, 2005), allows the President to block the assets of proliferators
of weapons of mass destruction (WMD) and their supporters under the authority granted by the
International Emergency Economic Powers Act (IEEPA, 50 U.S.C. 1701 et seq.), the National
Emergencies Act (50 U.S.C. 1601 et seq.), and Section 301 of Title 3, United States Code. Iranian
entities designated under E.O. 13382 are listed in Table 9 at the end of this paper.
U.S. officials, particularly Undersecretary of the Treasury Stuart Levey, said the Administration is
having substantial success in separate unilateral efforts (“targeted financial measures”) to
persuade European governments and companies to stop financing commerce with Iran on the
grounds that doing so entails financial risk and furthers terrorism and proliferation. Treasury and
State Departments officials, in April 17, 2008, testimony before the House Foreign Affairs
Committee, said they had persuaded at least 40 banks not to provide financing for exports to Iran
or to process dollar transactions for Iranian banks. Among those that have pulled out of Iran are
UBS and Credit Suisse (Switzerland), HSBC (Britain), Germany’s Commerzbank A.G and
Deutsche Bank AG. U.S. pressure has reportedly convinced Kuwaiti banks to stop transactions 60
with Iranian accounts, and South Korean banks are considering doing the same. The
International Monetary Fund and other sources report that these measures are making it more
difficult to fund energy industry and other projects in Iran, and particularly hurting small Iranian
businesses who have to pay new fees and premiums in order to collect on accounts earned by
outside trade. The Organization for Economic Cooperation and Development (OECD) in 2006
raised the financial risk rating for Iran.
Some of these moves by European banks have come about by U.S. pressure. In 2004, the
Treasury Department fined UBS $100 million for the unauthorized movement of U.S. dollars to
Iran and other sanctioned countries, and in December 2005, the Treasury Department fined Dutch
bank ABN Amro $80 million for failing to fully report the processing of financial transactions
involving Iran’s Bank Melli (and another bank partially owned by Libya).
In action intended to cut Iran off from the U.S. banking system, on September 8, 2006, the
Treasury Department barred U.S. banks from handling any indirect transactions (“U-turn
transactions, meaning transactions with non-Iranian foreign banks that are handling transactions
on behalf of an Iranian bank) with Iran’s Bank Saderat (see above), which the Administration 61
accuses of providing funds to Hezbollah. Bank Sepah is subject to asset freezes and transactions
60 Mufson, Steven and Robin Wright. “Iran Adapts to Economic Pressure.” Washington Post, October 29, 2007.
61 Kessler, Glenn. “U.S. Moves to Isolate Iranian Banks.” Washington Post, September 9, 2006.
limitations as a result of their naming as sanctionable entities under Resolution 1737 and 1747.
The Treasury Department extended that U-Turn restriction to all Iranian banks on November 6,
Thus far, the Treasury Department has not gone so far as to sanction any bank for dealing with
Iran by designating it a “money laundering entity” under Section 311 of the USA Patriot Act,
although some say that step has been threatened at times. Nor has Treasury imposed any specific
sanctions against Bank Markazi (Central Bank) which, according to a February 25, 2008, Wall
Street Journal story, is helping other Iranian banks circumvent the U.S. and U.N. banking
pressure. However, the European countries reportedly oppose such a sanction as an extreme step
with potential humanitarian consequences, for example by preventing Iran from keeping its th
currency stable. S. 3445, a Senate bill in the 110 Congress, and a counterpart passed by the
House on September 26, 2008 (H.R. 7112), call for this sanction.
In enforcing U.S. sanctions, on December 17, 2008 the U.S. Attorney for the Southern District of
New York filed a civil action seeking to seize the assets of the Assa Company, a U.K-chartered
entity. Assa allegedly was maintaining the interests of Bank Melli in an office building in New
York City. An Iranian foundation, the Alavi Foundation, also allegedly maintains a part interest in
On May 6, 1995, President Clinton issued Executive Order 12959 banning U.S. trade and 62
investment in Iran. This followed an earlier March 1995 executive order barring U.S.
investment in Iran’s energy sector. The trade ban was intended to blunt criticism that U.S. trade
with Iran made U.S. appeals for multilateral containment of Iran less credible. Each March since
1995, the U.S. Administration has renewed a declaration of a state of emergency that triggered the
investment ban. Some modifications to the trade ban since 1999 account for the trade that does
exist between the United States and Iran. H.R. 1400,S. 970 S. 3445, and H.R. 7112, see below,
would reimpose many of the restrictions.)
The following conditions and modifications, as administered by the Office of Foreign Assets
Control (OFAC) of the Treasury Department, apply:
• Some goods related to the safe operation of civilian aircraft may be licensed for
export to Iran, and as recently as September 2006, the Bush Administration, in the
interests of safe operations of civilian aircraft, permitted a sale by General Electric of
Airbus engine spare parts to be installed on several Iran Air passenger aircraft (by
European airline contractors). H.R. 1400 would ban such sales of spare parts.
• OFAC regulations do not permit U.S. firms to negotiate investment deals with Iran or
to trade Iranian oil overseas.
• Since April 1999, commercial sales of food and medical products to Iran have been
allowed, on a case-by-case basis and subject to OFAC licensing. According to OFAC in
April 2007, licenses for exports of medicines to treat HIV and leukemia are routinely
expedited for sale to Iran, and license applications are viewed favorably for business
62 An August 1997 amendment to the trade ban (Executive Order 13059) prevented U.S. companies from knowingly
exporting goods to a third country for incorporation into products destined for Iran.
school exchanges, earthquake safety seminars, plant and animal conservation, and
medical training in Iran. Private letters of credit can be used to finance approved
transactions, but no U.S. government credit guarantees are available, and U.S. exporters
are not permitted to deal directly with Iranian banks. The FY2001 agriculture
appropriations law (P.L. 106-387) contained a provision banning the use of official credit
guarantees for food and medical sales to Iran and other countries on the U.S. terrorism
list, except Cuba, although allowing for a presidential waiver to permit such credit
guarantees. Neither the Clinton Administration nor the Bush Administration provided the th
credit guarantees. Iran bills in the 110 Congress, such as H.R. 7112, do not ban such
exports to Iran.
• In April 2000, the trade ban was further eased to allow U.S. importation of Iranian
nuts, dried fruits, carpets, and caviar. The United States was the largest market for Iranian
carpets before the 1979 revolution, but U.S. anti-dumping tariffs imposed on Iranian
products in 1986 dampened of many Iranian products. The tariff on Iranian carpets is now
about 3%-6%, and the duty on Iranian caviar is about 15%. In December 2004, U.S.
sanctions were further modified to allow Americans to freely engage in ordinary
publishing activities with entities in Iran (and Cuba and Sudan). As of mid-2007, the
product most imported from Iran by U.S. importers is pomegranate juice concentrate.
H.R. 1400, S. 970, S. 3445, and H.R. 7112 would re-impose the ban on importation of
• The trade ban permits U.S. companies to apply for licenses to conduct “swaps” of
Caspian Sea oil with Iran, but, as part of a U.S. policy to route Central Asian energy
around Iran (and Russia), a Mobil Corporation application to do so was denied in April
The trade ban does not bar subsidiaries of U.S. firms from dealing with Iran, as long as the
subsidiary has no operational relationship to the parent company. Some U.S. companies have
come under scrutiny for dealings by their subsidiaries with Iran., S. 970, S. 3227, S. 3445, and
three House-passed bills (H.R. 1400, H.R. 7112, and H.R. 957)—would apply sanctions to the
parent companies of U.S. subsidiaries if those subsidiaries are directed or formed to trade with
Iran. Among subsidiaries of U.S. firms that trade with Iran are the following.
• On January 11, 2005, Iran said it had contracted with U.S. company Halliburton, and
an Iranian company, Oriental Kish, to drill for gas in Phases 9 and 10 of South Pars.
Halliburton reportedly provided $30 million to $35 million worth of services per year
through Oriental Kish, leaving unclear whether Halliburton would be considered in 63
violation of the U.S. trade and investment ban or the Iran Sanctions Act (ISA)—because
the deals involved a subsidiary of Halliburton (Cayman Islands-registered Halliburton
Products and Service, Ltd, based in Dubai). On April 10, 2007, Halliburton announced
that its subsidiaries had, as promised in January 2005, completed all contractual
commitments with Iran and that it is no longer operating there, but Halliburton has said it
is setting up a headquarters in Dubai to pursue business in the region.
63 “Iran Says Halliburton Won Drilling Contract.” Washington Times, January 11, 2005.
• General Electric (GE) announced in February 2005 that it would seek no new
business in Iran, and it reportedly is expected to wind down the already agreed contracts
by July 2008. GE was selling Iran equipment and services for hydroelectric, oil and gas
services, and medical diagnostic projects through Italian, Canadian, and French
subsidiaries. The trade ban appears to bar any Iranian company from buying a foreign
company that has U.S. units.
• Subsidiaries of several other U.S. energy equipment firms are apparently still in the
Iranian market. These include Foster Wheeler, Dresser Rand, Schlumberger, Natco 64
Group, and Overseas Shipholding Group.
• An Irish subsidiary of the Coca Cola company provides syrup for the U.S.-brand soft
drink to an Iranian distributor, Khoshgovar. Local versions of both Coke and of Pepsi
(with Iranian-made syrups) are also marketed in Iran by distributors who licensed the
recipes for those soft drinks before the Islamic revolution and before the trade ban was
imposed on Iran.
The Iran Sanctions Act penalizes foreign (or U.S.) investment of more than $20 million in one 65th
year in Iran’s energy sector. In the 109 Congress, H.R. 6198 was passed and then signed on
September 30, 2006 (P.L. 109-293). This “Iran Freedom Support Act” extends ISA until
December 31, 2011, and dropped Libya from the law. It codified existing Iran sanctions, made
exports to Iran of WMD or advanced conventional weapons technology sanctionable, and
recommended (but did not mandate) a 180-day time limit for the Administration to determine
whether a project violates ISA. It did not change the menu of available sanctions. As noted above,
it also authorized additional funding for promoting democracy in Iran. (See CRS Report
RS20871, The Iran Sanctions Act (ISA), by Kenneth Katzman.)
No projects have actually been sanctioned under ISA, and numerous investment agreements with
Iran since its enactment have helped Iran slow deterioration of its energy export sector. (A chart
illustrating the list of publicly announced investments and investment decisions is contained in
CRS Report RS20871, The Iran Sanctions Act (ISA), by Kenneth Katzman).
H.R. 1400, passed by the House on September 25, 2007, would remove the Administration’s
ability to waive application of sanctions under ISA. A companion Senate measure, S. 970, does
not contain a similar provision, nor do S. 3445 or H.R. 7112. The Administration opposes that
provision on the grounds that requiring sanctions on allied companies would divide the United
States and its allies on Iran policy. However, H.R. 1400 does not impose on the Administration a
time limit to determine whether a project is sanctionable. H.R. 1400, S. 970, S. 3227, S. 3445,
H.R. 7112, and H.R. 957 would amend the definitions of sanctionable entities to include official
credit guarantee agencies, such as France’s COFACE and Germany’s Hermes, and both bills
would also clearly apply ISA sanctions to pipeline and liquified natural gas (LNG) projects. H.R.
1400 would require the president to select a ban procurement from a sanctioned entity as one of
the two sanctions to impose.
64 Prada, Paulo, and Betsy McKay. Trading Outcry Intensifies. Wall Street Journal, March 27, 2007; Brush, Michael.
Are You Investing in Terrorism? MSN Money, July 9, 2007.
65 Originally called the Iran-Libya Sanctions Act, or ILSA; P.L. 104-172, August 5, 1996. It was renewed by P.L. 107-
24, August 3, 2001; renewed again for two months by P.L. 109-267; and renewed and amended by P.L. 109-293.
A growing trend not only in Congress but in several states is to require or call for or require
divestment of shares of firms that have invested in Iran’s energy sector (at the same levels 66
considered sanctionable under the Iran Sanctions Act). Pending legislation, H.R. 1400, does not
require divestment, but requires a presidential report on firms that have invested in Iran’s energy
sector. Another bill, H.R. 1357, would require government pension funds to divest of shares in
firms that have made ISA-sanctionable investments in Iran’s energy sector and bar government
and private pension funds from future investments in such firms. Two other bills, H.R. 2347
(passed by the House on July 31, 2007) and S. 1430, would protect mutual fund and other
investment companies from shareholder action for any losses that would occur from divesting in
firms that have investing in Iran’s energy sector. S. 3445 and H.R. 7112 contain extensive
provisions to encourage divestment from Iran.
S. 970, S. 3227, S. 3445, H.R. 7112, H.Con.Res. 362, and S.Res. 580 . Legislation pending in the th
110 Congress—primarily the Iran Counter-Proliferation Act of 2007, H.R. 1400 and S. 970, and
variants such as S. 3227, S. 3445, and H.R. 7112 (a House version of S. 3445)—would attempt to
compel foreign adoption of tighter sanctions against Iran. Their provisions on the Iran Sanctions
Act were noted above. In addition, these bills would broaden the types of foreign entities (to
include official credit guarantee agencies, for example) and projects (liquified natural gas, LNG)
that could be sanctioned by the United States for dealings with Iran. Versions of some of these th
bills might, according to observers, be introduced in the 111 Congress.
H.R. 1400, passed by the House on September 25, 2007 by a vote of 397-16, would remove
presidential waiver authority to avoid sanctioning such companies. It would also mandate cuts in
U.S. contributions to the World Bank for lending to Iran and preventing Russia from obtaining a
nuclear agreement with the United States if it continues supplying nuclear technology to Iran. S.
3445 and H.R. 7112 seek instead to prevent the diversion of WMD-related technology via such
countries as the UAE. H.R. 1400, S. 970, S. 3445, and H.R. 7112 would would rescind the easing
of the U.S. trade ban with Iran. H.R. 7112 was passed by the House on September 26, 2008, by
unanimous consent but was not taken up in the Senate.
H.Con.Res. 362 expresses the sense of Congress for imposition of strong additional sanctions,
including sanctioning Iran’s Central Bank, imposing sanctions under the Iran Sanctions Act,
banning gasoline exports to Iran, and strict inspections for all cargo, vehicles, and persons leaving
or entering Iran. Some consider this provision as tantamount to committing aggression against
Iran, since Iran would view such a strict embargo as an act of war. It has not been brought to a
floor vote. S.Res. 580 does not call for a ban on gasoline exports to Iran or for a comprehensive
66 For information on the steps taken by individual states, see National Conference of State Legislatures. State
Counter-Narcotics . In February 1987, Iran was first designated as a state that failed to cooperate
with U.S. anti-drug efforts or take adequate steps to control narcotics production or trafficking.
U.S. and U.N. Drug Control Program (UNDCP) assessments of drug production in Iran prompted
the Clinton Administration, on December 7, 1998, to remove Iran from the U.S. list of major drug
producing countries. This exempts Iran from the annual certification process that kept drug-
related U.S. sanctions in place on Iran. According to several governments, over the past few years
Iran has augmented security on its border with Afghanistan in part to prevent the flow of narcotics
from that country into Iran. Britain has sold Iran some night vision equipment and body armor for
the counter-narcotics fight. Iran also reportedly is providing aid to Afghan farmers to grow crops
other than poppy.
Travel-Related Guidance . Use of U.S. passports for travel to Iran is permitted. Iranians entering
the United States are required to be fingerprinted, and Iran has imposed reciprocal requirements.
In May 2007, the State Department increased its warnings about U.S. travel to Iran, based largely
on the arrests of the dual Iranian-American nationals discussed earlier.
Status of Some U.S.-Iran Assets Disputes . A U.S.-Iran Claims Tribunal at the Hague continues to
arbitrate cases resulting from the 1980 break in relations and freezing of some of Iran’s assets.
Major cases yet to be decided center on hundreds of Foreign Military Sales (FMS) cases between
the United States and the Shah’s regime, which Iran claims it paid for but were unfulfilled. About
$400 million in proceeds from the resale of that equipment was placed in a DOD FMS account,
and about $22 million in Iranian diplomatic property remains blocked, although U.S. funds have
been disbursed—credited against the DOD FMS account—to pay judgments against Iran for past
acts of terrorism against Americans. Other disputes include the mistaken U.S. shoot-down on July
3, 1988, of an Iranian Airbus passenger jet (Iran Air flight 655), for which the United States, in
accordance with an ICJ judgment, paid Iran $61.8 million in compensation ($300,000 per wage
earning victim, $150,000 per non-wage earner) for the 248 Iranians killed. The United States has
not compensated Iran for the airplane itself. As it has in past similar cases, the Administration has
opposed a terrorism lawsuit against Iran by victims of the U.S. Embassy Tehran seizure on the 67
grounds of diplomatic obligation.
Mistrust between the United States and Iran’s Islamic regime has run deep for over two decades.
Many experts say that all factions in Iran are united on major national security issues and that
U.S.-Iran relations might not improve unless or until the Islamic regime is removed or moderates
substantially, even if a nuclear deal is reached and implemented. The Administration and many
experts believe that Iran has become emboldened by the installation of pro-Iranian regimes in Iraq
and Afghanistan, and the new strength of Hezbollah in Lebanon, and that Iran now seeks to press
its advantage to strengthen regional Shiite movements and possibly drive the United States out of
the Gulf. Others reach an opposite conclusion, stating that Iran now feels more encircled than
ever by pro-U.S. regimes and U.S. forces guided by a policy of pre-emption, and Iran is
redoubling its efforts to develop WMD and other capabilities to deter the United States. Some say
that, despite Ahmadinejad’s presidency, the United States and Iran have a common interest in
stability in the Persian Gulf and South Asia regions in the aftermath of the defeat of the Taliban
67 See CRS Report RL31258, Suits Against Terrorist States by Victims of Terrorism, by Jennifer K. Elsea.
and the regime of Saddam Hussein and that major diplomatic overtures to Iran should be
Figure 1. Structure of the Iranian Government
Figure 2. Map of Iran
Source: Map Resources. Adapted by CRS (April 2005).
Table 9. Entities Sanctioned Under U.N. Resolutions and
U.S. Laws and Executive Orders
(Persons listed are identified by the positions they held when designated;
some have since changed.)
Entities Named for Sanctions Under Resolution 1737
Atomic Energy Organization of Iran (AEIO) Mesbah Energy Company (Arak supplier) Kalaye Electric
Pars Trash Company Farayand Technique Defense
(centrifuge program) (centrifuge program) Organization
7th of Tir Shahid Hemmat Industrial Group Shahid Bagheri
(DIO subordinate) (SHIG)—missile program Industrial Group
Fajr Industrial Group Mohammad Qanadi, AEIO Vice President Behman
(missile program) Asgarpour
Dawood Agha Jani Ehsan Monajemi Jafar Mohammadi
(Natanz official) (Natanz construction manager) (adviser to AEIO)
Ali Hajinia Leilabadi Lt. Gen. Mohammad Mehdi Nejad Nouri Gen Hosein Salimi
(director of Mesbah Energy) (Malak Ashtar University of Defence (Commander,
Technology rector) IRGC Air Force)
Ahmad Vahid Dastjerdi Reza Gholi Esmaeli Bahmanyar
(head of Aerospace Industries Org., AIO) (AIO official) Morteza
Maj. Gen. Yahya Rahim Safavi (Commander in
Entities Added by Resolution 1747
Ammunition and Metallurgy Industries Group thEsfahan Nuclear Fuel Research and Kavoshyar
(controls 7 of Tir) Production Center and Esfahan Nuclear Company
Technology Center (subsidiary of
Parchin Chemical Industries Karaj Nuclear Research Center Novin Energy
(branch of DIO) Company
Cruise Missile Industry Group Bank Sepah Sanam Industrial
(funds AIO and subordinate entities) Group
Ya Mahdi Industries Group Qods Aeronautics Industries Pars Aviation
(produces UAV’s, para-gliders for IRGC Services Company
asymmetric warfare) (maintains IRGC
Sho’a Aviation Fereidoun Abbasi-Davani Mohasen
(produces IRGC light aircraft for asymmetric (senior defense scientist) Fakrizadeh-
Seyed Jaber Safdari Amir Rahimi Mohsen Hojati
(Natanz manager) (head of Esfahan nuclear facilities) (head of Fajr
Mehrdada Akhlaghi Ketabachi (head of SBIG) Naser Maleki Ahmad
(head of SHIG) Derakshandeh
(head of Bank
Brig. Gen. Morteza Reza’i Vice Admiral Ali Akbar Ahmadiyan Brig. Gen.
(Deputy commander-in-chief, IRGC) (chief of IRGC Joint Staff) Mohammad Reza
Rear Admiral Morteza Safari Brig. Gen. Mohammad Hejazi Brig. Gen. Qasem
(commander, IRGC Navy) (Basij commander) Soleimani
Gen. Mohammad Baqr Zolqadr
(IRGC officer serving as deputy Interior Minister
Entities Added by Resolution 1803
Thirteen Iranians named in Annex 1 to Resolution Abzar Boresh Kaveh Co. Barzaganin Tejaral
1803; all reputedly involved in various aspects of (centrifuge production) Tavanmad Saccal
Electro Sanam Co. Ettehad Technical Group Industrial
(AIO front co.) Factories of
Jabber Ibn Hayan Joza Industrial Co. Khorasan
Niru Battery Manufacturing Co. Pshgam (Pioneer) Energy Industries Safety Equipment
(Makes batteries for Iranian military and missile Procurement
systems) (AIO front,
(involved in uranium enrichment)
Entities Designated Under U.S. Executive Order 13382
(many designations coincident with designations under U.N. resolutions)
Entity Date Named
Shahid Hemmat Industrial Group (Iran) June 2005, Sept.
Shahid Bakeri Industrial Group (Iran) June 2005
Atomic Energy Organization of Iran June 2005
Novin Energy Company (Iran) January 2006
Mesbah Energy Company (Iran) January 2006
Four Chinese entities: Beijing Alite Technologies, LIMMT Economic and Trading Company, June 2006
China Great Wall Industry Corp, and China National Precision Machinery Import/Export Corp.
Sanam Industrial Group (Iran) July 2006
Ya Mahdi Industries Group (Iran) July 2006
Bank Sepah (Iran) January 2007
Defense Industries Organization (Iran) March 2007
Pars Trash (Iran, nuclear program) June 2007
Farayand Technique (Iran, nuclear program) June 2007
Fajr Industries Group (Iran, missile program) June 2007
Mizan Machine Manufacturing Group (Iran, missile prog.) June 2007
Aerospace Industries Organization (AIO) (Iran) Sept. 2007
Korea Mining and Development Corp. (N. Korea) Sept. 2007
Islamic Revolutionary Guard Corps (IRGC) October 21, 2007
Ministry of Defense and Armed Forces Logistics October 21, 2007
Bank Melli (Iran’s largest bank, widely used by the Guard); Bank Melli Iran Zao (Moscow); Melli October 21, 2007
Bank PC (U.K.)
Bank Kargoshaee October 21, 2007
Arian Bank (joint venture between Melli and Bank Saderat). Based in Afghanistan October 21, 2007
Bank Mellat (provides banking services to Iran’s nuclear sector); Mellat Bank SB CJSC (Armenia). October 21, 2007
Reportedly has $1.4 billion in assets in UAE
Persia International Bank PLC (U.K.) October 21, 2007
Khatam ol Anbiya Gharargah Sazendegi Nooh (Revolutionary Guard construction, contracting October 21, 2007
arm, with $7 billion in oil, gas deals
Oriental Oil Kish (Iranian oil exploration firm) October 21, 2007
Ghorb Karbala; Ghorb Nooh (synonymous with Khatam ol Anbiya) October 21, 2007
Sepasad Engineering Company (Guard construction affiliate) October 21, 2007
Omran Sahel (Guard construction affiliate) October 21, 2007
Sahel Consultant Engineering (Guard construction affiliate) October 21, 2007
Hara Company October 21, 2007
Gharargahe Sazandegi Ghaem October 21, 2007
Bahmanyar Morteza Bahmanyar (AIO, Iran missile official, see above under Resolution 1737) October 21, 2007
Ahmad Vahid Dastjerdi (AIO head, Iran missile program) October 21, 2007
Reza Gholi Esmaeli (AIO, see under Resolution 1737) October 21, 2007
Morteza Reza’i (deputy commander, IRGC) See also Resolution 1747 October 21, 2007
Mohammad Hejazi (Basij commander). Also, Resolution 1747 October 21, 2007
Ali Akbar Ahmadian (Chief of IRGC Joint Staff). Resolution 1747 October 21, 2007
Hosein Salimi (IRGC Air Force commander). Resolution 1737 October 21, 2007
Qasem Soleimani (Qods Force commander). Resolution 1747 October 21, 2007
Future Bank (Bahrain-based but allegedly controlled by Bank Melli) March 12, 2008
Yahya Rahim Safavi (former IRGC Commander in Chief July 8, 2008
Mohsen Fakrizadeh-Mahabadi (senior Defense Ministry scientist) July 8, 2008
Dawood Agha-Jani (head of Natanz enrichment site) July 8, 2008
Mohsen Hojati (head of Fajr Industries, involved in missile program) July 8, 2008
Mehrdada Akhlaghi Ketabachi (heads Shahid Bakeri Industrial Group) July 8, 2008
Naser Maliki (heads Shahid Hemmat Industrial Group) July 8, 2008
Tamas Company (involved in uranium enrichment) July 8, 2008
Shahid Sattari Industries (makes equipment for Shahid Bakeri) July 8, 2008
7th of Tir (involved in developing centrifuge technology) July 8, 2008
Ammunition and Metallurgy Industries Group (partner of 7th of Tir) July 8, 2008
Parchin Chemical Industries (deals in chemicals used in ballistic missile programs) July 8, 2008
Karaj Nuclear Research Center August 12, 2008
Esfahan Nuclear Fuel Research and Production Center (NFRPC) August 12, 2008
Jabber Ibn Hayyan (reports to Atomic Energy Org. of Iran, AEIO) August 12, 2008
Safety Equipment Procurement Company August 12, 2008
Joza Industrial Company (front company for Shahid Hemmat Industrial Group, SHIG) August 12, 2008
Islamic Republic of Iran Shipping Lines (IRISL) and 18 affiliates, including Val Fajr 8; Kazar; September 10,
Irinvestship; Shipping Computer Services; Iran o Misr Shipping; Iran o Hind; IRISL Marine 2008
Services; Iriatal Shipping; South Shipping; IRISL Multimodal; Oasis; IRISL Europe; IRISL Benelux;
IRISL China; Asia Marine Network; CISCO Shipping; and IRISL Malta
Firms affiliated to the Ministry of Defense, including Armament Industries Group; Farasakht September 17,
Industries; Iran Aircraft Manufacturing Industrial Co.; Iran Communications Industries; Iran 2008
Electronics Industries; and Shiraz Electronics Industries
Export Development Bank of Iran. Provides financial services to Iran’s Ministry of Defense and October 22, 2008
Armed Forces Logistics
Entities Sanctioned Under Executive Order 13224 (Terrorism Entities)
Qods Force October 21, 2007
Bank Saderat (allegedly used to funnel Iranian money to Hezbollah, Hamas, PIJ, and other Iranian October 21, 2007
supported terrorist groups)
Entities Sanctioned Under the Iran Non-Proliferation Act and other U.S. Proliferation Laws
Norinco (China). For alleged missile technology sale to Iran. May 2003
Taiwan Foreign Trade General Corporation (Taiwan) July 4, 2003
Tula Instrument Design Bureau (Russia). For alleged sales of laser-guided artillery shells to Iran. September 17,
13 entities sanctioned including companies from Russia, China, Belarus, Macedonia, North April 7, 2004
Korea, UAE, and Taiwan.
14 entities from China, North Korea, Belarus, India (two nuclear scientists, Dr. Surendar and September 29,
Dr. Y.S.R. Prasad), Russia, Spain, and Ukraine. 2004
14 entities, mostly from China, for alleged supplying of Iran’s missile program. Many, such as December 2004
North Korea’s Changgwang Sinyong and China’s Norinco and Great Wall Industry Corp, have and January 2005
been sanctioned several times previously. Newly sanctioned entities included North Korea’s
Paeksan Associated Corporation, and Taiwan’s Ecoma Enterprise Co.
9 entities, including those from China (Norinco yet again), India (two chemical companies), and December 26,
Austria. Sanctions against Dr. Surendar of India (see September 29, 2004) were ended, 2005
presumably because of information exonerating him.
7 entities. Two Indian chemical companies (Balaji Amines and Prachi Poly Products); two Russian August 4, 2006
firms (Rosobornexport and aircraft manufacturer Sukhoi); two North Korean entities (Korean
Mining and Industrial Development, and Korea Pugang Trading); and one Cuban entity (Center
for Genetic Engineering and Biotechnology).
9 entities. Rosobornesksport, Tula Design, and Komna Design Office of Machine Building, and January 2007
Alexei Safonov (Russia); Zibo Chemical, China National Aerotechnology, and China National
Electrical (China). Korean Mining and Industrial Development (North Korea) for WMD or
advanced weapons sales to Iran (and Syria).
14 entities, including Lebanese Hezbollah. Some were penalized for transactions with Syria. April 23, 2007
Among the new entities sanctioned for assisting Iran were Shanghai Non-Ferrous Metals Pudong
Development Trade Company (China); Iran’s Defense Industries Organization; Sokkia Company
(Singapore); Challenger Corporation (Malaysia); Target Airfreight (Malaysia); Aerospace
Logistics Services (Mexico); and Arif Durrani (Pakistani national).
13 entities: China Xinshidai Co.; China Shipbuilding and Offshore International Corp.; Huazhong October 23, 2008
CNC (China); IRGC; Korea Mining Development Corp. (North Korea); Korea Taesong Trading
Co. (NK); Yolin/Yullin Tech, Inc. (South Korea); Rosoboronexport (Russia sate arms export
agency); Sudan Master Technology; Sudan Technical Center Co; Army Supply Bureau (Syria); R
and M International FZCO (UAE); Venezuelan Military Industries Co. (CAVIM);
Entities Designated as Threats to Iraqi Stability under Executive Order 13438
Ahmad Forouzandeh. Commander of the Qods Force Ramazan Headquarters, accused of January 9, 2008
fomenting sectarian violence in Iraq and of organizing training in Iran for Iraqi Shiite militia
Abu Mustafa al-Sheibani. Iran based leader of network that funnels Iranian arms to Shiite militias January 9, 2008
Isma’il al-Lami (Abu Dura). Shiite militia leader, breakaway from Sadr Mahdi Army, alleged to January 9, 2008
have committed mass kidnapings and planned assassination attempts against Iraqi Sunni
Mishan al-Jabburi. Financier of Sunni insurgents, owner of pro-insurgent Al-Zawra television, January 9, 2008
Al Zawra Television Station January 9, 2008
Specialist in Middle Eastern Affairs