The US Treasury Department on Thursday defended its issuance of special licenses for US companies to do billions of dollars worth of business with Iran and other blacklisted nations as state sponsors of terrorism, in response to a New York Times report on deals made despite sanctions and trade embargoes.
An examination by the newspaper found the Treasury’s Office of Foreign Assets Control has made nearly 10,000 exceptions to US sanctions rules over the past decade, at the behest of a host of companies — from Kraft Food and Pepsi to some of the nation’s largest banks.
A Treasury official said the majority of the cases examined by the Times were approved under a decade-old law requiring the Treasury to license exports of agricultural and medical humanitarian aid to Iran and Sudan.
“These are not discretionary exceptions to US sanctions made by Treasury,” the official said, speaking on condition of anonymity.
“Because the US has the toughest and most comprehensive sanctions against Iran, allowing for the exportation of food, medicine and medical devices is consistent with our objective of not hurting the Iranian people,” the official said.
However, the Times said the 10-year-old law was so broadly written that allowable humanitarian aid has included cigarettes, chewing gum, weight-loss remedies, Louisiana hot sauce and sports rehabilitation equipment sold to the institute that trains Iran’s Olympic athletes.
The paper said it found hundreds of licenses were approved because they were deemed to serve US foreign policy goals. Many clearly do, among them deals to provide famine relief in North Korea or to improve Internet connections —and nurture democracy — in Iran. However, the examination also found cases in which the foreign-policy benefits were considerably less clear, the article said.
It cited one instance in which a US company was permitted to bid on a pipeline job that would have helped Iran sell natural gas to Europe.
The US government has long banned US companies from investing in Iran’s energy sector. After the UN imposed tougher energy and financial sanctions against Iran to curb its nuclear development program over the summer, similar bans have been imposed by Europe, Japan and South Korea.
Several other US businesses were permitted to deal with foreign companies believed to be involved in terrorism or weapons proliferation. In one such case, involving equipment bought by a medical waste disposal plant in Hawaii, the government was preparing to deny the license until an influential politician intervened.
Treasury officials have said the tougher sanctions — which have effectively forced many financial services firms to choose between doing business with Iran or with the US — have imposed financial hardship on Iran’s government.
The Treasury official said that in most of the decisions to allow US firms to do business in a sanctioned country, the licenses were approved to allow them to wind down operations extricate themselves from existing contracts or export educational material.
“All of these licensing decisions advance our national security and foreign policy goals,” the official said. “In none of these cases were licenses issued to provide commercial benefit to designated entities.”
The Treasury official also said that allowing US companies to make food, agricultural products and medicine available to Iran is not diminishing the effect of the anti-nuclear sanctions.
In an interview with the Times, the Obama administration’s point man on sanctions, Stuart Levey, said that focusing on the exceptions “misses the forest for the trees.”
“No one can doubt that we are serious about this,” Levey said.
However, as the administration tries to press Iran even harder to abandon its nuclear program, some diplomats and foreign affairs experts worry that by allowing the sale of even small-ticket items with no military application, the US muddies its moral and diplomatic authority.
“It’s not a bad thing to grant exceptions if it represents a conscious policy decision to give countries an incentive,” said Stuart Eizenstat, who oversaw sanctions policy for the Clinton administration when the humanitarian-aid law was passed. “But when you create loopholes like this that you can drive a Mack truck through, you are giving countries something for nothing, and they just laugh in their teeth. I think there have been abuses.”
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