Wall Street Journal: The U.S. has begun to ratchet up enforcement of existing sanctions on Iran, including cracking down on illegal exports of American products, even as it threatens fresh economic restrictions if Iran doesn't stop enriching nuclear material. The Wall Street Journal
By CHIP CUMMINS
DUBAI — The U.S. has begun to ratchet up enforcement of existing sanctions on Iran, including cracking down on illegal exports of American products, even as it threatens fresh economic restrictions if Iran doesn't stop enriching nuclear material.
Despite initial signs of progress in talks between Iran and members of the United Nations Security Council plus Germany in Geneva on Thursday, U.S. officials are expected to push for new U.N. or unilateral sanctions unless Tehran backs up its word with actions in coming weeks and months.
Over the past three decades, the U.S. has imposed a range of unilateral measures on Iran, prohibiting American citizens and companies from doing most business there. But those steps haven't kept American products out of Iran's bazaars, showrooms and high-end retailers.
For years, American authorities concluded there was little their enforcement agents could do about it. U.S. policy makers have debated at length whether to spend resources trying to halt the flow of seemingly harmless consumer products into Iran. Critics say such sanctions hurt U.S. exports and don't pressure policy makers in Tehran effectively.
But as Washington kicks up the pressure on Iran, sanction enforcement has become a priority. The U.S. Treasury's Office of Foreign Assets Control, the agency spearheading enforcement, has beefed up its investigative and enforcement teams, officials say. "We've been more effective, more aggressive and more public in our enforcement," said Adam Szubin, OFAC's director, in an interview.
As part of that push, OFAC has held discussions with some American companies about whether they are doing enough to ensure their products aren't illegally making it into Iran, U.S. officials said.
"It is reasonable for us to ask, what have you done to make sure your export doesn't go to Iran," Mr. Szubin said. "We won't countenance willful blindness."
Agencies are focusing in some cases on instances where they suspect American manufacturers could be turning a blind eye to foreign subsidiaries, distributors or customers who are improperly reselling goods into Iran, according to another U.S. official.
Earlier this year, the Securities and Exchange Commission queried Hewlett-Packard Co. about its Iran business. In correspondence released by the SEC, the Palo Alto, Calif., company said a European subsidiary sold products to third-party distributors in the United Arab Emirates, which resold them into Iran.
H-P said the sales didn't break any rules, but that it had stopped doing business with the distributors. In a statement, H-P said the query was part of a "routine staff review" of Hewlett-Packard's annual SEC filing. A spokesman for the SEC declined to comment. The status of the SEC query isn't clear.
There are exceptions to restrictions on American exports to Iran, making it sometimes difficult to determine what is legal and what isn't. Foreign subsidiaries, for instance, sometimes aren't under the same restrictions as their American parent, according to officials.
Caterpillar Inc., of Peoria, Ill., says that under current U.S. sanctions its foreign subsidiaries may, under some circumstances, sell its heavy machinery to independent dealers that resell to users in Iran.
Closely held Arya Machinery, with offices in Tehran, markets itself on its Web site as Iran's exclusive dealer of Caterpillar equipment. A senior sales executive at the company said Arya buys equipment from a Caterpillar subsidiary in Europe.
A Caterpillar spokesman declined to comment about Arya, but said in a statement that Caterpillar has no assets, operations or employees in Iran and is in "full compliance with all applicable laws."
At Dubai's bustling downtown wharf, Iranian sailors load goods bound for a handful of Iranian ports. During one recent visit, dozens of new Whirlpool Corp. refrigerators stood in neat rows in front of one dhow, chartered for the Iranian port of Bushehr. The captain declined to say who was shipping the cargo to Iran.
Products made by Whirlpool, of Benton Harbor, Mich., are readily available throughout Dubai, one of seven emirates that make up the U.A.E. A Whirlpool spokeswoman declined to comment except to say the company will abide by all sanctions.
The U.A.E. has vowed to enforce U.N. sanctions. But there are no laws here against shipping everyday, American-brand goods across the Persian Gulf to Iran.
