As Iran Awaits Sanctions Relief, U.S. Raises Concerns About Lost Leverage

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Once inspectors determine that Iran is abiding by a nuclear deal, United Nations and European Union sanctions will be lifted. But some Iranians will remain on U.S. sanctions lists.

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Transcript

MELISSA BLOCK, HOST:

The U.S. imposes sanctions on Iran for a lot of reasons, not just for nuclear activity. There are Iranian businesses on sanctions lists for supporting terrorism, or having connections to Iran's Revolutionary Guard Corps or for criminal activity. The lists deter other countries that might do business with Iran, and NPR's Michele Kelemen reports that some worry the U.S. could lose this leverage under the nuclear deal.

MICHELE KELEMEN, BYLINE: There was a reason the sanctions against Iran were so effective, says Juan Zarate, a former Treasury Department and White House official. He says they showed countries and companies that it could be risky to do business with Iran, not just because of Iran's suspect nuclear program.

JUAN ZARATE: It's because they have worried about the integrity of the Iranian financial system, the fact that the Iranian Revolutionary Guard controls much of the economy, the fact that the Iranian government is engaged in all of these other problems internationally - support to terrorist groups, militant groups, support to Assad, human rights abuses, even money-laundering.

KELEMEN: Obama administration officials say those are all still concerns, and the U.S. will continue to keep up the financial pressure on Iranian individuals or businesses involved in any of that. But Zarate, who's now with the Center for Strategic and International Studies, is not so sure because of the way the nuclear deal is written.

ZARATE: That's the most troubling part of how this deal is structured, it appears we've begun to give away our ability to use those very financial tools that brought Iran to the table against Iran in the future for all of the other things that we're concerned about.

KELEMEN: He points to paragraph 29, which says the U.S. will refrain from any policy intended to adversely affect the normalization of trade and economic relations with Iran. When members of the Senate Foreign Relations Committee raised this in today's hearing, treasury secretary Jack Lew pushed back.

(SOUNDBITE OF ARCHIVED RECORDING)

JACK LEW: We made clear in the negotiations that we retained the ability and we were going to keep in place sanctions on terrorism, on regional destabilization, on human rights violations.

KELEMEN: And he says Iranians involved in those activities will stay on U.S. blacklists. Former Treasury Department official Matthew Levitt, of the Washington Institute for Near East Policy, says the administration needs to look at all these lists because he says some bad actors might only be facing nuclear-related sanctions which will be lifted.

MATTHEW LEVITT: So if an individual was involved in support for terrorism or abuse of human rights and undermining stability in Lebanon or Syria, those or any of the other existing executive orders or authorities that we had at our disposal. The one that was chosen most of the time was proliferation because it got the greatest buy-in and the least pushback from the Europeans and others.

KELEMEN: It might be difficult now to get buy-in, Levitt says, but the U.S. needs to try.

LEVITT: Keeping alive the idea that there are still risks to doing business with certain elements within Iran.

KELEMEN: U.S. unilateral sanctions can have a broader impact, but over time, he worries, that this tool will be harder and harder to use. Zarate of CSIS echoes that concern.

ZARATE: There's a psychology to sanctions at play. And to the extent that the Iranians are being rehabilitated in the minds of the private sector, that then makes it more difficult for the U.S. to use these kinds of financial measures against Iran in the future.

KELEMEN: Treasury Secretary Lew though says that nuclear sanctions could snap back if Iran violates the deal, and the U.S. will continue to impose sanctions on other grounds. Michele Kelemen, NPR News, Washington. Transcript provided by NPR, Copyright NPR.