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November 23 2023

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Improving the Proposed “Iran Sanctions Enforcement Act”

Subject: Improving the Proposed “Iran Sanction Enforcement Act”

From: Navid Mohebbi, Policy Director at National Union for Democracy in Iran

Background: Recently, Senators Joni Ernst (R-IA) and Richard Blumenthal (D-CT) introduced the “Iran Sanctions Enforcement Act.” This bill aims to turn Executive Order 13558 from 2010, which established the Export Coordination Enforcement Center, into law. The bill proposes the creation of a $150 million sanctions enforcement fund within the Department of Homeland Security to bolster the agency’s capacity for sanction enforcement. Under the Justice for United States Victims of State Sponsored Terrorism Act, 75% of the seized funds are allocated to the U.S. Victims of State Sponsored Terror Fund. The new bipartisan bill seeks to add an enforcement fund to which the remaining 25% will be allocated. The enforcement fund will be capped at $500 million, with any excess proceedings directed toward paying down the national debt. While the decision to reinforce sanctions is a necessary and positive step, there are concerns about the distribution of funds to victims of the regime in the United States, as well as the implications of using these funds to pay off the national debt.

Bottom line up front:  While a sanctions enforcement fund is a welcome proposal, the funds obtained from blocking and seizing Iranian oil revenue should not be allocated solely to victims of terrorism. This approach may not be the most effective due to the disproportionate rewards, the limited funds available, the lack of accessibility for all victims, and the short-term nature of the solution. This action would also likely provoke a strong backlash from other, non-compensated victims of the regime, chief among them the Iranian people. A wiser strategy would be to invest these funds in the Iranian freedom movement, thereby empowering Iranians to free both themselves and innocent people around the world from the threat of the Islamic Republic.

Issues with Current Allocation of Seized Iranian Assets:

    • Disproportionate Compensation in Court Cases: Court-awarded compensations to victims have often been excessively high, with victims receiving tens of millions of dollars, far beyond the norm of payment to wrongfully detained citizens in the United States.
    • Limited Resources vs. Unlimited Victims: The seized Iranian assets are limited in quantity. In contrast, the number of victims of the Islamic Republic’s terrorism and repression is vast, including thousands of former prisoners in the United States and Europe. The available funds are insufficient to cover all of these victims.
    • Inequitable Access to Compensation: Some victims have the potential to access compensation through courts. However, many who have lost their lives or spent years in prison under the regime do not have this opportunity, creating a sense of unfairness and resentment among the broader victim community.
    • Economic Hardship in Iran: A majority of Iranians live below the poverty line because of the regime’s misgovernance and exploitation of resources for purposes that do not benefit the people. Using the seized assets without including the needs of the Iranian populace would alienate a significant ally.
    • Amount of Seized Assets vs. U.S. National Debt: The decision to allocate the remaining funds toward paying the U.S. national debt is purely symbolic. First, the amount of money left over from these proceeds is relatively insignificant and would have a negligible impact on the substantial U.S. national debt. Secondly, the perception of this action by the Iranian people could be unfavorable, potentially viewed as their wealth being plundered by a foreign country. This could also provide the regime in Iran with a propaganda tool.
    • Short-term Solution for a Long-term Problem: While the victims of terrorism do deserve support and compensation, this bill is not a solution to the Islamic Republic’s terrorism because it is predicated on the failed expectation of behavior change from this regime. The only way to bring true justice to the victims of terrorism and to prevent further victims is to support the Iranian people in bringing about an end to the Islamic Republic.

What the United States Should Do Instead

A more effective approach to utilizing these funds is supporting and strengthening Iran’s freedom movement. Iranians have shown remarkable resilience, evidenced by an active and dynamic pro-democracy movement through five major uprisings since 2017, which have witnessed the sacrifice of over 2,300 lives in the quest for freedom. Many pro-democracy activists believe that the failure of these uprisings can largely be attributed to a lack of international support for the Iranian people.

As NUFDI recommended in its recent report, Breaking the Trend: How to Combat the Hostage-Taking Business in Iran, the United States should spend Iranian money on the Iranian people, including providing internet access, supporting democracy promotion efforts, and establishing a labor strike fund for Iranian workers.