May 14, 2024

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IntelBrief: Sanctions Target Iran and its Axis of Resistance

AP Photo/Hassan Ammar

Since the October 7 Hamas attack on Israel, U.S. and allied officials have used all available tools of national power to counter efforts by Iran and the regional armed factions it supports to help Hamas battle Israel. Backing Hamas is part of a longstanding drive by Iran and its allies to promote insecurity among Israeli citizens, drive a wedge between the United States and Israel, and expel U.S. forces from the region, including Iraq and Syria. Since October 7, the United States and its allies have used preventive and retaliatory military action to counter Iran-backed attacks on Israel, on U.S. forces in the region, and on commercial shipping through regional maritime chokepoints.

U.S. and European leaders have imposed economic sanctions on leaders of key Iran-aligned groups as well as the businesses and financial networks that Iran and its partners use to generate and move funds for their operations. Recognizing that sanctions might not necessarily affect the course of the Israel-Hamas war, no Western official has advertised sanctions as a “quick fix” that will de-escalate the conflict raging in the region. On the other hand, many Western politicians, including members of the U.S. Congress, often advocate expanded sanctions as a cost-free and low-risk policy component, while overstating the ability of sanctions to accomplish national objectives.

Still, Western sanctions can degrade Iran’s network over the longer term by shutting Iranian and pro-Iranian leaders, fighters, facilitators, business partners, and financial supporters out of the international financial system and rendering them unable to benefit from the universal acceptance of the U.S. dollar. Sanctions directed at specific leaders and commanders appear intended to delegitimize them as leaders of their domestic constituencies, deter global leaders from meeting with or hosting them, and prevent them from accumulating or accessing financial assets outside their countries of origin. Yet, the practical effect of targeting specific Iranian or Iran-affiliated leaders and commanders is questionable because most Axis leaders and commanders do not seek to travel outside the region or conduct financial transactions with U.S. or Europe-based banks.

In the aggregate, the post-October 7 sanctions, even combined with the extensive pre-existing sanctions imposed over many years on Iran and its allies, have had little or no observable effect on the ability of Iran or its partners to carry out their varying attacks since October 7. On the other hand, the accumulated effect of Western sanctions on Iran-aligned groups might manifest over the longer term. U.S. and other sanctions announcements also help third-country intelligence and law enforcement entities understand Iran-backed financial and logistical networks to assist the Western effort to blunt Iran’s strategic reach. As a general compliance practice, global banks routinely ban transactions with, or accounts held by persons or entities named in U.S. and allied sanctions designations.

Both before and since October 7, U.S. and allied officials have sought to address the key threat posed by Iran’s arsenal of ballistic and cruise missiles and armed drones, some of which Tehran has transferred to its partners, including the Houthis in Yemen, Lebanese Hezbollah, and pro-Iranian militias in Iraq and Syria. The Hamas attack came two weeks before the October 18 expiration of a UN ban on Iran’s development and transfer of missile and armed drone technology – an automatic termination provided for in the 2015 multilateral Iran nuclear agreement (JCPOA). U.S. officials long asserted U.S. sanctions on Iran’s missile and drone programs would remain in place and, in September, the United Kingdom, France, and Germany announced they would retain their sanctions on the Iranian missile and drone technology as well. The day of the UN ban expiration, the U.S. Department of the Treasury sanctioned 11 individuals, eight entities, and one vessel based in Iran, Hong Kong, the People’s Republic of China (PRC), and Venezuela, determined to be “enabling Iran’s destabilizing ballistic missile and unmanned aerial vehicle (UAV) programs.”

On April 18, five days after Iran’s unprecedented missile and drone barrage against Israel, Treasury announced sanctions on 16 individuals and two entities determined to be enabling Iran’s drone production, including engine types that power Iran’s Shahed variant drones used in the attack, which are also those sold to Russia for use against Ukraine. In concert with the U.S. announcement, the UK sanctioned seven individuals and six entities who enabled Iran to conduct destabilizing regional activity, including the attack on Israel. Among those named were Iranian Defense Minister Brigadier General Mohammad Reza Ashtiani, the Iranian Armed Forces General Staff, and the Islamic Revolutionary Guards Corps (IRGC) Navy. On April 25, the United States, UK, and Canada sanctioned another dozen entities, individuals, and vessels that they said played a central role in facilitating and financing the sale of Iranian armed drones for Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL). One sanctioned entity was Sahara Thunder, identified as “the main front company that oversees MODAFL’s commercial activities in support of these efforts.”

Targeting financiers and financial facilitators, U.S. officials sanctioned the Iraqi airline Fly Baghdad and its CEO in January for providing assistance to the IRGC – Qods Force (IRGC-QF) and its “proxy groups” in Iraq, Syria, and Lebanon. The announcement included sanctions on three leaders and supporters of one of the IRGC-QF’s main Iran-aligned militias in Iraq, Kata’ib Hezbollah (KH), as well as a business that moves and launders funds for KH. According to the U.S. statement: “For several years, Iraqi airline Fly Baghdad has supported the operations of the IRGC-QF and its proxies by delivering materiel and personnel throughout the region,” including delivering shipments of weapons to Damascus International Airport in Syria for transfer to members of the IRGC-QF and Iran-aligned militia groups on the ground in Syria, such as the Syrian military, Lebanese Hezbollah, and KH.

The KH figures sanctioned included KH political party chief Moanes al-Ibudi and Awqad Muhsin Faraj al-Hamidawi, the youngest brother of KH Secretary-General Ahmad al-Hamidawi – identified as directing KH’s businesses and aspects of KH’s financial portfolio. Also that month, the U.S. Treasury Department sanctioned three entities and one individual located in Lebanon and Türkiye for providing critical financial support to the IRGC-QF and Lebanese Hezbollah by selling Iranian commodities, including to the Syrian government. Sanctioned entities included: Türkiye-based Mira Ihracat Ithalat Petrol (Mira); Lebanon-based Yara Offshore SAL, a Hezbollah-affiliated company; and Lebanon-based Hydro Company for Drilling Equipment Rental, reportedly operating under the direction of senior IRGC-QF officers and maintaining commercial ties with Hezbollah. In January, the United States, UK, and Australia took action against Hamas financial networks and facilitators of virtual currency transfers. In March, U.S. and UK officials jointly sanctioned two individuals and three entities as key financial facilitators and fundraisers for Hamas, including Gaza Now.

In an effort to degrade and deter the Houthi movement from attacking regional targets and, more recently, commercial shipping in the Red Sea, U.S. and UK authorities have jointly sanctioned the group’s financial facilitators and military leaders. In early 2022, the United States sanctioned alleged Houthi financier Sa’id al-Jamal, whose network has transferred tens of millions of dollars to Yemen via a complex international network of intermediaries in support of the Houthis’ attacks on Saudi and Emirati targets. In January, after the Houthis turned their fire on commercial ships as part of their campaign to thwart Israel’s offensive against Hamas, U.S. and UK officials sanctioned Houthi Defense Minister Mohamed al-Atifi; Commander of the Houthi Naval Forces Muhammad Fadl Abd al-Nabi: Chief of the Houthi Coastal Defense Force Muhammad Ali al-Qadiri; and Assistant Minister of Defense for Logistics and Director of the Procurement Department Muhammad Ahmad al-Talibi. Yet, neither the U.S. and allied sanctions nor joint military action against Houthi missile and drone positions has yet deterred the Houthis from continuing to harm the global economy through attacks on shipping through the Red Sea.