October 5, 2020

IntelBrief: U.S. Sanctions Iran-led Axis

Secretary of State Mike Pompeo listens as Defense Secretary Mark Esper speaks during a news conference to announce the Trump administration's restoration of sanctions on Iran, Monday, Sept. 21, 2020, at the U.S. State Department in Washington. (AP Photo/Patrick Semansky)

Bottom Line Up Front

  • The Trump administration imposed additional sanctions on Iran, Syria, and Lebanese Hezbollah to weaken the Iran-led ‘axis of resistance.’
  • The sanctions are intended to isolate members of the Iran-led axis from the international banking system and to reduce their financial resources. 
  • The sanctions are unlikely to compel any members of the axis to alter their fundamental goals or behaviors.
  • The axis is able to mitigate the effect of U.S. sanctions through their relationships with Russia, China, Venezuela, and other actors. 

In September, the Trump administration announced new sanctions intended to weaken and destabilize the core members of a regional ‘axis of resistance’ centered on Iran. Iran has dedicated all elements of its national power to ensuring the survival of the regime of Syrian dictator Bashar Al Assad against a nationwide insurgency that began in 2011. Assisting that effort was Iran’s most significant regional protégé, Lebanese Hezbollah, whose military wing was built by Iran’s Islamic Revolutionary Guard Corps (IRGC) and whose political arm has become a major force in Lebanese politics. Iran sought to ensure that no regime came to power in Syria that would threaten Hezbollah from across the border, or which would interfere with Iran’s ability to arm Hezbollah through Syrian territory. Shia Muslim Hezbollah represents, to some extent, an outgrowth of Iran’s Islamic revolution, and Assad’s Alawite community practices a version of Islam akin to Shiism.

In several separate announcements in September, the Administration imposed U.S. sanctions on a wide range of entities and individuals of Iran, Syria, and Hezbollah. One set of sanctions targeted two dozen Iranian military and nuclear program entities and individuals, under a new Executive Order issued on September 21 to deter new arms sales to Iran. The list added to the hundreds of Iranian and third country entities already sanctioned under a wide range of prior Executive Orders. Another set of sanctions, targeting Syrian military officers as well as Assad family financiers, was imposed to compel ‘the Assad regime and its enablers [to] take irreversible steps to end their campaign of violence against the Syrian people.’ The Trump administration separately sanctioned Hezbollah-linked companies, a Hezbollah official, and a former Lebanon minister for Hezbollah’s ‘exploit[ation] of Lebanon’s corrupt system just like other parties.’

The sanctions are intended to discredit the individuals and entities sanctioned, to deter global banks and officials from dealing with them, and to reduce their financial wherewithal. Yet, the effect of the sanctions is likely to be limited insofar as Iran, the Assad regime, and Hezbollah already have limited interactions with the global financial system, and no presence whatsoever in the U.S. market. Therefore, none of the new sanctions – as no previously imposed sanctions have - will likely cause the break-up of the axis of resistance or alteration of its goals, destabilize the Iranian or Assad regimes, respectively, or reduce Hezbollah’s influence on Lebanese politics.

Working against the effectiveness of U.S. sanctions are the relationships that the axis maintains with outside powers. Iran skirts extensive U.S. sanctions, in part, by selling several hundred thousand barrels of crude oil per day to China, with which Iran recently signed a 25-year strategic agreement. Both China and Russia have said they will sell new arms to Iran after the U.N. ban on such sales expires on October 18, 2020, despite the new U.S. Executive Order and other U.S. penalties if they do so. The revenue stream from China enables Iran to support the Assad regime with gratis oil shipments, credits, and investment in Syria’s agricultural and telecommunications sector, and to provide $700 million per year in support to Hezbollah. Russia remains militarily present in Syria, working alongside the Syrian military, Iran-backed forces, and Hezbollah to secure the Assad regime – assistance that works against U.S. pressure on the regime to agree to a political solution that would give Assad critics a role in governance.  By working within Lebanese institutions, Hezbollah benefits from investment and aid to Lebanon from the broader Arab world. Venezuela is helping the axis by supplying Iran with a precious source of hard currency – gold – in exchange for the gasoline the regime of Nicolas Maduro desperately needs. In apparent recognition of the key Iran-Venezuela relationship, the September U.S. sanctions on Iran included a specific designation of Maduro for ‘conventional arms-related activities [with Iran] pursuant to the new Conventional Arms Executive Order.’ The relationships among the members of the axis and between them and outside powers will likely continue to blunt the impact of U.S. sanctions on the Iran-led coalition.