Iran And Trading Partners Will Find Ways To Skirt Sanctions, Analysts Say The Trump administration hopes the sanctions will force Iran to negotiate a new nuclear deal. But analysts point out there are overt and covert activities to avoid the penalties.
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Iran And Trading Partners Will Find Ways To Skirt Sanctions, Analysts Say

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Iran And Trading Partners Will Find Ways To Skirt Sanctions, Analysts Say

Iran And Trading Partners Will Find Ways To Skirt Sanctions, Analysts Say

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RACHEL MARTIN, HOST:

The Trump administration has reimposed sanctions on Iran, including its oil industry, shipping and banking sector. Now comes the hard part, though - preventing companies or countries from finding ways around those very sanctions. Here's NPR's Jackie Northam.

JACKIE NORTHAM, BYLINE: The Trump administration hopes its sweeping sanctions will cripple Iran's economy and force it to negotiate a new nuclear deal. Daniel Wager, a financial crimes specialist at LexisNexis Risk Solutions, says sanctions are an effective way to change behavior, but they're not foolproof.

DAN WAGER: There will always be both overt and covert activities to work around sanctions, to dodge sanctions or evade them. That's something that's gone on for a very long time.

NORTHAM: Wager says many of the techniques to skirt sanctions are also used for money laundering, such as setting up shell companies and intermediaries. As an example, he points to Iran's efforts to procure aircraft parts and components, something Iran critically needs to keep its aging airplanes working.

WAGER: There's a vast network of individuals who are out there that will go to a company that provides aircraft components, engine parts, and they will procure them and represent that those goods are being shipped to and paid for by someone in a country where it is allowed. And once the goods are shipped to there, they're further transshipped onward to Iran.

NORTHAM: It's trickier to work around oil sanctions because the crude has to be transported by large tankers on open waters. Still, Peter Harrell, an adjunct fellow with the Center for a New American Security, says, in the past, Iran found ways to get its most important export to customers.

PETER HARRELL: You saw Iran have its oil tankers turn off their tracking information. You know, they'd kind of take these very convoluted shipping routes to try to disguise that they were Iranian tankers. They'd change their flag. They changed change their name. And, you know, all these kind of tactics a ship can use to disguise its origin.

NORTHAM: Harrell, who worked on sanctions during the Obama administration, says Iranian tankers can be tracked nowadays with the help of satellites. And the administration can also look at financial transactions around the world to identify Iranian oil deals. Elizabeth Rosenberg, a former sanctions official at the Treasury Department, says that will help track down and punish anyone doing business with the Iranians and not just the buyers of crude oil.

ELIZABETH ROSENBERG: They could also go after the refiners who. Are their partners and creditors? The shipping company is. The shipping lines, the brokers - who touches them? The web is very broad here.

NORTHAM: The U.S. wants Iran's oil exports, which represent about 80 percent of the country's economy, down to zero. But other countries want to keep the nuclear deal and do business with Iran. Harrell says energy hungry nations are willing to risk sanctions that could reduce their access to U.S. markets.

HARRELL: You could see a country such as China that's importing oil - instead of the oil being purchased by a great big Chinese company that has lots of business in the United States, it'll be purchased by some small company that doesn't really do any business in the U.S. And if it is sanctioned, so what?

NORTHAM: Some methods of evading sanctions fall into a gray zone, such as holding payments in an escrow account, something India did the last time Iran was sanctioned. There's bartering, exchanging oil for, say, industrial machinery. And the European Union is looking at creating a system that doesn't have any connection to the U.S. banking system - all stopgap methods that can help a hobbled Iranian economy despite U.S. efforts to bring it to its knees. Jackie Northam, NPR News.

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