Tag Archives: sanctions

New Iran Sanctions Disrupt US and Overseas Business

Treasury Secretary Steven Mnuchin

The effect of the US pulling out of the Iran nuclear agreement will not only reverberate in Iran. US companies will also feel the bite of newly imposed economic sanctions on the regime of Ali Khamenei, Iran’s Supreme Leader.

The US withdrawal from the agreement will force the US government to revoke existing licenses allowing for US companies to do business with Iran. Treasury Secretary Steven Mnuchin said on Tuesday that licenses held by Boeing Company and Airbus Group, Boeing’s European competitor, will be nullified by the US withdrawal from the agreement.

“The existing licenses will be revoked,” Mnuchin said to reporters.

The company responded by saying it will consult with the government on what their next move should be.

“As we have throughout this process, we’ll continue to follow the U.S. government’s lead,” Boeing commented.

Airbus is also dependent on licensing from the US to sell its airplanes to Iran due to the US-made parts Airbus uses in its aircraft.

There will be waivers and exemptions made under certain conditions for certain products and countries, but those conditions were not discussed by Mnuchin.

Mnuchin added that the new sanctions will also seriously limit the sale of oil by Iran, which sells about 5 percent of the world’s oil, making it the fifth largest oil producer in the world. He said that there will be a 6-month grace period to allow countries to finish up existing contracts and implement “significant reductions” in the amount of crude oil they purchase from Iran.

The secretary said he does not believe the price of oil will rise by much since he expects other countries will respond to the new sanctions with increased oil production.
Mnuchin said that the goal of the new sanctions is to force Iran to come to the table to renegotiate the Iran nuclear deal.

US Expands Sanctions on Russia

The Obama administration angered Putin and the Kremlin by sanctioning 34 additional individuals and entities for assisting Russian and Ukrainian companies to avoid US penalties and other punishments.

The expansion of the sanctions will help to “maintain the efficacy of existing sanctions” which were put in place in reaction to the Russian annexation of the Crimea last year and for the support that Russian has given to eastern Ukrainian separatists.

Fourteen of the 34 are connected to “serious and sustained evasion,” or are divisions of firms already on the sanctioned list. The treasury department said that six separatists and two ex-government officials from the Ukraine are “complicit” in corruption, or in weakening the Ukrainian government. US citizens are restricted from doing business with those on this list, and any US assets held by these entities are now frozen.

The new sanctions match those put in place by America’s allies and demonstrate Washington’s “unwavering resolve to pressure Russia to respect the security and sovereignty of Ukraine,” John Smith, the acting sanction boss of the treasury department said.

Kremlin spokesman Dmitry Peskov responded to the US move:

“This is a continuation of the unfriendly line against Russia that runs counter to logic, ” he said.

US Businesses Feel Bite in Response to Russian Sanctions

Despite the limited nature of the economic sanctions President Obama has imposed on Russia, some US businesses say they are already feeling a backlash.

In Temecula, California Roy Paulson, CEO of Paulson Manufacturing, says he has already lost business from his Russian distributors after the US reacted to Russia’s annexation of Crimea, formerly Ukrainian territory.

“I’m feeling a cold freeze in our relationship with businesses in Russia,” said Paulson.

Paulson produces protective face shields for commercial and public safety use. He says he has not received a customer request for an order price in several weeks from his Russian distributor.  Under ordinary circumstances he would usually be handling three or four orders simultaneously.

Obama’s sanctions so far include blacklisting and freezing the assets of 20 important Russian officials. The President has hinted that the sanctions could be intensified, perhaps taking steps against specifically named Russian industries.

According to Eswar Prasad, a professor of trade policy at Cornell University, severe trade restrictions are unlikely to be imposed by Obama. He does say that US organizations like the Export-Import Bank might feel pressure to limit loan guarantees to companies who are either looking to expand into new Russian markets or to sell their for the first time.

US sales to Russia are valued at about $11.2 billion, as of last year. That represents only 0.5 percent of total US exports, but that is already double what they were in 2010.

Other companies that say they have been negatively affected by the backlash to the sanctions are Dallas-based International Chem-Crete Company, which manufactures a product that prevents airport runways from freezing, and New Orleans-based Louisiana Caviar Company, whose business to Russia stopped months ago as tensions between Ukraine and Russia rose.

“I just saw it as anti-American sentiment,” says company owner John Burke.