U.S. Sanctions Against Iran - Rafsanjani and Khatami Governments

Rafsanjani and Khatami Governments

The term of President Rafsanjani was marked by some of the toughest sanctions against Iran. In March 1995, President Clinton issued Executive Order 12957 prohibiting U.S. trade in Iran's oil industry. In May 1995, President Clinton issued Executive Order 12959 prohibiting any U.S. trade with Iran. Trade with the United States, which had been growing following the end of the Iran–Iraq War, ended abruptly.

In 1996, the United States Congress passed the Iran–Libya Sanctions Act (ILSA). Under ILSA, all foreign companies that provide investments over $20 million for the development of petroleum resources in Iran will have imposed against them two out of seven possible penalties by the U.S.:

• denial of Export-Import Bank assistance;
• denial of export licenses for exports to the violating company;
• prohibition on loans or credits from U.S. financial institutions of over $10 million in any 12-month period;
• prohibition on designation as a primary dealer for U.S. government debt instruments;
• prohibition on serving as an agent of the United States or as a repository for U.S. government funds;
• denial of U.S. government procurement opportunities (consistent with WTO obligations); and
• a ban on all or some imports of the violating company.

In response to the election of Iranian reformist President Khatami, President Clinton eased sanctions on Iran. A debate in the U.S. Congress on whether to allow the expiration of ILSA, which some legislators argued hindered bilateral relations, and others argued would be seen as a concession on an effective program, ended on August 5, 2001, with its renewal by the Congress and signing into law by President George W. Bush.

In 2000 the Khatami government managed to reduce the sanctions for some items like pharmaceuticals, medical equipment, caviar or Persian rugs. In February 2004, during the final year of Khatami's presidency, the U.S. Department of the Treasury ruled against editing or publishing scientific manuscripts from Iran, and stated that U.S. scientists collaborating with Iranians could be prosecuted. In response, the Institute of Electrical and Electronics Engineers (IEEE) temporarily stopped editing manuscripts from Iranian researchers and took steps to clarify the OFAC guidelines concerning its publishing and editing activities. In April 2004 IEEE received a response from OFAC which fully resolved that no licenses were needed for publishing works from Iran and that the entire IEEE publication process including peer review and editing was exempt from restrictions. On the other hand, the American Institute of Physics (AIP), the American Physical Society and the American Association for the Advancement of Science, which publishes Science, refused to comply, saying that the prohibition on publishing goes against freedom of speech.