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Report: U.S. Companies Trade with Iran Despite Sanctions

Despite sanctions, U.S. companies have done billions of dollars in trade with Iran and North Korea, says the New York Times.
By Maayana Miskin
First Publish: 12/26/2010, 6:14 PM / Last Update: 12/26/2010, 7:22 PM

Over the past decade, United States-based companies have done billions of dollars in trade with Iran, North Korea, and other countries under sanctions for supporting terrorism, according to the New York Times. Products traded with Iran include gum, cigarettes, and sports equipment.

One American company was permitted to do work on an Iranian gas pipeline, despite sanctions aimed at Iran's gas industry in particular.

The transactions have been made possible by a 2000 law that allows exemptions from sanctions for companies selling food or medical products. The law was initially meant to allow humanitarian aid, but following pressure from lobbyists, included permits for non-humanitarian food products such as soda, beer, and additives.

Some purchasers of the “humanitarian” food products have been found to have links to terrorism. The New York Times found that of the Iranian chain stores that bought food colorings and cake sprinkles from the American company McCormick & Co., one is government owned, and a second counts blacklisted banks among its major investors.

Adam Szubin directs the Treasury Department's Office of Foreign Assets Control, which issues licenses for trade with countries under economic embargo. He told the Times that his office has limited resources and cannot fully investigate every buyer; in addition, he said, deals are allowed by law to go through even if the buyer has terrorist ties, as long as less than half the company is owned by those engaged in terrorism.

The report stated that Szubin's office has granted almost 10,000 requests to trade with countries under sanction in the past 10 years.

Stuart Eizenstat, who directed sanctions policy for the Clinton administration, told the Times that allowing exemptions could be positive “if it represents a conscious policy decision to give countries an incentive.” However, he said, American policy is not served by “loopholes like this that you can drive a Mack truck through.”

Iranians Feel Sanctions at the Pump
Tough American and European sanctions against Iran recently led to a significant change in Iranian policy, as the government stopped subsidizing gasoline, sending prices soaring from $0.38 per gallon to $2.55. The country has been experiencing gas shortages due to the sanctions, which have targeted Iran's fuel industry.

The Obama administration added new sanctions last week. Five new Iranian companies have been added to the Treasury Department's blacklist.