First transactions completed under channel set up in response to concerns over Iran’s economic crisis
The trade to Iran involved three shipments of drugs for cancer and transplant treatment, sent by an unidentified European firm, said Brian Hook, the State Department’s special envoy for Iran. Switzerland, which serves as the Washington’s representative in Tehran in the absence of U.S.-Iranian diplomatic ties, helped arrange the shipment.
The transactions came after the Treasury Department in October started a program officials said would address concerns that crippling U.S. sanctions against Iran would cut imports of medical supplies and basic necessities. While the sanctions aren’t intended to cut such trade, critics said the risks of doing business with Iran were squeezing trade needed for the most vulnerable populations.
“The United States is determined to ensure the Iranian people have access to food, lifesaving medicines, and other humanitarian goods,” Treasury Secretary Steven Mnuchin said in a statement.
Alireza Miryousefi, Iran’s spokesman at its mission to the United Nations, dismissed the humanitarian transactions, saying they didn’t address Tehran’s complaints about the economic impact of the sanctions on its population. “Paying lip service is not enough, we need to see concrete action (rather) than mere words,” he said.
The U.S. announcement coincided with a decision Thursday to continue allowing international cooperation on Iran’s civil nuclear program, including for medical uses. U.S. analysts had suggested that the recent escalation in U.S.-Iranian hostilities might prompt Washington to cancel waivers allowing the international cooperation. Henry Rome, with the Eurasia Group consulting firm, said the approval of the waivers would temporarily prevent further increases in tensions.
The U.S. killed Iranian Maj. Gen. Qassem Soleimani earlier this month in Iraq, and Iran retaliated with missile attacks on U.S. targets in Iraq.
The administration, along with many Iran watchers, says Iran’s economic hardships aren’t only the result of the sanctions, but Iran’s systemic corruption and economic mismanagement. U.S. officials accuse Tehran of diverting revenues away from economy-boosting programs in favor of financing proxies fighting in regional conflicts as well as for its nuclear-weapons and missile programs. Iran rejects the accusations.
Threats to punish banks and firms found helping Iran in contravention of the U.S. sanctions, along with previous cases of multibillion-dollar fines for such violations, have spooked most Western firms and other global companies into steering clear of Iran, including humanitarian transactions, according to government and industry officials.
An effort by European governments to facilitate certain types of trade using a vehicle known as Instex has so far failed because businesses feared their activities could trigger U.S. penalties even though European Union rules supposedly offered protection against American action.
Plummeting imports, the dire economic straits and a shortage of foreign currency is fueling dangerously high inflation, including for medical supplies and basic necessities in Iran. While analysts say those woes increase political pressure on the government, it isn’t known whether they will coerce Tehran into acceding to U.S. demands.
Esfandyar Batmanghelidj, head of a Europe-Iran business forum, said that how the U.S. uses its humanitarian channel would be key to its effectiveness. Treasury could use this “to siphon information about Iranian financial institutions,” he said, undermining its stated aim.
“But good faith implementation and a degree of trust in Swiss due diligence would help trade flow better and deliver obvious benefits for Iranian patients,” Mr. Batmanghelidj added.
Since the U.S. withdrew from the nuclear agreement with Iran in 2018 and reintroduced unilateral U.S. sanctions, it has become increasingly difficult for Swiss exporters to supply humanitarian goods to Iran, although such shipments are in principle not subject to U.S. sanctions.
Current and former U.S. officials say Iran fostered its own humanitarian problems by fraudulently labeling banned transactions as humanitarian trade under earlier U.S. sanctions programs.
“The Iranian regime has a history of using front companies disguised as humanitarian organizations,” said Mr. Hook, who added that the organizations were used to siphon off food and medicine. “So we have created a very high standard of due diligence.”
In recent months, Iran has gradually expanded nuclear activities that violate the nuclear deal. It has exceeded a limit on its permissible stockpile of enriched uranium, an essential ingredient for development of nuclear weapons. Iran also has conducted banned nuclear research work and is producing enriched uranium at an underground facility, Fordow, where enrichment activities were forbidden under the deal.
While Iran has said it would discard all remaining limits on its enrichment production under the deal earlier this month, Tehran hasn’t committed any fresh violations of the accord in recent weeks, diplomats say.
—Jessica Donati in Washington contributed to this article.
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