Oil is flowing through Hormuz again. But not for Iran | Eye for Iran | EP 118 |

So now when it comes to sanctions, Iran has faced U.S. sanctions for decades.

But this time, Washington is definitely widening the net around the ways that Iran has learned to evade them.

So the U.S. has expanded potential sanctions into five additional sectors.

We've got shipping, aviation, technology, gold and digital assets, targeting routes Iran uses to move oil.

money, equipment, and other goods outside of the traditional banking system.

So that's what's new here.

And rather than focusing only on Iranian entities, Washington is threatening foreign companies, banks, and their governments that facilitate those networks with secondary sanctions and potentially loss of access to the U.S. financial system.

So Max, I'll start with you.

Will Washington actually enforce this against major players like China, which you're an expert on, even if doing so would come with significant economic and political costs.

So it's interesting with respect to these new sectors of the Iranian economy for which there's now an authority to add sanctions on.

It's important to just give us some nuance there before getting to the China angle.

One, it's that these are criteria sectors of the Iranian economy that had already been covered by other executive orders previously.

as it related to IRGC involvement in those sectors.

So now what's happened is there's a broader pool of activity that could be sanctioned, where Treasury doesn't have to meet the threshold of assessing that someone was dealing with the IRGC in those sectors of the Iranian economy.

It's now just anyone, regardless of their touchpoints, the IRGC.

With respect to the China angle, do we think that the United States is going to take some sort of action against the Chinese financial institution? It's impossible to say, right? The reality here is that the United States has been consistent in identifying firms in mainland China and in Hong Kong that are key conduits for Iranian sanctions evasion.

The one area where we actually have an instance of the United States targeting a Chinese financial institution dates back to 2012, when the United States took a partial sanction against China's Bank of Kunlun for its dealings involving Iran and illicit oil sales.

That move by the Treasury Department was aimed at cutting off the bank's access to the U.S. dollar system.

But in the end, this was actually more of a symbolic move, since The head of OFAC at that time later testified before the U.S. Senate and said that Bank of Kunlun wasn't really tied to the U.S. dollar system very much.

It wasn't using U.S. dollars.

And so what we could potentially see, what I've long advocated for, is for the United States to add Bank of Kunlun to the specially designated nationals list to impose full blocking sanctions against on Bank of Kunlun.

And the reason for doing that is it would put upward pressure on the bank's ownership, the major Chinese state-owned entity, China National Petroleum Corporation, to divest its interest in the bank and ultimately let that bank fail since it's continued to serve as a key conduit for illicit Iranian oil sales and revenue from China to Iran.

But they haven't.

Correct.

The U.S. Treasury Department has known about Bank of Kunlun as this key conduit for several years, ever since that original designation in 2012.