The Washington Institute has produced a 2-part feature on the renewal of US sanctions.
Part 1 explains why the banking sector is Iran’s biggest weak spot. This says that the regime’s most vulnerable point is its precarious banking system, whose persistent mismanagement, capital shortfalls, and lack of transparency have already sparked public protests. Part 1 concludes that, unlike in 2012, banks, not oil exports, are the Iranian regime’s greatest economic vulnerability. The more these banks are isolated from the global financial system, the more difficulty they will have gaining the confidence of Iranians and raising the funds they need. With banks starved of capital, the government has been forced to take or contemplate controversial measures.
Part 2 says that pending policy decisions on re-imposing sanctions will give Washington opportunities to calibrate its arsenal of measures against illicit Iranian financial activity. Part 2 says that officials should keep in mind that sanctions need not be re-imposed exactly how they were before the nuclear deal. This discretion gives Washington room to better exploit key Iranian vulnerabilities, work with foreign partners with the aim of galvanizing multilateral action and prioritise US efforts in the face of time and resource constraints. For example, when targeting Iran’s oil sector, policymakers should focus more on revenues than sales, i.e. even as they take steps to reduce the volume of Iran’s oil sales, their priority should be ensuring that revenues from those sales are locked up. It also says that cutting off access to the top provider of such services, SWIFT, is neither necessary nor sufficient to minimize Iran’s access to the global financial system. It also says there are resource issues involved in preparing sanctions measures and actions can take months to prepare, and that some latitude in the measures will help in encouraging other states help call attention to Iran’s “most egregious violations of international norms”.