President Trump Updates on Iranian Sanctions (Executive Order 13876), June 24, 2019

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An Executive Order issued on June 24, 2019 by the President has placed new sanctions on Iran, targeting those individuals or institutions specifically or tangentially associated with the Office of the Supreme Leader of Iran either politically or financially.

Any property or interests in property in the United States acquired by the aforementioned individuals or institutions will be blocked from being transferred, paid, or otherwise dealt in.

While this Executive Order aims to deter terrorism and the destabilization of the Middle East through sanctions on individuals and institutions involved in those activities, it may also affect those who are related via even the most remote ties. It also prevents the immigration of Iranian persons to the United States if they are determined to have or have had remote financial or political ties to the specially designated entities.

The broad language of the Executive Order 13876 allows the Department of the Treasury a significant amount of leeway in determining to whom or what these sanctions apply.

The blocking of individuals and corporations are not the only recent targets. One of the industries deeply affected has been and continues to be Iranian Aviation.

While sanctions have affected the Iranian aviation industry since 1979, the situation is only getting worse. Currently 156 of Iran's total fleet of 300 planes are operational. The rest grounded due to missing parts. In 2015, UN resolution 2231 attempted to provide some relief by lifting sanctions for a “grace period.” During which only 16 of the 200 planes ordered from western manufacturers were actually delivered, before sanctions were put back in place by the current US administration.

The situation only gets worse. Current sanctions limit Iran from purchasing any aircraft manufactured with more than 10% American made parts, preventing the purchase Russian made aircrafts. According to Ali Abedzadeh, the head of Iran's Civil Aviation Industry, another 8% of the fleet is due to be retired in 2019. 580 new planes are needed by the Iranian Aviation industry by 2029.

To make matters worse operational cost are increasing. Iranian airlines consume more than 50% more fuel per flight then the international standard. One cause is from older less fuel-efficient planes. A second is due to increased flight times caused by the time it takes Iranian airlines to get approval to land. A third is the inability to import oil from western owned companies, required Iran to purchase from smaller refineries at above marked prices. The rising cost has caused domestic air travel to drop by 11% in Iran. This situation will soon reach a choking point for the Iranian airline industry.

Air Bus is the second largest aerospace and defense manufacturer and the largest helicopter manufacturer in the world. Airbus was renamed in 2017 and was formed from the consolidation of multiple European aviation companies. Iranian OFAC sanctions by US department of Treasury made sure Iranians will not be able to use the Western Top Commercial Technologies. Although its unfortunate, but maybe sanctions would coerce governments to come together and find common grounds to protect the interest of their countries and their nations.

If you have been put on a Specially Designated Nationals and Blocked Persons List, or need to be in compliance with OFAC Specific Licensing Division, or have questions on OFAC's current general licensing contact the law offices of Attorney Ramona Kennedy.

This is an OFAC law blog. It is not intended to be used as legal advice.

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