Iran skirting U.S. sanctions by using network of companies, dissidents say

Iran is financing its military and internal security forces by exporting billions of dollars worth of oil through a network of international companies that evade U.S. sanctions, confidential internal documents released by an exiled Iranian dissident group show.

Companies operated by Iran’s Islamic Revolutionary Guard Corps (IRGC) have facilitated sales not only of Iranian crude, but also the international transport of sanctioned Venezuelan oil, with China as a primary buyer, according to the documents the National Council of Resistance of Iran made public Wednesday.

The group pushed the claims at a press conference in Washington amid rising U.S. concern over the Guard’s political and economic power in Tehran, as well as growing international unease over the regime’s nuclear activities. Considered the protector of the 1979 Iranian Revolution, the IRGC was officially designated the IRGC as a terrorist organization by the Trump administration in 2019.

The Biden administration’s push for diplomacy with Tehran failed to restore the Obama-era nuclear deal that President Trump repudiated in 2018.

Mr. Biden’s top envoy for Iran, Robert Malley, said this week that the administration is still seeking diplomacy. But he acknowledged in an interview with Al Arabiya that Iran’s nuclear program is now advancing, and said Washington will use military force if necessary to prevent Tehran from acquiring a bomb.

NCRI representatives asserted that the current “policy of appeasement” has allowed Tehran to circumvent sanctions, proceed with its nuclear weapons program and finance international IRGC activities — including operations against the U.S. and its allies in Lebanon, Iraq, Syria and Yemen.

Revenue from sanctions-evading oil exports have also been channeled to Iranian security forces engaging in violent crackdowns on internal dissent amid ongoing anti-regime protests that began September of 2022, the dissident group claimed.

The documents expose a “very elaborate scheme by the Iranian regime to basically fund terror by circumventing sanctions,” said Alireza Jafarzadeh, deputy director of the Washington office of the NCRI.

The documents, he said, include confidential internal communications from the Petrochemical Commercial Company International, an Iranian firm founded in 2000 and targeted since 2011 by U.S. sanctions.

The PCCI “bypasses the oil and petrochemical sanctions in astronomical dimensions by creating branches and companies with the same name outside Iran (specifically countries that are not under sanctions),” stated an NCRI analysis summarizing the documents.

Oil exported through the branches is being purchased by clients around the world, including firms tied to the Syrian and Chinese governments, which have either quietly evaded or openly flouted both U.S. sanctions and an European Union embargo on Iranian crude. The documents circulated by the NCRI point specifically to Syria, Turkey, Turkmenistan and the United Arab Emirates as hosts of PCCI outposts.

The PCCI is itself a subsidiary of the Persian Oil and Gas Development Group, which is beholden to the IRGC within the context of a “’resistance economy’ ordered by [the Iranian] regime’s Supreme Leader Ali Khamenei to cede control of Iran’s economic arteries to the [IRGC],” the NCRI contended.

The Washington Times was not able to immediately verify the authenticity of the documents, which NCRI representatives said were obtained by dissident sources operating inside Iran.

The People’s Mujahedeen Organization of Iran or MEK is the principal member of the NCRI. While the MEK has a tumultuous history in Washington — it was once placed on then removed from the State Department’s Foreign Terrorist Organizations list — the group is believed to have deep sources in Iran and is credited with major past revelations, including exposing secretive Iranian nuclear facilities in the early 2000s.

Mr. Jafarzadeh declined Wednesday to speculate on the top international purchasers of sanctions-evading oil being exported out of Iran. However, other organizations critical of the Iranian regime have documented what they say are Chinese purchases of Iranian crude.

A 2021 report by The Washington Times citing data from United Against Nuclear Iran, which tracks Iranian crude oil purchases, outlined how Beijing’s purchases steadily increased following Mr. Biden’s election. Because Iran has so few other significant buyers, China has been able to demand a steep discount for the oil it purchases from Iran.

’Maximum pressure’

The purchases have drawn scrutiny in national security circles since 2018, when Mr. Trump withdrew the U.S. from the multinational nuclear accord that had given Iran billions of dollars worth of sanctions relief in exchange for limits on its suspect nuclear program. International monitors said Iran had largely abided by the deal, but began exceeding its limits after the U.S. withdrawal.

In pulling out of the accord, the Trump administration attempted to uphold a global embargo on Iranian crude, the country’s main export. The embargo was part of a “maximum pressure” campaign aimed at halting Tehran’s ballistic missile program and support of allies in Lebanon, Iraq, Syria and Yemen.

Despite criticism of the Trump administration, the international community broadly complied with the oil embargo. Even China, one of the key signatories of the Obama-era nuclear deal, cut most of its purchases of Iranian crude by early 2020. Only about 11,640 barrels per day moved between Iran and China in February 2020, according to United Against Nuclear Iran.

But as the 2020 U.S. presidential election approached, Beijing began increasing its purchases.

National security sources say privately that they believe Chinese officials calculated the U.S. would not punish Beijing during the period of domestic political uncertainty in Washington that year — and that the new Biden administration would be reluctant to highlight violations as it sought to revive the nuclear deal.

Beijing proceeded to triple its purchases of Iranian crude during the months immediately after the 2020 election, when it became clear that the Biden administration would not deter such activity.

A more recent assessment by United Against Nuclear Iran said “China is principally responsible for keeping the Iranian regime in business through oil purchases that have totaled over $47 billion since [Mr.] Biden assumed office.”

“Chinese imports have likely exceeded those made when the trade was not subject to U.S. sanctions,” the organization said in an April analysis. The analysis pointed to “more than 300 foreign oil-carrying ’Ghost Armada’ ships” facilitating sales to China via Beijing’s “officially non-state, semi-independent ’teapot’ petrochemical refiners.”  

“Teapots were originally permitted to import crude, subject to centrally imposed quotas, starting in July 2015,” the analysis said. “Since then, China’s economic planning agency, the National Development and Reform Commission (NDRC), has granted tens of new licenses annually. Estimates of the number of teapots hover around 150.”

The White House has come under increasing criticism for tolerating Beijing’s purchases. In January, Mr. Malley said the administration would increase pressure on China to stop buying Iranian oil.

The U.S. will “take steps that we need to take in order to stop the export of Iranian oil and deter countries from buying it,” he told Bloomberg Television at the time.

But NCRI representatives and other regime critics say the administration hasn’t backed that up with action.

Washington needs “more targeted” and “more layered” sanctions to address Tehran’s evasion operations, said Mr. Jafarzadeh, adding that current sanctions “are inadequate” and “not being implemented.”

“The whole purpose of our press conference today is this is a wake up call for the administration — for everybody,” he said.