After Iran’s large-scale missile and drone attack on Israel on April 13, the United States pledged to increase economic pressure on Iran and hold it accountable for the attack, including through new sanctions and export controls.[1] Before the end of the month, the U.S. Treasury Department had announced two new sanctions packages to that end.[2]

The packages exemplified three emerging shifts in U.S. sanctions on Iran: more coordination on designations with allied countries; a greater effort to sanction companies’ broader business networks, including their key officials; and perhaps a renewed appetite for sanctioning Iran’s industrial capacity.

As a result, targeted sanctions against Iran—already expansive—could nevertheless swell further before the end of President Joe Biden’s current term in office and increasingly converge with the sanctions policies of key U.S. allies. Notably, however, this expansion of targeted designations has not yet been accompanied by more rigorous enforcement of existing sanctions on Iran’s energy exports.

Working with Allies

In recent months, the Treasury appears to have coordinated more frequently with allied countries, most notably the United Kingdom, for its designations. For example, on December 14, 2023, the two countries concurrently published targeted sanctions against Islamic Revolutionary Guards Corps (IRGC) Quds Force officials involved in providing support to non-state groups such as Hizballah and Hamas.[3]

In both of the sanctions packages following Iran’s April 13 attack (announced on April 18 and 25), the Treasury again highlighted its coordination with the United Kingdom.[4] The April 25 package marked the sixth such synchronized action between the two countries in as many months.[5]

However, in neither case did the countries precisely align their sets of designated entities. On April 18, the United States sanctioned 18 entities in total, including several companies connected to Iran’s unmanned aerial vehicle (UAV) program, such as Aseman Pishraneh, which services UAV engines. The United Kingdom’s designations included 13 entities. Although Aseman Pishraneh was among them, so were several entities that have long been subject to U.S. sanctions, such as the Aerospace Industries Organization,[6] indicating that the United Kingdom and other U.S.-allied countries still have some ways to go before they close the sanctions gap that opened between them and the United States over the past decade.

There are also a few recent sanctions gaps resulting from U.S. inaction. For example, the company Chekad Sanat Faraz Asia, which manufactures components for Shahed-series UAVs, is sanctioned only by the European Union and Australia, but not the United States or the United Kingdom.

The result is a somewhat uneven patchwork that is particularly conspicuous when it comes to UAV-related sanctions. On one extreme, there are companies such as the light aircraft maker Paravar Pars, which faces restrictions imposed by the United States, European Union, Australia, Canada, Japan, and the United Kingdom. On the other, there is Beijing Micropilot, a Chinese supplier of engines used in Shahed-series UAVs, which is sanctioned only by the United Kingdom.[7]

Table: A selection of Iranian UAV-related entities and major jurisdictions where they are sanctioned

Source: Data compiled by the Wisconsin Project

Still, the convergence of U.S. and allied sanctions is likely to continue and even may accelerate, thanks to a new EU framework for restrictive measures on Iran’s UAV program adopted last July and expanded in May to cover missiles as well as Iran’s transfers of both drones and missiles to Russia and armed groups in the Middle East.[8] A more expansive new UK framework came into force last December.[9] As a result, both jurisdictions now have broader authorities to impose targeted sanctions against Iranian individuals and companies.

Business Networks

In addition to working more closely with allies, the Treasury also seems to have become more willing to sanction a broader set of individuals and entities connected to companies involved in Iran’s weapon programs, including their boards of directors.

For example, on April 18, the Treasury designated seven key officials affiliated with Kimia Part Sivan Company, a firm that has worked with the IRGC Quds Force to improve its UAVs.[10] But the trend goes back more than a year; in January 2023, the United States designated six executives and board members at Qods Aviation Industries,[11] and a month later it went after eight officials at Paravar Pars.[12] In the above cases, the Treasury seems to have sanctioned the individuals not necessarily because they personally engaged in sanctionable behavior—though it is possible that they have—but because of their association with a company whose behavior was sanctionable. While U.S. allies have occasionally mirrored this practice when coordinating their designations with the United States, they do not appear to have adopted it systematically.

Similarly, the Treasury’s April 25 announcement targeted the company Bonyan Danesh Shargh (BDS) and four of its officials on the grounds that BDS has worked with the IRGC Aerospace Force Self-Sufficiency Jihad Organization.[13] Notably, the Treasury then went one step further, sanctioning three additional companies for being connected to a BDS official. In other words, the Treasury designated entities two degrees removed from the primary sanctions target.

This approach of targeting a company’s broader business network can hinder sanctions evasion by making it more difficult for a key official at a sanctioned company to simply register a new business or shift the illicit activities to another existing company.

Industrial Capacity

Finally, Treasury’s April 18 announcement may presage a newfound appetite for targeting Iran’s general industrial capacity, something the United States has largely shied away from under President Biden.

Under President Trump’s “maximum pressure” campaign, the United States was eager to target Iranian industries. Executive Order (E.O.) 13846, which re-imposed sanctions on Iran following the U.S. withdrawal from the Joint Comprehensive Plan of Action, targeted numerous major sectors of the Iranian economy, including the automotive sector.[14] E.O. 13871, signed in 2019, brought new sanctions to Iran’s metals sector, and E.O. 13902, signed in 2020, targeted the construction and manufacturing sectors, among others.[15]

Since President Biden took office in 2021, however, the only sectors the United States has taken aim at with sanctions have been the energy and petrochemical industries. Prior to Iran’s April 13 attack against Israel, the Biden administration had not used E.O. 13871 to designate any entities.

But on April 18, Treasury used that order to target several of Khouzestan Steel Company’s customers and suppliers abroad.[16] Simultaneously, it designated several subsidiaries of Bahman Group, a large holding company in Iran’s automotive manufacturing sector, for their connections to Iran’s armed forces.[17]

By sanctioning more businesses in more sectors, the United States may be seeking to counteract the apparently waning economic pressure of existing measures. If the Biden administration continues trend of designating companies across a broader swathe of the Iranian economy, it could find itself inching back toward the Trump administration’s maximum pressure approach. This trend has thus far not been followed by U.S. allies such as the United Kingdom and the European Union, which have focused their sanctions more closely on entities directly connected to Iran’s UAV and missile programs.

Conclusion

Together, the sanctions packages following Iran’s attack against Israel suggest that the United States is looking for ways to turn up the pressure on Iran’s economy and its military programs.

There may be a more straightforward way of doing so, however, namely by more rigorously enforcing existing sanctions on Iran’s oil sales through systematically targeting foreign buyers and shippers. Crude oil and petroleum products are a key source of income for the Iranian government, and Iran’s oil exports recently reached a six-year high despite heavy U.S. sanctions on paper.[18] In an attempt to prompt a crackdown on such exports, in April the U.S. Congress passed new measures strengthening the government’s authority to designate parties buying and transporting Iranian crude.[19] However, the Biden administration may be hesitant to use this authority or to more stringently enforce oil sanctions,[20] lest a disruption of oil markets cause rising prices at the pump during an election year.

Still, while the effect of the three trends outlined in this article may not cause the level of economic pain that cutting off Iran’s oil exports might, they should not be discounted. They could, if continued, impose new marginal costs for Iran and make it more difficult for its military programs to advance. And better sanctions coordination among Western allies can enable them to more effectively address increasingly interlinked proliferation challenges, of which Iran is one part, in the face of Russian and Chinese obstruction of broader multilateral efforts.