US Economic Sanctions Harm Iranians’ Right to Health | HRW

US Economic Sanctions Harm Iranians’ Right to Health | HRW...
hrw.org 29/10/2019 Health

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US Should Ensure Effective Humanitarian Exemptions
Iranians shop at a drugstore at the Nikan hospital in Tehran on September 11, 2018. © 2018 Reuters/Brian Snyder
(Washington, DC) – The Trump administration’s broad sanctions on Iran have drastically constrained the ability of the country to finance humanitarian imports, including medicines, causing serious hardships for ordinary Iranians and threatening their right to health, Human Rights Watch said in a report released today. The administration in Washington should take immediate steps to ensure a viable channel exists for trade of humanitarian goods with Iran.
The 47-page report, “‘Maximum Pressure’: US Economic Sanctions Harm Iranians’ Right to Health,” documents how broad restrictions on financial transactions, coupled with aggressive rhetoric from United States officials, have drastically constrained the ability of Iranian entities to finance humanitarian imports, including vital medicines and medical equipment. While the US government has built exemptions for humanitarian imports into its sanctions regime, Human Rights Watch found that in practice these exemptions have failed to offset the strong reluctance of US and European companies and banks to risk incurring sanctions and legal action by exporting or financing exempted humanitarian goods. The result has been to deny Iranians access to essential medicines and to impair their right to health. Under international law, the US should monitor the impact of its sanctions on Iranians’ rights and address any violations sanctions cause.
“Trump administration officials claim they stand with the Iranian people, but the overbroad and burdensome US sanctions regime is harming Iranians’ right to health, including access to life-saving medicines,” said Sarah Leah Whitson, Middle East director at Human Rights Watch. “The comprehensive web of US sanctions has led banks and companies to pull back from humanitarian trade with Iran, leaving Iranians who have rare or complicated diseases unable to get the medicine and treatment they require.”
Between November 2018 and October 2019, Human Rights Watch interviewed 21 people, including Iranian medical professionals, former or current employees of Iranian and international pharmaceutical importers of medicines, and lawyers and NGO workers with firsthand knowledge of the challenges of humanitarian operations in Iran. Some of the interviewees live in Iran, and many of those interviewed either previously lived in Iran and/or continue to travel to Iran but reside outside the country. Human Rights Watch interviewed US government policy experts with direct or indirect experience of working on Iran issues. A Human Rights Watch researcher also corresponded with several Iranians who had commented on social media about the inaccessibility of needed medicine for themselves or their family members. Human Rights Watch relied on available Iranian and US government official statements and analyzed economic and trade data produced by Iran’s Central Bank, Iran’s Food and Drug Organization (Sazman-e-Ghaza-va-Daroo), and Eurostat, the statistical office of the European Union based in Luxembourg.
Since the Trump administration formally withdrew the US from the international nuclear agreement with Iran in May 2018, it has re-imposed previously suspended nuclear related economic sanctions, including on oil exports, and added new sanctions. The US Treasury Department predicted the sanctions would lead to Iran’s “mounting financial isolation and economic stagnation.” Open-ended and comprehensive sanctions such as those that the Trump administration has imposed on Iran have negatively impacted the humanitarian needs and the enjoyment of the right to health for millions of Iranians, Human Rights Watch said.
On October 25, 2019, with the announcement of new sanctions on Iran, Treasury Secretary Steven T. Mnuchin said that “This administration remains committed to the unfettered flow of humanitarian aid to the Iranian people, who have suffered for forty years under the mismanagement of this corrupt regime.” However, US officials also have sent a contradictory message, saying that the strategy is in fact to cause enough distress for the Iranian people that they force the government to change its behavior – a recipe for infringing on Iranians’ economic rights. On February 14, 2019, US Secretary of State Mike Pompeo told CBS News: “Things are much worse for the Iranian people [with the US sanctions], and we are convinced that will lead the Iranian people to rise up and change the behavior of the regime.”
The recent US Treasury and State Department announcement of a “new humanitarian mechanism” for trade with Iran is a rare implicit acknowledgement that broad US sanctions on Iran have restricted the flow of humanitarian goods into the country,” Whitson said. “The US government should get serious about addressing the harm resulting from its cruel sanctions regime by creating a viable financial channel with reasonable requirements for companies, banks, and groups to provide humanitarian goods for people in Iran instead of requiring more burdensome hurdles.”
The October 25 designation of Iran as a “jurisdiction of primary money laundering concern under Section 311 of the USA PATRIOT Act,” constitutes an escalation of US financial sanctions against Iran. It includes a new mechanism to “increase transparency of permissible trade” with Iran. There is serious concern that complying with the burdensome requirements of the new mechanism will not be feasible for companies. It is also unclear whether compliance will supersede the prohibition on any trade, including humanitarian trade, with designated entities under terrorism provisions. As one former US official involved in Iran sanctions policy put it: “I suspect most will see this mechanism less as a humanitarian channel and more as an intelligence gathering function to enable additional US sanctions. For those of us seeking a real channel, this ain’t it.”
Human Rights Watch found that US economic sanctions on Iran, despite the humanitarian exemptions, are causing unnecessary suffering to Iranian citizens afflicted with a range of diseases and medical conditions. Some of the worst affected are Iranians who have rare diseases and/or conditions that require specialized treatment and are unable to acquire previously available medicines or supplies. This includes patients with leukemia, epidermolysis bullosa (EB, a type of disease that causes fragile, blistering skin), epilepsy, and chronic eye injuries from exposure to chemical weapons during the Iran-Iraq war.
People with severe forms of EB have been unable to get specialized bandages and are significantly more likely to get bacterial infections and develop sepsis. Children with epilepsy resistant to common treatments and unable to get imported medicines have frequent, uncontrolled seizures that risk injury and over time severe and permanent brain damage.
Over the past year, the US Treasury Department has added a large number of institutions, including Iranian government and private banks, to the Specially Designated Nationals and Blocked Persons List for the sanctions. US and non-US companies and financial institutions that engage in transactions with these entities can be prosecuted in the US. The serious regulatory and due diligence requirements placed on international firms trading with Iran have left only a small number of companies and banks with the capacity to finance trade with Iran and a willingness to accept the increased financial and legal risks.
Excessive caution or “overcompliance” by banks and pharmaceutical companies is a significant factor for this, Human Rights Watch said. Human Rights Watch found, for instance, that a European company refused to sell the special bandages needed by patients with EB despite the humanitarian exemption. Human Rights Watch reviewed correspondence with two other banks in which they refused to authorize humanitarian transactions with Iran.
The Trump administration’s broad use of “terrorist” designations further threatens humanitarian trade with Iran. The April designation of the Islamic Revolutionary Guard Corps, part of Iran’s military force, as a Foreign Terrorist Organization, could affect up to 11 million Iranians, the New York Times reported. While these designations do not apply to medicines, they increase the potential risks for companies if they end up in transactions with designated entities. Moreover, the September 20 decision to impose further sanctions on Iran’s Central Bank severely restricts the last remaining Iranian financial institution able to engage in foreign exchange transactions involving humanitarian imports, rendering the “humanitarian exemption” nearly meaningless.
“We have now, for a full year, tried to find banks that are able and willing to transfer money from donors [for our humanitarian operations],” Jan Egeland, secretary general of the Norwegian Refugee Council, which supports thousands of Afghan refugees in Iran, said in August. “But we are hitting a brick wall on every side. Norwegian and other international banks are afraid of US sanctions to transfer the money that governments have given for our vital aid work.”
Under international law, a country or coalition of states enforcing economic sanctions should consider the impact on the human rights of the affected population, especially their access to goods essential to life, including medicines and food. Human Rights Watch opposes sanctions that have a disproportionately negative impact on the human rights of the affected population, or that create unnecessary suffering, in particular for vulnerable populations.
The US government should work to establish viable financial channels for humanitarian trade with Iran and take immediate steps to ensure that humanitarian exemptions are effective in facilitating Iranians’ access to medicine and medical equipment, Human Rights Watch said.
“Ordinary Iranians are bearing the brunt of America’s sanctions policy, and their hearts and minds will be keeping tabs on the parties that are causing them harm,” Whitson said.
While sanctions diminish Iran’s capacity to meet the needs of residents, they do not take away Iran’s human rights obligations. The Iranian government should ensure that citizens and residents can enjoy their right to health without discrimination and should take all possible measures to reduce the negative impact of sanctions on vulnerable groups. This includes the government’s obligation to prevent corruption and misuse of resources.
Summary
In May 2018, the Trump administration formally withdrew from the international nuclear agreement with Iran, known as the Joint Comprehensive Plan of Action (JCPOA), agreed upon by the Obama administration in July 2015. Over the next 120 days, until November 5, 2018, the US government re-imposed all economic sanctions related to Iran’s nuclear program that had been previously lifted, including “secondary sanctions” on non-US entities that conduct financial or commercial transactions with Iran.
Though the US government has built exemptions for humanitarian imports into its sanction regime, broad US sanctions against Iranian banks, coupled with aggressive rhetoric from US officials, have drastically constrained Iran’s ability to finance such humanitarian imports. The consequences of redoubled US sanctions, whether intentional or not, pose a serious threat to Iranians’ right to health and access to essential medicines—and has almost certainly contributed to documented shortages—ranging from a lack of critical drugs for epilepsy patients to limited chemotherapy medications for Iranians with cancer.
At the core of the harmful knock-on effects of renewed US sanctions on Iran is that in practice, these sanctions have largely deterred international banks and firms from participating in commercial or financial transactions with Iran, including for exempted humanitarian transactions, due to the fear of triggering US secondary sanctions on themselves. As a result, Iranians’ access to essential medicine and their right to health is being negatively impacted, and may well worsen if the situation remains unchanged, thereby threatening the health of millions of Iranians.
On several occasions, US officials have indicated that the pain US sanctions are causing for ordinary Iranians is intentional, part of a strategy to compel Iranian citizens to demand their autocratic government to “change behavior” – a recipe for collective punishment that infringes on Iranians’ economic rights. For instance, on February 14, 2019, US Secretary of State Mike Pompeo told CBS News, "Things are much worse for the Iranian people [with the US sanctions], and we are convinced that will lead the Iranian people to rise up and change the behavior of the regime.” The US Treasury Department itself predicted that US policies would lead to Iran’s “mounting financial isolation and economic stagnation.”
The Trump administration, beyond re-imposing economic sanctions that had been suspended under the JCPOA, has repeatedly targeted Iranian financial institutions. On October 16, 2018, for example, the Office of Foreign Assets Control (OFAC) of the US Treasury Department further restricted Iran’s access to global financial markets by adding about 20 Iranian institutions to the list of Specially Designated Global Terrorists (SDGTs) for “supporting military force that recruits and trains child soldiers.”
Then, with the total re-imposition of sanctions suspended under the JCPOA, in November 2018, the US Treasury Department added at least 37 Iranian governmental and privately-owned banks, as well as Iran’s national oil company, to the Specially Designated Nationals and Blocked Persons List (SDN) of individuals subject to sanctions. Any company subject to US jurisdiction, US as well as non-US, that engages in transactions with SDNs can be subject to prosecution in the US, creating a significant risk for businesses, banks and global financial institutions essential for facilitating the import of essential medicines and medical equipment into Iran.
Previously, the US government had lifted sanctions on non-US entities as part of the JCPOA. The serious regulatory and due diligence requirements placed on international firms trading with Iran have left only a limited number of companies and banks with the capacity to finance trade with Iran and willing to accept the increased financial and legal risks of US secondary sanctions that come with those transactions.
These restrictions on financing, combined with the sharp depreciation of the Iranian currency, the rial, have resulted in severely limiting Iranian companies and hospitals from purchasing essential medicines and medical equipment from outside Iran that residents depend upon for critical medical care. Moreover, renewed US sanctions have directly impacted families’ purchasing power, contributing to inflation rates of around 30 percent in the past year. Iran’s nearly universal health care coverage currently absorbs a significant portion of health care costs. But the failure of this system, which is already under serious financial stress, will likely have devasting effects on millions of patients.
In July 2019, the UN Special Rapporteur on the situation of human rights in Iran said that he is “not only concerned that sanctions and banking restrictions will unduly affect food security and the availability and distribution of medicines, pharmaceutical equipment and supplies, but is also concerned at their potential negative impact on United Nations and other operations and programs in the country.”
Human Rights Watch found that current economic sanctions, despite the humanitarian exemptions, are causing unnecessary suffering to Iranian citizens afflicted with a range of diseases and medical conditions. Some of the worst-affected are Iranians with rare diseases and/or conditions that require specialized treatment who are unable to acquire previously available medicines or supplies. This includes people with leukemia, epidermolysis bullosa (EB, a type of disease that causes fragile, blistering skin), or epilepsy, and individuals with chronic eye injuries from exposure to chemical weapons during the Iran-Iraq war.
The consequences for these individuals can be catastrophic: people with severe forms of EB are now unable to access specialized bandages and are at significantly increased risk for bacterial infections, sepsis, fusion of fingers, and contractures of joints. Individuals with epilepsy who are resistant to common treatments and unable to access foreign-made medicines may suffer frequent, uncontrolled seizures that risk injury and result over time in severe, permanent brain damage. Shortages of essential medicines can affect a much broader range of patients as well. For example, an Iranian journalist has reported on severe complications after a Caesarean section believed to be related to the use of a “non-standard” anesthesia medicine because of lack of access to higher quality medication.
The abusive consequences of secondary sanctions, demonstrated by research conducted by Siamak Namazi, an Iranian-American analyst, on the sanctions regime during the Obama Administration prior to the JCPOA, have inevitably recurred with the re-imposition of sanctions by the Trump administration. But the difference now with the Trump Administration’s Iran sanctions is “that the US has re-imposed the sanctions it lifted pursuant to the nuclear deal and it has layered on many more, including doing things like designating some Iranian financial institutions not previously designated and that were previously used to facilitate food, medicine and medical imports,” Elizabeth Rosenberg, a former US Treasury Department sanctions official, told NPR. As Rosenberg pointed out, “most of the big Iranian banks are designated” – i.e., under sanction – and smaller banks “may have less capacity to handle cross-border financial transactions.” Iran is currently able to conduct business through a very limited number of banks and financial institutions closely affiliated with countries that had initially received waivers from the US to continue purchasing Iran’s oil, notably China, India and Turkey. These banks used Iran’s oil revenues, held in escrow accounts, to execute financial transactions for imports of medicine and other items prioritized by the Iranian government as essential goods.
Moreover, the tone of US government officials in public and private concerning economic transactions with Iranian institutions has contributed to companies and banks’ hesitation to engage in trade with Iran. For instance, Richard Grenell, the US Ambassador to Germany, told a German paper on May 6, 2019 that, “You can do as much business as you want in Iran, but we have a say with regards to your visa.” “Because if you do something, we’re not going to agree to let you enter our country,” he added.
Excessive caution or “overcompliance” by banks and pharmaceutical companies wary of falling afoul of US sanctions is a significant factor in limiting Iran’s access to funds for imports of medicines and medical equipment. As former French ambassador to Washington Gérard Araud told a Hudson Institute gathering in October 2018, “the fact is that banks are so terrified by the sanctions that they don’t want anything to do with Iran.” In the case of the specialized bandages needed for patients with epidermolysis bullosa, Human Rights Watch found evidence that a European company refused to sell the bandages as a result of sanctions despite the humanitarian exemption. In two other instances, Human Rights Watch reviewed correspondence from banks refusing to authorize humanitarian transactions with Iran after the imposition of sanctions.
This fear has even caused problems for humanitarian actors supporting thousands of Afghan refugees in Iran. The Norwegian Refugee Council (NRC) is the largest of five international NGOs working in Iran, where they have implemented programs in areas like education for over seven years. However, they are now facing similar hurdles financing their operations due to sanctions. “We have now, for a full year, tried to find banks that are able and willing to transfer money from donors [for our humanitarian operations],” said NRC head Jan Egeland in August 2019, “but we are hitting a brick wall on every side. Norwegian and other international banks are afraid of US sanctions to transfer the money that governments have given for our vital aid work.”
According to individuals familiar with international humanitarian trade with Iran, the broad restrictions on financing of Iran-related trade have forced Iranian pharmaceutical companies to reroute even transactions that are fully authorized under US sanctions law through the hawala system, an informal remittance network that relies on existing family or other relationships of trust to make payments without transferring money. But, use of the hawala system often results in increased transaction costs and is difficult to use due to Iranian government health regulations, doctors and importers say. This has led importers to choose alternative pharmaceuticals and equipment of lower quality. In interviews with Human Rights Watch, as well as in posts on social media, patients reported suffering from serious side-effects when they had to choose medical alternatives after they either could not find or could not afford their usual medication in the market. Human Rights Watch is not able to independently verify the reported medical side effects resulting from the use of lower quality medicine or medical equipment.
The Trump administration’s broad use of “terrorist” designations further threatens humanitarian trade with Iran. The US has failed to clarify its April 15 designation of the Islamic Revolutionary Guard Corps (IRGC), a formal part of Iran’s military force, as a Foreign Terrorist Organization (FTO), which could impact up to 11 million Iranians. Even though medicines are exempted from sanctions, “they do become prohibited if they are found to be going to a designated actor or entity,” Richard Nephew, a former State Department office, told the BBC. Referring to such a designation, Jan Egeland from NRC told the audience in a conference on humanitarian aid that while governments in Washington, London, and Bern may not intend to sabotage his organization’s work with refugees, “no one is able to tell me that if you do [your operation] this way, [neither] you nor your staff will be in violations of our rules.”
The Trump administration’s September 20, 2019 decision to impose further sanctions on Iran’s Central Bank under its “counterterrorism authority” severely restricts the last remaining Iranian financial institution able to engage in foreign exchange transactions involving humanitarian imports, rendering the “humanitarian exemption” meaningless. According to Brian O’Toole, a former senior advisor to the director of OFAC, its impact “will be to further impair the delivery of food and medicine to the Iranian people.” On October 14, a representative of Iran’s drug importers association told Iranian media that after the US declared these sanctions, South Korean banks have suspended their relations with Iran.
On October 25, 2019, the US Departments of the Treasury and State announced a further escalation of US financial sanctions against Iran by the Financial Crimes Enforcement Network (FinCEN) bureau of the Treasury department, while at the same time announcing a new mechanism to “increase transparency of permissible trade” with Iran. The FinCEN action is aimed at depriving the Iranian government the ability to use “so-called humanitarian trade to evade sanctions and fund its malign activity” by designating Iran as a “jurisdiction of primary money laundering concern under Section 311 of the USA PATRIOT Act.” This designation is known colloquially as the “financial death penalty” because of the severe restrictions it places on a country’s financial institutions.
At the same time, the Treasury and State Departments also appeared to acknowledge the need to mitigate the consequences of the September 2019 US sanctions designation of the Central Bank of Iran (CBI) by jointly offering a humanitarian “mechanism” for humanitarian transactions in exchange for a commitment by companies and banks to conduct “enhanced due diligence.” The requirement for enhanced due diligence includes information about customers, including the identities of all consignees and intermediaries involved in the transactions, as well as monthly statement balances with the value, currency, and balance date of any account of an Iranian financial institution held at the participating host nation’s foreign financial institutions that is being used for humanitarian transactions. Moreover, the entity hoping to use the mechanism should provide a written commitment from any Iranian distributors involved in the transactions that they will not allow the goods to be sold or resold to Iranian designated individuals or entities and that the Iranian distributor will impose this obligation on downstream customers. It is, however, not clear from the guidance if complying with these burdensome requirements would be feasible for companies and whether it will supersede the prohibition on any trade, including humanitarian trade, with designated entities under terrorism provisions.
The impact of these parallel policy pronouncements remains to be seen. To many close observers of US sanctions policy, the humanitarian mechanism appeared unlikely to actually increase humanitarian exports to Iran. Instead, the combination of onerous requirements and a thinly veiled intelligence gathering function appeared aimed at garnering publicity rather than realistically confronting the humanitarian problems caused by US sanctions against Iran.
For example, a sanction lawyer familiar with the issue told Human Rights Watch that the requirement for foreign banks to provide far-reaching monthly reports to the US Treasury department with respect to any humanitarian transactions involving Iran in exchange for comfort letters from OFAC as to their sanctions exposure is a “new bureaucratic hurdle for humanitarian trade with Iran.”

Two former US and Treasury department officials with close knowledge of the US sanctions regime on Iran also reacted to this announcement by expressing skepticism about its effects. Brian O’Toole reacted to the announcement on Twitter by writing, “This does not help, and in fact probably makes the situation worse.” Richard Nephew also tweeted that “in the context of the 311 finding [USA Patriot Act money laundering provision] AND general atmosphere, I suspect most will see this mechanism less as a humanitarian channel and more as an intelligence gathering function to enable additional U.S. sanctions. For those of us seeking a real channel, this ain't it.”
A country or coalition of states enforcing economic sanctions should consider the impact on the human rights of the affected population, especially regarding their access to goods essential to life, including medicines and food. Open-ended and comprehensive sanctions such as those that the Trump administration has imposed on Iran have negatively impacted the humanitarian needs and the enjoyment of human rights of Iran’s general population. Human Rights Watch opposes sanctions that have a disproportionately negative impact on the enjoyment of human rights by civilian populations, or create unnecessary suffering, in particular for vulnerable populations.
The harmful effect of US sanctions on Iranians’ access to food and medicine should not be a surprise in light of similar effects observed in other sanctions regimes. The multilateral sanctions on Iraq in the 1990s, for example, notoriously decimated the Iraqi economy and “had a detrimental effect on the health of the population,” according to several health researchers.
The US government should take immediate steps to ensure humanitarian exemptions are effective in facilitating Iranians’ access to medicine and medical equipment. Most importantly, the US government should publicly clarify at the highest level that banks and companies face no legal or financial risks in exporting or financing exempted humanitarian goods to Iran. On August 6, 2019, OFAC issued “Guidance Related to the Provision of Humanitarian Assistance and Support to the Venezuelan People,” stating that OFAC “is committed to ensuring that humanitarian support can flow” to Venezuela and “encourag[ing] US persons to avail themselves to these authorizations,” including remittances. OFAC should issue an equivalent public “guidance” for Iran and adopt it as policy.
The imposition of sanctions does not diminish the human rights obligations of the targeted state. The Iranian government needs to take steps "to the maximum of its available resources" to provide the greatest possible protection for the rights of each individual within its jurisdiction. While sanctions inevitably diminish Iran’s capacity to meet the needs of its residents, the government is obligated to ensure that citizens and residents can enjoy their right to health without discrimination and should take all possible measures, including negotiations with other states, to reduce to a minimum the negative impact of sanctions on vulnerable groups. This includes the government’s obligation to prevent corruption and misuse of resources. In order to reduce obstacles to other states’ establishing humanitarian trade mechanisms with Iranian financial institutions, Iran should also ratify UN counterterrorism financial transparency initiatives.
---Summary In May 2018, the Trump administration formally withdrew from the international nuclear agreement with Iran, known as the Joint Comprehensive Plan of Action (JCPOA), agreed upon by the Obama administration in July 2015. Over the next 120 days, until November 5, 2018, the US government re-imposed all economic sanctions related to Iran’s nuclear program that had been ---
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