Yesterday, Treasury Secretary Janet Yellen swore up and down that the Bidens have in no way relaxed the economic sanctions on Iranian oil. Here’s to refresh your memory:
YELLEN: "Well, we have not in any way relaxed our sanctions on Iranian oil and we are we have sanctions on Hamas, on Hezbollah. This is something we have been constantly looking at and using information that comes available to tighten sanctions.
So, here is my problem with that statement. Couple of years ago, Iran was producing about 400,000 barrels of oil a day. Today they're producing about 3.5 million barrels per day, and they’re on their way to 4 million a day according to industry observers.
Now, where'd that come from? You don't suppose sanctions were lifted so they could sell it do ya? Wait a minute, some more numbers. Iran has a favorite customer: China. In 2020 Iran sold China roughly $6.5 billion worth of oil. Next year in 2021, that mysteriously jumped to $23 billion.
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Then last year, in 2022, that oil sale mysteriously leaped to $30 billion. Well, where did all that come from? If we didn't lift the sanctions, how come they're producing and selling all that oil? Odd story isn't it? What's it worth to Iran? Anyway at least another $60 billion worth of revenue. The $6 billion controversy from the hostage exchange is small here. The oil sales is everything.
As the Mid East's greatest state sponsor of terrorism, $60 billion to Hamas and Hezbollah who were aiming to destroy Israel. That’s a likely guess, don’t you think? U.S. intelligence is actually telling us Iran didn't fund, or plan, or mastermind this hideous Hamas massacre of Gaza. Really?
While Ali Baraka, who is a Hamas big shot was telling Russian TV that "Our allies are those that support us with weapons and money. First and foremost, it is Iran that is giving us money and weapons." Where did that Iranian money come from? Energy sales. Now, how are all those energy sales possible? A relaxation of sanctions. That's how. One more factoid: Iranian foreign exchange reserves were about $4 billion, three years ago. Today, it is estimated to be $70 billion. Where did they get all that money? You guessed it: a relaxation of sanctions.
Here's a quote from my long-time pal, foreign policy expert Elliott Abrams writing in National Review: "Hamas depends heavily on Iranian funding. Iran was broke when Donald Trump left office, but is now pretty flush in cash. That's not just because of the recent deal....for U.S. hostages.... but because the Biden admin has not been enforcing U.S. oil sanctions."
I'm going to get a little technical here folks, but hang on, it will not be painful I promise. First, the Congress on numerous occasions has mandated economic sanctions on Iran, Venezuela, Russia and Hezbollah. That's the law. Second, there are two kinds of sanctions.
One is primary sanctions that prohibit citizens and companies of the sanctioning country from engaging with the sanctioned country. Think U.S. and Russia. Post-Crimea and now post-Ukraine. Second, there is something called secondary sanctions that stops third parties from banking or engaging in commerce with the sanctioned country.
Recent U.S. sanctions against Iran illustrate this example. U.S. secondary sanctions gave banks around the world a choice. Either stop dealing with Iranian banks or lose access to the U.S. dollar financial system.
That's the tough stuff. The secondary sanctions, it's not just the SWIFT system, which is a messaging system about transactions. It means that for example, this is just an example, if France bought oil from Iran, France would be cut off from the entire U.S. dollar system. France would be cut from something called the Fed Wire. In the private banking system, France would be cut off from something called the clearing house.
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The execution of these sanctions is all monitored by the Treasury Department's Office of Foreign Asset Control or OFA. If the Biden administration were implementing primary and secondary sanctions on Iran, then the Iranian outlaws wouldn't be producing nearly 4 million barrels of oil per day or selling over $30 billion worth of exports to China or accumulating some $70 billion worth of foreign exchange reserves. Trust me on this.
So, Janet Yellen is telling us a big fib when she denies that sanctions haven’t been relaxed. It's kinda similar to her earlier fib that there is no inflation. Remember that one? The reality is Congress has mandated the tools to keep Iran in poverty and thus deny Hamas at all the financing to cut off babies heads and murder grannies in bed. Trouble is the Bidens won't execute the congressional law.
This article is adapted from Larry Kudlow’s opening commentary on the October 12, 2023, edition of "Kudlow."
