Yes, the title of this post is a joke. And no, you’re not reading a post from the Onion right now. This tongue in cheek moment was brought to you by a rereading of the Motion for Summary Judgment filed on behalf of the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) in the Epsilon Electronics litigation.
I do understand that OFAC has a very serious job to do, and plays an important role in protecting our national security and the integrity of our financial system. Further, I understand that the laws which they administer and enforce are designed to advance those noble causes. I also understand that the reason OFAC has this important job to do is because certain foreign nations, entities, and individuals engage in conduct which constitutes such a threat to our national security so severe that the President is compelled to invoke certain powers afforded to him to respond to such threats. Finally, I understand that in the case of OFAC Iran sanction these threats include proliferation of weapons of mass destruction, terrorist financing, and human rights concerns. I understand all of these things.
What is hard for me to understand, however, is why–in a case like Epsilon, where the government’s defense is so strong–does there need to be such a plea to passion concerning these threats in relation to the conduct that was punished?
For those of you who haven’t heard about the Epsilon litigation, it concerns a civil lawsuit brought against OFAC for issuing an approximately $4 million penalty last summer after Epsilon was found to have been involved in exporting car audio equipment to a company in Dubai with knowledge that it was ultimately destined for Iran. Based on the administrative record filed in the case, OFAC’s arguments look pretty solid, and as they correctly noted, the fine they imposed was well within what the underlying statute, the International Emergency Economic Powers Act (“IEEPA”), allows for.
Yet, throughout the Motion for Summary Judgment there was a lot of talk about the threat Iran poses, and how the President has used the authorities at issue here to combat Iran’s weapons of mass destruction proliferation efforts and funding of terrorist groups in the Middle East. Indeed, the words terrorism/terrorist were used six (6) times in what amounts to roughly 10 pages of substantive argument. Further, the words “weapons of mass destruction” were used five (5) times in those same 10 pages. But it was the following lines that really motivated me to write this post:
“Denying Iran the benefits of trade with the United States, and the promise of renewed trade once sanctions are lifted, are, respectively, the stick and the carrot of U.S. sanctions and are key aspects of U.S. pressure on Iran to cease its support for international terrorism, its efforts to acquire weapons of mass destruction, and its destabilizing activities in the Middle East. Epsilon’s violations of the ITSRs provided the Iranian economy with more than $3.4 million of normal U.S. trade, directly contradicting and frustrating U.S. policy towards Iran.”
Come on guys, you had us at IEEPA.
Was the ITSR promulgated to prevent trade with Iran? Yes. Was Epsilon punished in a manner consistent with what the law allows? Yes. Did OFAC do its job? Yes. But if you want me to believe that denying Parviz and Hooshang the ability to bump the new Sasy Mankan album so that everyone within a mile radius of Azadi Square can hear it is part of the carrot and stick approach to get Iran to give up its nuclear program and support for Hezbollah, then sorry, but that’s something I can not abide.
I’m not a policy analyst–that’s Sam’s job–but I’m pretty sure that neither the Supreme Leader, nor his advisors are staying up at night weighing whether the benefit to their regional and global standing through development of a nuclear program is worth the cost of not being able to get the best quality subwoofers that money can buy.
I’m not saying OFAC did anything wrong in penalizing Epsilon. Indeed, their job is to prevent any U.S. goods from being sent to Iran, be it sensitive dual-use equipment or in-dash stereo receivers. But let’s keep this all in context and not oversell it. Although the law exists due to concerns about weapons of mass destruction proliferation and terrorist financing, the conduct here had nothing to do with that, nor is the promise of renewed trade in car audio equipment the carrot Iran is hoping to receive.