Granting waivers on Iranian oil only emboldens the ayatollahs

Three months ago, an American team led by Brett McGurk, the National Security Council Coordinator for the Middle East and North Africa, attempted to convince Iran to pressure its Houthi clients in Yemen to cease attacking commercial ships in the Red Sea. The so-called indirect talks, which Oman brokered, came to an inconclusive end in February — and the attacks have continued, with no letup in sight. 

Since the talks over the Houthis have been suspended and in effect have collapsed, McGurk and other American officials have been negotiating to secure both a truce between Israel and Hamas and the Iranian-backed terrorist group’s release of the more than 130 hostages still captive in Gaza. These talks have been going on for months and thus far gone nowhere as well. 

And on yet another Middle Eastern front, Washington in January entered into talks with the government of Iraq that aimed at securing the withdrawal of the 2,500 American troops still in the country. In conjunction with the opening of these talks, Iraqi militias, likely acting on instructions from Tehran, suspended their attacks on American forces in both Syria and Iraq. These talks, like the others, have not reached any conclusion, and the Iranian-supported Iraqi militias once again have gone on the offensive. No doubt with Tehran’s approval, earlier this week one of those militia groups, most likely Kataib Hezbollah, fired five rockets at a U.S.-led coalition base in Rumalyn, Syria from the Iraqi town of Zummar. 

The rocket attack came a day after Iraqi Prime Minister Mohammed Shia al-Sudani had returned from Washington meetings with President Joe Biden without obtaining an agreement on a timetable for the withdrawal of American troops from his country. Not surprisingly, Kataib Hezbollah promised that the attacks would continue.

It should be clear to the Biden administration that the only way to reach any agreement with Tehran to constrain the activities of its clients is by exerting pressure on Iran itself. The most obvious way to pressure Tehran would be to end all waivers on its exports of petroleum, most of which go to China.

Over the last 12 months, Iranian oil revenues totaled about 35 billion dollars, enough to support all of Tehran’s clients for the next five to seven years. Yet the Biden administration has been reluctant to lift the waivers that it first granted in 2021, out of fear that a spike in oil prices, which have increased substantially over the past year, could wreck its electoral prospects in November. 

This week’s passage of the long-delayed supplemental appropriation for Israel, Ukraine and Taiwan also includes a provision that imposes new sanctions on shippers and refiners of Iranian crude oil. A second provision, specifically targeted at Iran’s oil trade with China, expands secondary sanctions that would apply to Chinese financial institutions involved in Iranian oil sales to China. President Biden has signed the legislation that seemingly, and at long last, tightens the economic screws on the ayatollahs. But in fact, both provisions grant the administration the ability to issue 180-day waivers in order to prevent a further increase in domestic oil prices. 

Needless to say, if, as is expected, the administration grants these waivers, nothing will change until Election Day. Tehran will continue to sell oil to China and to accumulate revenue. America will continue to confront Iranian stonewalling at the negotiating table. And Iran will continue its nefarious efforts to further destabilize the Middle East, to the detriment of America’s friends, allies and interests throughout this perpetually troubled region.

Dov S. Zakheim is a senior adviser at the Center for Strategic and International Studies and vice chairman of the board for the Foreign Policy Research Institute. He was undersecretary of Defense (comptroller) and chief financial officer for the Department of Defense from 2001 to 2004 and a deputy undersecretary of Defense from 1985 to 1987.