(Bloomberg Opinion) -- Iranian doctors and nurses, like their peers worldwide, are dealing with an unprecedented public-health crisis: the coronovirus has taken more than 1,900 lives and infected 25,000, according to official statistics. But they are also dealing with a unique challenge as U.S. sanctions exacerbate shortages of crucial medical equipment.
Faced with calls to relax sanctions during the pandemic, U.S. Secretary of State Mike Pompeo has maintained that the sanctions “do not target imports of food, medicine, and medical equipment, or other humanitarian goods.” But the issue facing Iran’s healthcare system is not about what the sanctions target, but rather what their humanitarian exemptions fail to encompass. On this point, Pompeo is being disingenuous.
The humanitarian exemptions pertain to “medicine” and “medical devices,” terms that are narrowly defined to emphasize the treatment of disease, excluding medical equipment. For example, personal protective equipment such face shields, which doctors and nurses need to protect themselves from the risk of infection and which are also used in industrial applications, do not fit the typical definition of humanitarian goods.
Moreover, the Treasury Department requires their specific authorization for the export of a wide range of advanced medical equipment to Iran by American companies. These restrictions apply to equipment crucial for fighting the virus, including ventilators, CT scanners, decontamination equipment, and full-mask respirators.
European and other foreign companies seeking to exports these goods to Iran are also encumbered by the U.S. regulations. International banks are reticent to accept Iran-related payments, particularly given that the Central Bank of Iran, which is subject to U.S. secondary sanctions, oversees the exchange through which importers receive foreign currency allocations.
Although the Treasury Department issued a new general license in February reestablishing the ability of Iran’s central bank to play a role in payments related to humanitarian trade, the license does not extend to advanced medical equipment unless authorized by a specific authorization—something non-U.S. companies cannot obtain.
For this same reason, such equipment cannot currently be sold through the Swiss Humanitarian Trade Arrangement, the payment channel often cited by Trump administration officials to show their commitment to the wellbeing of Iranians. SHTA, which launched in February, is also not an option for exporters that do not maintain an account at Banque de Commerce et de Placements, the Swiss commercial bank at the heart of the channel.
These restrictions help explain why European exports of personal protective equipment to Iran fell by two-thirds as the Trump administration moved to isolate the Iranian economy under its “maximum pressure” campaign. Total European Union exports fell from 39 million euros in 2017 to just 13 million euros last year.
In late February, the Trump administration “formally conveyed” an offer of assistance to Iran in confronting the virus crisis. On Sunday, Iran’s Supreme Leader Ali Khamenei said he had rejected that offer, suggesting the U.S. might include in any aid shipment “a drug that will keep the virus alive and prevent its eradication."
Khamenei’s paranoid response stands in sharp contrast to calls for sanctions relief and other assistance issued by members of the Rouhani administration, business leaders, and prominent artists, as well as ordinary Iranians on social media.
But the absence of public detail about the administration’s offer meant that Khamenei faced no political cost for dismissing it outright. If the administration had publicized the details for the Iranian public to see, it would have created pressure for the aid to be accepted.
In any case, the opportunity to provide aid may have passed. Trump will find it politically difficult to send assistance to Iran now that the U.S. is facing its own full-blown crisis and seeking to import equipment from abroad. However, there are three administrative steps that could be taken that would significantly improve Iran’s ability to respond to its virus outbreak while costing the U.S. nothing at all.
Frist, the administration should widen the scope of the humanitarian exemption to include the full range of items and equipment necessary to help Iranian doctors and nurses fight the epidemic.
Second, it should provide comfort letters to key international banks at the heart of Iran’s commercial import of medicine and medical equipment, clarifying the scope of acceptable trade. To date, the Treasury Department has only provided such a letter to BCP as part of the new SHTA payments channel.
Third, the administration should ease Iran’s access to its existing foreign currency reserves. The U.S. already has the means to provide this relief without granting Iran unfettered use of the funds.
When the Trump administration eliminated waivers permitting the sale of Iranian crude to eight key customers in May 2018, it also discarded a system of escrow accounts which enabled Iran to use accrued oil revenue exclusively for the purchase of humanitarian goods from the countries to which it was exporting. This system allowed oil revenues accrued and spent outside of Iran under the strict oversight of both local regulators and the Treasury Department, effectively eliminating the risk of misuse.
It would be easy to restore such an escrow system to enable Iran to use a portion of its ample foreign currency reserves now sitting frozen in accounts worldwide. Such a system could even be established in lieu of granting Iran the $5 billion loan it has requested from the International Monetary Fund, which would require the Trump administration to make larger political concessions.
The Trump administration should acknowledge that limited sanctions relief—amounting to a few administrative acts—would in no way change the overall posture of its maximum-pressure policy and in no way compromise U.S. national security. Helping Iranian doctors and nurses to protect themselves so that they can bring the epidemic under control is essential to shortening the duration of the global crisis—something that is in the clear interest of all Americans.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Esfandyar Batmanghelidj is the founder of Bourse & Bazaar, a media company that supports business diplomacy between Europe and Iran through publishing, events and research.
©2020 Bloomberg L.P.