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Abu Dhabi, UAEMonday 17 December 2018

US sanctions highlight Russian complicity in smuggling Iranian oil to Syria

But exposing Russia’s role also reveals the hand of US intelligence, analyst says

In this file photo taken on March 12, 2017, an Iranian military speedboat patrols the waters as a tanker prepares to dock at the oil facility in the Khark Island, Iran. AFP
In this file photo taken on March 12, 2017, an Iranian military speedboat patrols the waters as a tanker prepares to dock at the oil facility in the Khark Island, Iran. AFP

New US sanctions announced on Tuesday are unique for being accompanied by an unprecedented level of detail about covert funding for Syria’s Bashar Al Assad through channels running from Moscow and Tehran onwards to Beirut and Damascus, experts say. But the level of detail provided by the sanctions also reveals much about US intelligence into Iranian affairs.

The sanctions – the latest in a string imposed by US President Donald Trump after he withdrew from the nuclear deal with Iran in May – accuse Iran of creating a complex web of Russian shell companies and Syrian intermediaries to ship oil to Damascus.

Accompanying the sanctions announcement, the US Treasury department published an unusual amount of gathered US intelligence – ranging from photos to handwritten notes – that aimed to show a linkage between a Syrian businessman, officials at the Central Bank of Iran, and a Russian oligarch linked to a state owned energy subsidiary, accusing them of funneling money to Assad, Hezbollah and Hamas. One photo showed a cigar-chomping man posing with stacks of what appear to be bank notes.

The shipping of Iranian oil has long been known to be critical to the survival of the Assad regime in Syria. “Iranian oil supplies to Damascus are of existential value,” said Charles Lister, a senior fellow at the Middle East Institute in Washington. “The regime simply can’t operate without them, so this poses an extremely serious risk to [Bashar] Assad and the sustainability of his ability to govern at any level close to effectively.”

But the attempt to implicate Russia in the smuggling of Iranian oil is revealing. “The Russian angle here is very significant, highlighting Moscow’s complicity in supporting Hamas and Hezbollah, and in what is in effect an Iranian scheme to keep Assad and Damascus afloat,” Mr Lister said. “This is a big deal.”

The US Treasury Department’s publishing of detailed information about the involvement of the targeted information gives an insight into the level of American intelligence into Iranian activities. “The US intelligence community is showing its hand,” said Mr Lister, “and the true extent of US awareness of all the malign activities the Iranian government has been sustaining in the region.”

However, the new sanctions are unlikely to change either Moscow or Tehran’s stance in the region. "We shouldn't underestimate how important the Assad regime is to these governments,” said Faysal Itani of Rafik Hariri center for the Middle East at the Atlantic Council. “Targeted sanctions will not change the Iranian and Russian calculus.”

He continued: “Iran has nothing to lose anyway, and Russia will try to see how much more it can get away with.”

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Hamas being targeted in the new sanctions suggests the group is again under Iranian influence. “It distanced itself from Iran when the Syrian revolution broke out but with Assad surviving that leaves them in a difficult spot,” said Mr Itani. “With all the US pressure on and belligerence against Iran I'm not surprised the latter would cultivate this asset again.”

The sanctions come at a difficult time for Hezbollah and could impose a financial toll on the Lebanese group. “At a time that the party is implementing budget cuts in Lebanon, reportedly shutting down offices and enforcing a hire freeze at its institutions because of the Iran sanctions, these could add the strain,” said Hanin Ghaddar of the Washington Institute for Near East Policy.

The group has been seeking alternative sources of funding, including oil revenues from Syria, and these kind of sanctions complicate its efforts. “It is particularly significant because these latest US measures go after these same alternative sources, it will have a larger impact than normal designations,” Ms Ghaddar said. “Hezbollah works in a cash economy and disrupting those networks will affect their supply.”