U.S. Policy Recommendations

he following U.S. policy recommendations should be considered in order to elevate pressure against the world’s leading state-sponsor of terrorism, Iran, and its partner in Latin America, Venezuela. These measures would hinder the two U.S. adversaries’ economic cooperation, particularly in the energy sector. It is also essential to identify the illicit financing schemes used by Iran-backed terrorist organizations in Venezuela and prevent the proliferation of weapons to Maduro and Iranian proxies in Venezuela. The U.S. government must consider all elements of national power to counter these two countries, focusing on legal actions and economic measures in particular.

  • Pressure maritime service providers facilitating the illicit trade of oil and oil products between Iran and Venezuela. Since U.S. sanctions against Venezuela’s oil sector were imposed, Venezuela has exported more than 360 million barrels of oil, according to Reuters. Given the increased tempo of petroleum shipments between Iran and Venezuela, the U.S. Department of the Treasury and the DOJ should increase pressure on maritime service providers complicit in these sanctions evasion activities. Insurers, owners, operators, ports, and other maritime service providers are each targeted by Iran’s deceptive practices, including document falsification, ship-to-ship (STS) transfers on the high seas to obscure the oil’s origins, changes of the vessel’s name and its identifying features, the use of front entities to obscure ownership, and switching off AIS transponders in contravention of internationally-accepted shipping practices. Alerting these service providers—which make the Venezuelan-Iranian oil trade possible—to these deceptive practices and threatening them with sanctions will cut down on the shipments.
  • Expand financial intelligence capabilities. Illicit actors engage in economic activities designed to deceive U.S. authorities and circumvent sanctions. To counter and deter sanctions evasion, U.S. authorities must focus on the proliferation of front companies and bank accounts engaged in transactions on behalf of corrupt politicians in the Maduro regime, criminal syndicates, terrorist organizations operating in Venezuela, and the IRGC. For example, the U.S. financial system’s safeguards against transactions through intermediary banks outside Venezuelan and Iran might be strengthened through a broader sanctions regime and public-awareness campaign that raises the profile of prominent illicit actors. Criminal money laundering operations, such as trade-based money laundering, that drug traffickers like Hezbollah use to conceal the origin of their proceeds and lower the risk of detection should be exposed. Given Hezbollah’s interests in various industries, trade-based money laundering techniques like over- and under-invoicing and misstating the value of items to move money across continents are important to examine. The group’s acquisition of valuable financial assets in real estate and other industries also warrants attention.
  • Prevent the proliferation of Iranian weapons to Venezuela and its terrorist proxies in Venezuela. The installation of ballistic missiles, drone production and/or launch facilities, and the transfer of unmanned aerial combat vehicles (UACVs) to Venezuela would compensate for Iran’s lack of an intercontinental ballistic missile (ICBM), setting up a potent deterrent against any U.S. military option. Without a credible military option, the U.S. cannot deter Iran from making strides in its nuclear program, for which near weapons-grade enriched uranium has been produced, and the time needed to produce a nuclear weapon has been dramatically shortened. Therefore, U.S. national security agencies must prevent Iran from exporting these munitions to its partner in Latin America. Consistent with the Monroe Doctrine, the U.S. should consider the proliferation of such systems in the Western Hemisphere as a direct threat to peace and security and, therefore, unacceptable. The first resort to prevent these shipments would be diplomatic; in particular, the U.S. must lead a diplomatic push to invoke the “snapback” provisions contained in U.N. Security Council Resolution 2231, which would reinstate the U.N. arms embargo against Iran. The U.S. might also consider bolstering its intelligence and interdiction capabilities and persuading allies to deny Conviasa and Mahan Air overflight privileges.