Treasury Nominees Say They Will Prioritize Ongoing Sanctions Review

The two Treasury Department nominees slated to oversee some of the agency’s sanctions work (see 2105260018) said they will prioritize Treasury’s ongoing sanctions review, but declined to commit to any specific actions related to Iran, China or the Nord Stream 2 pipeline. Brian Nelson, the nominee to lead the Terrorism and Financial Intelligence office, and Elizabeth Rosenberg, the nominee to be assistant secretary for terrorist financing, told a Senate panel June 22 they will pursue strong penalties against sanctions evaders but want more information before committing to take specific actions.

Several senators on the Senate Banking, Housing and Urban Affairs Committee asked both Nelson and Rosenberg to commit to punish China. Sen. Pat Toomey, R-Pa., said Chinese purchases of Iranian oil have “gone through the roof” in recent months at about 600,000 barrels a day. “By all accounts,” Toomey said, “China has been openly violating U.S. law with impunity.”

Nelson said the U.S. needs to respond “appropriately” to China but didn’t say whether further sanctions were warranted. “Obviously, I'm not in the government,” he said. “I would welcome the opportunity, if I'm confirmed, to be briefed on this incredibly important issue.” Rosenberg said she also needs more information but stressed that sanctions work only if they are properly enforced. “I would certainly agree that violating U.S. sanctions law is a problem,” she said. “The credibility and strength of U.S. sanctions depends on their effective implementation and enforcement.”

Senate Foreign Relations Committee Chairman Sen. Bob Menendez, D-N.J., said the U.S. shouldn’t lift all sanctions against Iran as part of a potential U.S. return to the Joint Comprehensive Plan of Action. He urged both Nelson and Rosenberg to push for some continued restrictions on the Central Bank of Iran (see 1909200036).

“Isn't it possible to consider specific licenses, in which the central bank doesn't get a total wash," Menendez said, “but actually would have specific licenses to do certain things that are otherwise sanctioned?” Both Nelson and Rosenberg said such a license would be possible. “I would need to talk with [Office of Foreign Assets Control] leadership about the specifics,” Nelson said.

Rosenberg said she shares the “concern” of several senators who said they disagreed with the State Department's decision not to sanction Nord Stream 2 AG for its involvement with the Russian gas pipeline (see 2106070065). But she didn’t commit to pressing for sanctions. “I am not in the position to have examined the facts and circumstances about whether the entity that you've named would meet criteria or threshold for designation,” Rosenberg said. “If I'm confirmed, I can commit to you that I would look into that and would gladly come and follow up with you about that question.”

Although Nelson didn’t offer many specific answers, he did lay out his priorities for the TFI office and said he was concerned that it hasn’t had a confirmed leader in almost two years. “The first piece of action is to get to work advocating for the tools that TFI has,” he said, adding that he also will advocate for the “dedicated professionals that are doing the work that is seen and felt throughout the interagency, with our foreign partners and obviously with this committee and Congress.” The OFAC, which is overseen by TFI, lost a record number of employees in 2019, partly due to the Trump administration’s hostility toward career civil servants and the political nature of its sanctions decisions (see 2010290028).

Nelson also said he plans to be involved in the agency’s review of its sanctions programs begun earlier this year (see 2106070007). “One of the very first things I would want to do is participate in the ongoing sanctions review,” he said. Treasury needs “to make sure that we are making that tool, that incredibly powerful tool of our foreign policy and national security, as effective and targeted as possible while managing and mitigating unintended consequences.”