Wednesday, November 7, 2018
2:37 p.m. EDT
Briefer: Deputy Spokesperson Robert Palladino
U.S. Department Of State
Department Press Briefing
DPB # 56
Wednesday, November 7, 2018
(On The Record Unless Otherwise Noted)
2:37 p.m. EDT
MR PALLADINO: Welcome, everyone. Thanks for coming. We’re going to start at the top today with our Special Representative for Iran Brian Hook. He has some opening remarks, then he’d be happy to take a few questions from you all. Please, Brian, come on up.
MR HOOK: Now that our sanctions on the Iranian regime have been reimposed, we want to alert nations of the risk of doing business with Iran’s shipping sector. If Iranian tankers make calls to your ports or transit through your waterways, this comes at great risk. The United States urges you to consider the advisory we are issuing today.
The sanctions that were reimposed on Monday include sanctions on Iran’s port operators as well as its energy shipping and shipbuilding sectors. We placed on our sanctions list Iran’s national maritime carrier, the Islamic Republic of Iran Shipping Lines, and its oil transport giant, the National Iranian Tanker Company. These sanctions are critical to our maximum pressure campaign. Iran’s energy sector accounts for up to 80 percent of the country’s income from exports. The regime uses this revenue to support its terrorist militias, fund missile proliferation, and sustain its revolutionary exploits that destabilize the Middle East.
We have also reimposed sanctions on the provision of underwriting services, insurance, and re-insurance. Knowingly providing these services to sanctioned Iranian shipping companies will result in the imposition of U.S. sanctions. As Iran’s maritime carriers and vessels are redesignated and lose access to insurance on the international market, they are likely to turn to self-insurance. We suspect they will use Iranian insurance providers such as Kish P&I. Should there be an accident involving an Iranian tanker, there is simply no way these Iranian insurance companies can cover the loss.
This is especially important for Iran’s crude oil tankers, which are usually insured for amounts of $1 billion or more. Oil spills and accidents involving tankers are extremely costly. The immediate costs associated with response and cleanup can range from hundreds of millions of dollars to billions of dollars. When litigation costs and penalties are added, the total liability is even greater. But the costs of these accidents extend well beyond the initial response and cleanup. Tanker spills can imperil fishing and maritime industries for generations, harm tourism, and create irreversible economic and environmental costs on communities and ecosystems.
From the Suez Canal to the Strait of Malacca and all chokepoints in between, Iranian tankers are now a floating liability. Countries, ports, and canal operators, and private firms should know they will be likely responsible for the costs of an accident involving a self-insured Iranian tanker.
We sincerely hope there will be no accidents, but accidents are a very real possibility given Iran’s record. Only 10 months ago in January, an oil tanker managed by the National Iranian Tanker Company collided with a vessel in the East China Sea. The tanker was carrying one million barrels of condensate. The tanker burned for one week and then sank. The collision led to the largest release of condensate ever and caused an oil spill the size of the city of Paris. As the cleanup continues, the liability for this will be in the hundreds of millions of dollars. Iranian insurance companies only covered a small portion of that vessel’s liability. The majority of the tanker’s value is covered by international insurers.
Now that our sanctions are back in place, these international insurers will no longer be in the risky business of covering Iran’s tankers. Self-insured Iranian tankers are a risk to the ports that permit them to dock, the canals that allow them to transit, and the boats that cross their path. This exposes the entire maritime shipping network to immense liability.
If entities continue to do business with Iran’s tankers, they may assume that Iranian insurers can and will absorb the full liability associated with the accident. This is a fantasy. There is little to gain by taking on so much risk for so little return. Just as concerning, entities who allow self-insured Iranian tankers to transit through their canals or dock in their ports may be facilitating Iran’s illicit activity.
Iran has supported the Assad regime in Syria by regularly shipping millions of barrels of Iranian crude to the country. Those entities who permit the transit of Iranian tankers may very well be enabling this activity. I have described very serious liability concerns, but all nations should also be aware of the safety standards and practices of Iran’s oil tankers.
There are increasing reports that Iranian tankers are switching off their AIS transponders at sea. These transponders are safety devices used for collision avoidance and navigation. They enable ships to see other ships and to communicate with coastal authorities. Under international maritime law, vessels have been required since 2004 to use them to broadcast their identity and location. Based on credible data, we now know that up to a dozen Iranian tankers have recently disabled their maritime transponders and have effectively gone dark. We should not be surprised that an outlaw regime also violates basic maritime law.
Turning off these transponders makes tankers harder to track and is a tactic that Iran has used in the past to evade sanctions. In 2012, a majority of vessels in the National Iranian Tanker Company’s fleet turned off their transponders in the run-up to the imposition of U.S. oil-related sanctions. This tactic is a maritime security threat. These transponders are designed to maximize visibility at sea and turning them off only increases risk of accidents and injuries.
Self-insured Iranian tankers engaging in unsafe behavior with many tons of crude oil onboard is courting environmental and financial disaster. Our strong message to any entity considering doing business with these Iranian tankers is to rethink your decision. Protect your port, protect your business, and promote maritime safety.
QUESTION: Just on this whole shipping thing, just to be devil’s advocate here for a second, why should people not look at this and say that this is an admission or an acknowledgment that the sanctions are going to make international maritime – international shipping more dangerous?
MR HOOK: Well, the burden is on Iran to make it safe. We’re not the one turning off the – the transponders.
QUESTION: No, but you’re the one sanctioning – you’re the one making it impossible or difficult for them to get insurance, aren’t you?
MR HOOK: I think you’re misplacing the burden of compliance on the United States.
QUESTION: Well, but —
MR HOOK: Iran has tankers. Maritime law requires them to keep their transponders on. They’re turning them off to evade our sanctions.
QUESTION: Thanks. Is the – the allotments, the waivers – how much oil are these countries allowed to export during this time? Is there a cap on it? And then also, can you explain how you plan to monitor the escrows in the weeks and months ahead?
MR HOOK: I can’t get into specific volumes because that’s confidential. It’s a bilateral agreement that was reached in each of the SREs. We do —
QUESTION: But there is a cap on each one?
MR HOOK: In order to be eligible for an SRE, a country needs to show a significant reduction. And so we are going to be continuing our path to zero. As you heard the President say today, and I think a couple of days ago, we want – we have been able to take off 1 million barrels from Iran’s exports, and we have actually brought down the price of oil. It was at $74 a barrel when the President announced he was out of the deal; we then took off a million barrels of oil, and Brent is now at 72, roughly 72.
We have been very careful about applying maximum economic pressure without lifting the price of oil, and we’ve done that successfully. I’d just remind you that the Obama administration granted 20 SREs, 20 SREs to 20 countries over a period of many years. We have granted eight. Two of those eight countries have stopped importing Iranian crude. And if you look at all the countries that were importing Iranian crude prior to when the President left the deal in May, 20 of those countries are now at zero. And so 80 percent of this regime’s revenue comes from oil exports. We are very serious about denying Iran the revenue it needs to destabilize the Middle East and fund missile proliferation and all the other malign behaviors it engages in.
QUESTION: Brian, the ship you mentioned that sunk off the East China Sea was among those targeted for sanctions in the announcement that came out Monday. Why was that, and what does that say about the accuracy of that list of 700 entities that you put forward?
MR HOOK: Well, just because a ship is at the bottom of the sea doesn’t mean that it still doesn’t have economic consequences. There’s still payments on the books. And so that ship, just because it sank doesn’t mean that its financial lifecycle has come to an end. And so we’re very serious about going after all of these energy, the way they move their ships, the oil itself. And so that’s why we did that.
QUESTION: The Iraqi prime minister just said that Iraq is not part of the U.S. sanctions against Iran, and it wants a balanced relationship with the U.S. and Iran. What’s your comment on that? And is Iraq in compliance with the sanctions so far?
MR HOOK: Well, Iraq was a – we granted Iraq a waiver to allow it to continue to pay for its electricity imports from Iran. We are confident that this will help Iraq limit electricity shortages in the south. Iraq is a friend and a partner, and we are committed to its stability and prosperity.
QUESTION: And is it in compliance, as far as you know?
MR HOOK: We are very pleased with how we are working with the Iraqis.
QUESTION: Brian, since you don’t – you can’t reveal the details of those exceptions that you’ve made with eight of these countries, can you at least give us some kind of idea as to how much those countries can import from Iran during this time? And also, what level of oil – what level of – what reductions are you seeking from all of these at the end of the six-month period?
MR HOOK: I can’t tell you what our target is. We do have a target.
QUESTION: You do have one?
MR HOOK: Yeah, we do have a target. And —
QUESTION: Is it zero?
MR HOOK: Well, our – yes. I mean, we have a goal to get to zero. As I said, we have an adequately supplied oil market. We have to ensure that we advance our national security objectives while we do not injure our economic interests. If we were to increase the price of oil, it would be bad for American consumers, it would be bad for the global economy, and it would give an advantage to Iran. Now, we foresee in 2019 that we will have more supply than demand, and that puts us in a much better position to bring countries – all countries importing Iranian crude to zero. So that’s our target.
During the next six months, we are going to be monitoring our diplomatic progress and the price of oil to ensure that we have calibrated this the right way.
QUESTION: So —
QUESTION: But, Brian, why don’t you want to give those figures? I mean, if it’s not a transparent – this all feels rather opaque.
MR HOOK: Well, I told you the figure; it’s zero. That is the figure.
QUESTION: It’s never going to go down to zero.
MR HOOK: And so oil is a very fluid market. We have done a very good job of increasing oil production. So we have taken off a million barrels of oil, and during that same period the United States increased production by 1.7 million barrels and we increased exports by a million. The Saudis played a very helpful role, and the Saudi energy minister, Khalid al-Falih, was very good at increasing production during that period. We’ve been very pleased with oil producers increasing their capacity to ensure a well-supplied and stable oil market.
So during this period, while we have taken off a million barrels, we have not lifted the price of oil. And that is not by accident; it is through very careful and calibrated diplomacy led by the Secretary and the President.
QUESTION: So does that mean that some SRE can be renewed after the six-month period?
MR HOOK: We are not looking to grant any exemptions or waivers from our sanctions regime. We have looked at this in terms of we do want to achieve maximum pressure without harming friends or allies, and we do not want to lift the price of oil. So there are a number of variables that go into these things, and we have calibrated them very well so far.
QUESTION: Have you received assurances from countries like China and India that they are going to go down to zero by the end of six months?
MR HOOK: We have – we have been working with a number of countries and I think that we either have concluded all of our SREs – there are no more than eight, and as I said, two of those have already stopped importing, and the rest we have reached agreement with.
QUESTION: To go back to Michelle’s question, Brian. So if you won’t tell us exactly how this is going to work or what number you’re trying to get to, can you talk about your confidence in knowing the money that goes into these bank accounts and the monitoring that the jurisdictions do? As you know, the jurisdictions, the U.S. relies on those jurisdictions to do that monitoring. Turkey was a real problem last time. Why do you have confidence that Turkey will somehow do better than it did before the JCPOA?
MR HOOK: Well, I think you’ve seen a lot of pre-compliance with our sanctions over the last six months. You’ve seen a number – you’ve seen over a hundred corporations announce prior to November that they are leaving the Iranian market or they’re canceling planned investments. On the oil side, we have seen the vast majority of refiners announce that they’re out. I think this is a much different environment with our sanctions. I think the world knows that the President and his Secretary of State are very serious about maximum economic pressure. And that will apply to the escrow accounts. One of the advantages of these SREs is that it denies Iran the revenue from its oil sales. They do not get paid in hard currency. This is a regime that is facing a liquidity crisis. And so now these escrow accounts, even those countries who are still importing Iranian oil, Iran does not get the revenue. They only – it stays in an escrow and then they spend down that amount to import goods from that country that was importing their oil.
The Treasury Department monitors the escrow accounts. Secretary Mnuchin, Under Secretary Mandelker, Marshall Billingsley are very focused on ensuring that these escrow accounts are never used for illicit goods, and we will police these very aggressively.
QUESTION: But as you know, Turkey was subject to criminal action last time for evading sanctions. Do you include Turkey on this list because you have confidence that they’ll do something different or they’ve promised something different, or is this a political decision to include Turkey?
MR HOOK: Well, we have – Turkey is one of the countries. I had very good meetings with my counterparts in Turkey and we are confident that we have reached an understanding in terms of the next six months.
QUESTION: On Turkey? The president of Turkey, I don’t know if you know, he said that, “We will not obey such sanctions.” He announced that he’s not going to follow the sanctions. And he said also that he sees this move by Washington as, quote, “violating the global balance,” end quote. What is your answer on this?
MR HOOK: President Trump received this same question this morning, and I would refer you to his answer.
And secondly, the United States is concerned by the verdict sentencing Ali Salman to life in prison in Bahrain. We’ve closely followed this case against the former parliamentarian and secretary general of the Al-Wefaq political society, including a previous acquittal on these same charges on June 21st. We understand the verdict may be subject to further appeals. The United States will continue to engage regularly with the Government of Bahrain on a range of shared interests, including the importance of safeguarding fundamental freedoms and human rights.
QUESTION: The fighting around Hodedah seems to be picking up with – and UNICEF and MSF and all these aid groups who are saying children are at risk at these hospitals. And I wonder what’s happened to the U.S. call for a ceasefire.
MR PALLADINO: The – well, I would start by saying we closely are following the developments that are taking place in Hodedah. As the Secretary said, we’ve been urging all parties to come to the table, and to recognize that there’s no military victory that can be achieved in Yemen. And we continue to call for a cessation of hostilities and for all parties to support United Nations Special Envoy Martin Griffiths in finding a peaceful solution to the conflict.
QUESTION: So have there been any phone call? I mean, when you say they’re calling for that, can you talk about any meetings, any phone calls, any urgency to that?
MR PALLADINO: We are in daily contact with the special envoy. We – and we’ve got – we are in contact with a wide range of Yemeni interlocutors ad well as international partners throughout the Middle East. We’ll remain in touch.
QUESTION: Would you call on the Saudi coalition to halt this offensive that they seem to now be bearing down on in Hodedah?
MR PALLADINO: We’ve called for a cessation of hostilities. That would include – as our statement previously said, both Houthi missiles directed at Sauda Aria and the United Arab Emirates. Please, next question.
QUESTION: Last week, you also said that now was – the timing was right for this cessations of hostilities, this ceasefire to begin. You said that was based on conversations with both sides. Have you had a miscommunication then, with the Saud-led coalition, that they’re now beginning this offensive?
MR PALLADINO: Timing – our assessment remains the same. We are in contact with the relevant parties and we’re going to continue to watch this closely.
QUESTION: Yeah. I’m just – to put a finer point on that, I mean, did the coalition – the Saudi coalition that the U.S. supports coordinate with or tell you in advance that they were going to increase fighting around Hudaydah or did they just ignore the Secretary’s call?
MR PALLADINO: We’ve been clear with Saudi, Emirati, and Yemeni officials at every level that the destruction of critical infrastructure or destruction of the delivery of vital (inaudible) aid and commercial goods is unacceptable, and we are in close contact with our partners.
QUESTION: Just to follow up on that, because you’re not really answering the question, I mean, the Secretary of State issued a very explicit statement with the Secretary of Defense saying it was time for this to end and it’s not ending. Do you see that as a slap in the face, and what are you going to do about it?
MR PALLADINO: November was the month that we have called for and that is what the special envoy is pursuing. We continue to call for a cessation of hostilities. That is a cessation of hostilities and vigorous resumption of a political track. That is the way forward. That’s how we are going to ease this humanitarian crisis. The United States message remains we need to end this conflict and replace this conflict with compromise, and that’s all I have on this topic for today.
QUESTION: Yemen, please, just one thing. So since the call for – to – for a cessation of hostilities, have you seen any reduction in hostilities?
MR PALLADINO: I don’t – I’m not going to characterize actions on the ground. Our position remains – remains, has not changed. We are closely coordinating and urging a cessation of hostilities and a resumption of the political track and we will continue to push forward in that regard.
QUESTION: So the administration informed the Congress that Russia has not complied with their requirements of the chemical and biological weapons warfare elimination act. And can you walk us through this process? What will be next? Is there any decision on sanctions already? And what will happen? Are there consultations or how will it go? Thank you.
MR PALLADINO: Right, okay. So we made a determination against the Russian Government over its use of Novichok nerve agent against Sergei and Yulia Skripal back on August 6th. Under the act, the chemical biological weapons act, the Russian Government had until yesterday, November 6th, to take steps to meet the conditions required under the act. Yesterday – by yesterday, it had not done so, so we followed what was required under the act and we informed the Congress that we were unable to certify that the Russian Federation was in compliance. And so what – as we move forward we will be proceeding with our statutory requirements. I’ll leave it at that.
QUESTION: When do you expect to impose those additional sanctions? Is there a time – specific timeline under the statutory guidelines?
MR PALLADINO: The process takes time and we want to get sanctions right. We need to carefully consider the impact that sanctions have on U.S. national security interests, and I’ll leave it at that. But this is something that we take seriously.
QUESTION: Yeah. Some congressmen expressed regret that you weren’t ready with the plan for immediate sanctions once a determination was made since you had 90 days to know what were the consequence of the sanctions on national security and so on. And they said that this kind look as hesitation towards Russia. Do you – are you going to act quickly to answer those concerns?
MR PALLADINO: We are – we’re going to – we want to get the sanctions right. It’s important that we do so. Sanctions require – so that’s a process that takes time. As far as the law goes, the law is pretty clear that under the statute, our obligation by yesterday was to inform the Congress, and we met the requirements of the law.