Washington has given Iran more than $5 billion in cash to help it meet its financial needs since January.
But on Friday, the US Treasury Department issued new guidelines that allow Iran to spend the money on “other strategic, nonmilitary purposes,” including “commercial and commercial services” and “support for foreign governments.”
“This is an unprecedented step by the US,” said Robert Einhorn, the deputy Middle East director for Human Rights Watch.
“The US is allowing Iran to bypass US sanctions and spend its oil revenue abroad in a way that it would not normally be allowed.”
The sanctions on Iran were imposed by Congress after it was revealed that Tehran had spent billions of dollars to help Syrian President Bashar al-Assad’s regime during the war.
The sanctions, which are due to expire in 2021, have targeted Tehran for its alleged support of the Assad regime and its support of militant groups like Hezbollah and Hamas.
The new guidelines do not limit Iran’s ability to spend money in the international economy, as US Treasury Secretary Steven Mnuchin argued.
“The US continues to believe that the sanctions must end and that Iran must not be allowed to continue to provide the regime with arms and money to fund terrorist groups,” Mnuchin said.
“Iran’s continued support for the Assad government and Hezbollah, as well as its ballistic missile program, poses a threat to the US, its allies, and its regional partners.
The administration is prepared to work with Congress to find a path forward that will restore Iran’s financial independence and deter its continued efforts to destabilize and threaten the United States.”
The Treasury Department said it expects Iran to begin using the funds to purchase goods and services, including the purchase of oil and gas, construction and equipment.
“We are pleased that the Trump administration is recognizing that Iran’s continued violations of international sanctions and threats to its regional allies and partners will have devastating consequences for US national security interests,” Mnuchinsaid.
“We will continue to work closely with our European allies and partner countries to bring Iran’s violations of its obligations to international law to an end and to support our allies in the fight against Iran’s destabilizing activities in the region.”
Mnuchin said that in addition to the cash to Iran, the Treasury has also allowed the country to purchase U.S. securities, including U.N. debt and mortgage-backed securities.
The Treasury has previously said it would give Iran more flexibility in its spending, and Mnuchin has been more direct about that in the past.
He said in July that he would allow Iran “the flexibility” to spend oil money on other priorities.