An Iranian girl walks next to a wall painting of Iran's national flag while using her cellphone in a street, in Tehran, Iran, April 28, 2018. Photo: AFP

While US-Iran relations are apparently warming, with hopes rising of a resumption of the scuppered Joint Comprehensive Plan of Action nuclear pact, Washington continues to pile on punitive measures, particularly in the technology sector.

The US government recently imposed a penalty of US$8 million on Germany’s SAP Software Solutions for “illegally” exporting US-origin software, including upgrades and security fixes, to Iranian users. The sale violated the technology sanctions placed on the Middle East nation, whic is home to nearly 60 million internet users.

From 2010 to 2017, SAP and its international partners exported the technology a total of 20,000 times to people in Iran and Iran-controlled front companies in states such as Germany, Turkey and the United Arab Emirates, while the company’s Cloud Business Group units have enabled some 2,300 users inside the embargoed country to access US-based cloud services.

A thorough investigation by different US government agencies, including the Department of the Treasury, Office of Foreign Assets Control (OFAC), Department of Commerce and the Bureau of Industry and Security (BIS), found the Walldorf-headquartered multinational software giant consciously contravened US technology sanctions on the Islamic Republic, and admitted to the “wrongdoing” to reach a settlement with the federal administration.

The exports apparently breached the Export Administration Regulations and Iranian Transactions and Sanctions Regulations. SAP, in order to steer clear of further prosecution, has voluntarily owned up to the malpractice and will pay $8 million in fines in addition to repatriating $5.14 million in “ill-gotten gains.”

The silver lining for the German firm is that it will not face criminal charges for its dealings with Iran because it worked in tandem with the US government willingly to further the investigations.

Assistant Attorney General John C Demers warned that the German firm could have faced stiffer punishment. Photo: AFP/Jim Watson

Growing isolation

Assistant Attorney General John C Demers, who oversees the Justice Department’s National Security Division, warned the consequences could have been worse had the US discovered the matter on its own.

“… when they violate those laws, there is a clear benefit to coming to the department before they get caught. SAP will suffer the penalties for its violations of the Iran sanctions, but these would have been far worse had they not disclosed, cooperated and remediated. We hope that other businesses, software or otherwise, we heed this lesson,” Demers said in a statement.

For many Iranians, the announcement is a reverberation of their growing isolation and detachment from the international community and points to the adversities they are destined to endure on the basis of their nationality.

Farshad Ghodoosi, an assistant professor of business law at California State University, Northridge, told Asia Times the latest settlement involving the Department of the Treasury and the German developer casts doubts over the assertion that sanctions can be planned and implemented smartly.

“The recent sanctions enforcement against SAP raises questions about the smartness of sanctions. It appears that some of the software downloaded were related to human resource management tools. It is hard to imagine how prohibiting software of this nature can serve a general policy,” Ghodoosi, who specializes in business law and international law, said.

Ghodoosi cites studies suggesting that sanctions do not achieve their stated goals and bring about unintended consequences: “How do we measure the smartness of sanctions? Sanctions related to technology products is a case in point which may deny ordinary people their ability to connect with the world and manage their daily lives.”

The SAP case is not the first instance of a foreign tech firm being punished by the US for supplying software, online services and electronic gadgets to Iranian users, even though in most cases the clients are ordinary people and not government bodies and the products in question have no practical relevance to Iran’s contested nuclear program or its military enterprise.

Stripped of connectivity

In 2017, the US government meted out a hefty penalty of $1.2 billion to the China-based ZTE technology company for supplying communications services to Iran using equipment manufactured in America. The liability incurred by China’s second major producer of telecoms apparatus was the largest criminal fine in a US sanctions violations case to that date.

The same year, CSE Global, a leading technology company in Singapore, was fined $12 million by the US Department of Treasury for 104 counts of violations of Iran sanctions by its subsidiary TransTel, namely for installing telecommunications equipment in a number of Iran-operated gas and oil fields in the Persian Gulf.

One of the questions lingering around these technology sanctions is whether they actually serve the purpose they are devised to fulfill – that is, blocking the Islamic Republic’s pathways to nuclear weapons and taking the edge off Tehran’s regional brinkmanship.

Experts and critics also wonder if stripping a young population of the means of connectivity and digital technologies is justifiable and conducive to positive change in Iranian society in the age of the internet and social media. Roughly 60% of Iran’s population is under 30.

The sanctions, which critics say American and international companies have been implementing through an often overbroad lens, have at times taken on discriminatory, racially prejudiced forms, victimizing anyone with an Iranian background even beyond Iran’s geographical borders.

For example, in 2012, an Apple Store employee in Atlanta, Georgia, refused to sell an iPad to a customer who was overheard speaking Persian. Sahar Sabet, a University of Georgia student and an Iranian-born US citizen, complained to the company and later received an apology from an Apple representative along with an offer to purchase the iPad she sought to buy.

Last year, the California-based crowdfunding platform GoFundMe shut down two fundraising campaigns initiated by Iranians in Canada to help families and friends of the victims of the doomed Ukraine International Airlines Flight PS752, which was shot down by the Islamic Revolutionary Guard Corps, killing all 176 passengers and crew on board.

An Iranian man wearing a face mask walks past a 5G logo at the Irancell mobile network company stand at the sixth Iran’s Internet of Things exhibition in the Tehran International Exhibition Center on February 16, 2021. Photo: AFP/Morteza Nikoubazl/NurPhoto

Research and education hampered

The restrictions have mushroomed over time and extended their reach over different facets of Iranian people’s online presence, identity and digital life.

The curbs have mostly acted to sever Iranians’ already minimal ties with the outside world, significantly at a time their own government has been jamming free internet access and blocking various social media platforms.

Pooyan Piredeir, an Iranian inventor and founder of the Marlik Institute of Innovation and Technology, said the tech sector sanctions have impaired his research and scholarly activities.

“A few years back, at the dawn of the introduction of US sanctions on Iran, my colleagues and I successfully finished a number of online courses offered by the American online course provider Coursera and obtained high marks. At the end of the programs, they refused to issue us certificates of completion, citing the US government’s sanctions,” he said.

According to Piredeir, these sanctions give the Iranian government a pretext to perpetuate its campaign of censorship and to boost its obstructive social media policy.

“The government capitalizes on the US measures to argue counter-sanctions and restrictions on online platforms are necessary, and this undermines the pressure put by social activists to de-ban a slew of blocked websites and applications,” he said.

“At the same time, the people’s ability to monitor the government’s conduct and share information will be overshadowed, [which is] doubly detrimental at the time of the Covid-19 pandemic,” he added.

The proponents of sanctions in the Obama and Trump administrations hypothesized that these provisions were “smart” in their targeting and didn’t impinge on the rights of citizens, and aimed specifically to scale up pressure on the government in Tehran.

Youths play an online multiplayer game at an internet cafe in Iran’s capital Tehran on January 24, 2021. Photo: AFP/Atta Kenare

Multiplying corruption

But many experts say the sanctions have missed the mark and have ultimately increased the vulnerability of civil society and created a new fissure between Iranians and the international community.

“Sanctions inherently cannot be smart. Technology sanctions have mostly affected the private economic, education and healthcare sectors of Iranian society. University labs, medical research institutes, graduate students, young people, entrepreneurs and startups are mostly affected by the US blind technology sanctions,” said Abbas Keramati, an assistant professor at Ryerson University’s Ted Rogers School of Information Technology Management.

He said such sanctions wind up multiplying corruption, which is one of their many unintended repercussions: “Private companies have no choice but to turn to informal or even underground vendors to purchase their technology supplies. In-transparent material flow, money flow and information flow in the informal supply chains leads to corruption proliferation.”

Iranian authorities have long advanced plans to establish a “National Information Network”, an indigenous version of the internet with in-built email, search engine and instant messaging services. Experts believe its ultimate aim is to supplant global internet connectivity, and when launched will make the world wide web unavailable to Iranians.

“Sanctions on digital products and services make the ‘foreign enemy’ syndrome more severe and a more effective tool for isolating the country even further. It is the foreign enemy that doesn’t want you to talk to your kids abroad on Google Talk, it is not the government,” said Farzaneh Badiei, director of the Social Media Governance Initiative at Yale Law School.

“Another problem is these kinds of sanctions legitimize the concept of a national internet. The government can argue that we need to be able to assert sovereignty over the internet so that we’d be self-sufficient and not need them. In reality, they want to create a national internet so that the civil society’s access to a global internet diminishes,” she told Asia Times.