In this episode of the Alongside: Future Thinking mini-series from NorthStandard, Mike Salthouse is joined by David Peyman, who serves as counsel to the world's largest maritime, financial, energy, and pharmaceutical sector actors. 

David served in the White House under Donald Trump as the State Department's sanctions chief between 2018 and 2020, and was responsible for managing 25 sanctions programs including Iran, Russia, China and Venezuela. 

Mike and David discuss what a second Trump term might look like for the shipping industry.

Highlights:

00:15 Meet David Payman: Sanctions Expert

00:48 Sanctions Under the Trump Administration

02:33 Impact of Sanctions on Iran

05:00 Perceptions of the Shipping Industry

07:17 Changes Under the Current Administration

08:22 What to Expect from a Second Trump Administration

11:49 Guidance for the Shipping Industry

Previously, though, he served in the White House for Donald Trump. As the State Department's Sanctions Chief between 2018 and 2020, David led the Office of Economic Sanctions Policy and Implementation and was responsible for managing 25 sanctions programs, including Iran, Russia, China, and Venezuela. So who better to shine a light for us on what the shipping industry might expect from a second sanctions chief?

Trump administration. David, delighted you could join us. Welcome. Perhaps we could start by your explaining your role and responsibilities in the, in the first Trump administration.

Uh, one of the unique things that we did in the administration was that for the first time ever, we created a sanctions targeting team. And for the first time, I think we looked at the shipping industry. In a different way, I think traditionally the U. S. looked at the shipping industry in respect to its traditional security concerns and obviously proliferation issues.

So weapons proliferation issues, nuclear proliferation issues, and obviously shipping being a key node that may implicate those security interests. But we also looked at it from an economic sanctions perspective. How the shipping industry can play a helpful part. In implementing U. S. sanctions because ultimately whether you have Iranian energy or Russian energy or Chinese goods or Venezuelan energy moving around the world, they're done by vessels.

[00:02:33] David Peyman: So I, I think at the very top of the priorities was, was Iran obviously, the, the, the, the, the security threat posed by Iran. And. I think they could, the objectives could be narrowed down to two, to four key objectives. One is ensuring Iran doesn't get a nuclear weapon. Two, ensuring Iran doesn't expand and continue its, its ballistic missile program.

Three, stopping Iranian malign activities in the Middle East region, Syria, Lebanon. Yemen, other parts of the Middle East that includes terrorism, sponsorship of terrorism like Hamas or Hezbollah and for releasing a Western hostages that includes obviously American and hostages of other, of other nationalities.

Um, and how successful were we? Well, look, there are several interesting data points over the course of four years. We decreased Iranian oil revenue by 52 billion a year. We bankrupted 17 out of 18 Iranian pension funds. Iranian inflation was in double digits. Unemployment was in double digits. So you had the regime being squeezed financially and in respect to stopping Iranian.

Not stopping but reducing Iranian malign activity in the region because they continued certainly during that, during that time and decreasing Iranian funds to contribute to sponsoring terrorist groups, I think were goals that that we largely achieved and you know, there's a lot of debate today. About whether the October 7th terrorist attack in Israel would have occurred under the Trump administration.

And there's a good argument to be made that the Iranians, Hamas, Hezbollah, were really playing defense because they were trying to survive financially in the face of the significant revenue cut. A 52 billion a year. I think for the first time in history, Hezbollah was making public pleas for donations because it was facing a financial crunch.

So it seems like during that time they were busy trying to survive rather than planning and financing a very large sophisticated terrorist attack against Israel.

And what, and how did that impression of the industry, and I'm, when I say the shipping industry, I'm talking about marine insurers, classification societies, as well as just ship owners and charters. How did that impression evolve during your time in office?

N. sanctions, and I think with you and others in the industry. We're looking for ways to work together to ensure, um, ship owners and, and other actors in the industry also similarly comply and figure out ways where we can identify sanctions evasion and to address that, I think with respect to other parts of the industry, I think it took some time for ship owners.

Um, to understand that the U. S. was extremely serious about implementing U. S. sanctions and that, you know, we subscribed to the idea that no one was too big to fail. So, you know, it didn't matter how big. Fleet that you had if you were violating u. s. Sanctions, you're going to be held accountable It didn't matter how many flags you registered or how many flags you issued and registered vessels under We were going to hold you accountable, and I think we saw that play out into two particular circumstances One was, we sanctioned a subsidiary of China's largest, uh, uh, vessel owner, Costco.

And that, I think, sent a ripple effect throughout the industry. And really sent the message home that the United States was serious. And, I think it produced a good result. Because ultimately, Costco Worked with my office to change its approach, to change its compliance policies, and to commit to not violating U. S. sanctions. I think unfortunately, in the new administration, that has changed. I think we're seeing active evasion, blatant evasion, flagrant evasion of U. S. sanctions, because there's no accountability. And so those actors, some of those actors, I think, have reverted to their previous ways. Um, but during the administration, I think that was a, that was a strong message that we sent.

Um, and ultimately ended up working out for Costco because they really, I think during the administration, at least the Trump administration really did change course. Um, and that led to larger conversations with other Chinese state owned entities on how they could comply.

Is there anything you think that it's done well? You know what, I suppose now we're getting onto the meat of this interview, which is what, what you think a second Trump presidency might change, um, from the current approach.

Um, I think, you know, there's been some concern, bipartisan concern among Democrats and Republicans that the massive amount of aid, billions of dollars going to Ukraine has not all been used properly, that there's some corruption there and that, you know, there needs to be a fresh approach to try to resolve this conflict.

And I don't want to telegraph exactly, you know, what the president might do, um, and, and the kinds of conversations he will have. But I think one of his key priorities, um, within the first few months, frankly, is to ensure an end to that conflict. And obviously that's going to have implications in respect to the price cap policy with respect to the export of Russian oil that we see today.

Um, and other approaches in respect to Russia and U. S. sanctions. Uh, with respect to Iran, I think you can safely assume that you'll see again a maximum pressure economic campaign holding Iran responsible, um, and holding third party countries responsible for sanctions evasion. And I think we learned a lot of lessons.

During the first four years and I think we'd be in a position or the Trump administration will be in a position To very quickly move forward on that maximum pressure campaign Having learned lessons of the past and and I think that has implications for the private sector because I think now private sector companies that either are intentionally evading U.

S. sanctions or violating them, or those that have simply taken a more lax approach and they haven't really prioritized compliance, I think would be wise to rethink that approach if there is a second Trump administration.

[00:10:47] David Peyman: I think, I think certainly it would be an area of, of, of priority. Um, I think that's a little bit of a different situation. Uh, as you know, we had pretty aggressive sanctions against Venezuela. You know, there were, there was hope that Guaido. Um, would be a force of positive change and both in the previous administration and the current Biden administration.

I'm not sure if that's that's played out as expected. Um, so it's important, I think, to have democratic elections in Venezuela. I think the Biden administration has Appropriately prioritized that effort, um, and frankly recognize that Venezuela might be a little different than Iran and China and other countries, um, and might need a more nuanced approach, um, whether that's a change in the sanctions regime or a dual track, I think it's to be determined, but, but I think the ultimate objective is the same that, that any administration would share, Which is ensuring free and fair elections, uh, in Venezuela and giving the Venezuelan people the opportunity to really choose their leader.

[00:12:05] David Peyman: That's right.

[00:12:18] David Peyman: Well, it's a very good question. I think from a high level, you know, we discussed the maximum pressure campaign and the implications of that. But frankly, I think it depends on the individuals, um, and the personalities involved in those that might join a second administration. I think to the extent that you have individuals that were part of the First administration had the engagement with your industry and others, you know, obviously that will be built on and we don't have to start from ground zero.

And I think there is a real partnership there between the United States and the private sector and there's a lot that we learned that will be utilized going forward. But if for some reason there are, there are individuals that don't have that previous experience, um, there might be a steeper learning curve.

So I think when it comes down to implementation, it has a lot to do with individuals that might be appointed in the second administration.

[00:13:25] David Peyman: Look, I would say notwithstanding perhaps nonexistent or lax enforcement efforts by the current administration, at the end of the day, U. S. law is U. S. law. And it behooves a company that has exposure to the United States to comply with that law. And you have to remember that that violations today. In 2024 or last year in 2023 or the last couple of years could be enforced next year.

So it's not like anybody has a free pass, although today you might not see enforcement. If there's evidence and I, and I can, you know, I'm not in the government, but there's a very good chance that those actors that today are either negligently or intentionally violating U. S. sanctions. There are people that are tracking that, and that information is there.

So, just because you don't see enforcement today, based on acts today or yesterday, the past couple of years, that's not to say that you won't see enforcement for acts, violations that occurred during the Biden administration. I think that's a very important message. Obviously going forward, the focus should be on how you proactively comply.

And I've always encouraged when I was in office and today in the private sector for companies that have concerns, those that want to comply. But they have commercial challenges, they have business cost challenges, they have competitor challenges whereby they feel like they're the only ones that would be complying and others would have a market advantage because they're not.

I think those are all good conversations to have with policymakers in the United States government. And I know companies oftentimes are hesitant to raise their head and initiate dialogue. But I think ultimately the point of this. Is not to catch someone and corner them, but rather work collaboratively and cooperatively to help companies that want to comply to comply.

So I always encourage private sector actors, especially if it could be done within an industry group. So that way, you know, one company doesn't feel like. You know, they're taking the lead on this, but rather than an industry group is making the effort to engage with the U S government. I think those kinds of conversations are always helpful, um, for the private sector and frankly, for the U S government to get folks to a place where they could comply in a way that's commercially reasonable for them.

[00:16:10] David Peyman: Thanks for having me on. Appreciate it.

You'll find the Alongside podcast and these Future Thinking episodes on the North Standard website at north standard. com, or wherever you get your podcasts. You can also click follow to ensure you don't miss an episode. That's it from me, Mike Salthouse. Bye for now.