On April 2, 2015, the Obama Administration announced that the U.S., Germany, Russia, the U.K., China and France (the “P5+1”) had agreed on the framework of a deal with Iran to address concerns surrounding that country’s nuclear program. The deal would push back Iran’s nuclear program in exchange for the gradual lifting of Western sanctions. It is important to note that the agreement that has been reached is a framework only, and the details regarding its implementation are still to be negotiated over the next few months. Unless and until such details can be agreed on, no changes to U.S. sanctions will take place.
Given the interest surrounding this deal, the Department of the Treasury, Office of Foreign Assets Control (OFAC) has issued guidance on the framework to provide information, but also to make clear that no reduction in sanctions is occurring at this time. Currently, the only sanctions relief in force at this time is that provided in November 2013 and extended through June 2015. The relief primarily applies to non-U.S. parties impacted by U.S. sanctions.
As part of the framework, Iran has agreed to reduce the number of centrifuges it has in operation by at least two-thirds and convert the centrifuges at its Fordow facility to research and other applications. Only after this reduction has occurred will the European Union lift its nuclear-related sanctions in phases, while U.S. sanctions would remain in place for a possible “snap-back” should Iran not follow the agreement.
U.S. sanctions will remain in place and will be phased out contingent on confirmation from the International Atomic Energy Agency (IAEA) of Iran’s compliance with various conditions regarding its nuclear activities. Under the agreement, IAEA inspectors will have access to Iranian nuclear facilities, its supply chain and mining facilities.
Despite assurances from the IAEA and the possibility of “snap-back” sanctions, the U.S. Senate is poised to carefully scrutinize any final deal with Iran. Senate Republicans have introduced a bill to give Congress the authority to approve or reject any deal. The bill would require the administration to wait 60 days before suspending any sanctions against Iran, giving lawmakers an opportunity to approve, reject, or take no action on the deal. It is unclear whether the legislation will pass before the final deal deadline of June and, if passed, it is possible that President Obama would veto such a bill.