Last week, I noted that the U.S.’s promised sanctions relief under a potential Joint Comprehensive Plan of Action (“JCPOA”) was limited to its “secondary” sanctions prohibitions – i.e., those sanctions that target the activities of foreign parties vis-à-vis Iran. As I wrote, understanding the scope of sanctions relief to be provided as part of a final nuclear deal is key for those wishing to take advantage of newly-permissible areas of trade with Iran, all the while remaining compliant with surviving U.S. sanctions authorities.
However, the scope of sanctions relief is limited in another sense as well: as the April 2nd Joint Statement reached between the U.S., other major world powers, and Iran states, the U.S. will “cease the application of all nuclear-relatedsecondary economic and financial sanctions” imposed on Iran in return for Iran taking steps to constrain and roll-back elements of its nuclear program.
But what’s a “nuclear-related” sanction?
As some have pointed out, few statutory sanctions prohibitions take exclusive aim at Iran’s nuclear program. Indeed, each of the major pieces of Iran sanctions legislation since 2010 has included “Sense of Congress” language decrying a variety of Iranian activities anathema to U.S. interests, including Iran’s support for international terrorism, its advances ballistic missile capabilities, its money-laundering risks, its human rights abuses, and its nuclear program. Moreover, Congressional findings describe all or some of these activities as the basis for certain specific statutory sanctions prohibitions.
It’s for this reason that U.S. negotiators have been careful in their use of language. Both the JPOA and the April 2nd Joint Statement used the phrase “nuclear-related sanctions” – not sanctions exclusively targeted at Iran’s nuclear program but only related to it. The reason is evident, too: in order to maximize U.S. negotiating leverage at the table, the U.S. had to make the potential scope of sanctions relief a function of the degree to which Iran was willing to concede on elements of its nuclear program. The more Iran agreed to long-term limits to constrain and roll-back its nuclear program, the more U.S. negotiators would provide in sanctions relief to Iran. Making sure not to define too far ahead what sanctions would be available for relief played into the hands of U.S. negotiators as the U.S. was able to market certain kinds of sanctions relief to Iran provided the price on its nuclear program was right.
In this sense, the use of the phrase “nuclear-related sanctions” created a large universe of U.S. sanctions available for relief as part of a deal with Iran. At the same time, the Obama administration was able to plausibly claim that sanctions specifically related to Iran’s support for international terrorism and its human rights abuses would remain in effect long after a nuclear deal with Iran. For example, while the IRGC might come off the 13382 List, it would in all likelihood remain designated under separate sanctions programs related to human rights abuses committed by Iranian authorities. Defined in this manner, then, sanctions relief would always be both more and less than what it seemed.
Nonetheless, the ultimate efficacy of this scheme for conceptualizing Iran sanctions will be dependent on how well the Obama administration is able to delineate areas where sanctions have been removed as part of a JCPOA and where sanctions will remain in effect. In the CNAS report I highlighted last week, one of the major recommendations is that the U.S. Treasury Department provide clear guidance to foreign officials and financial institutions regarding the scope of sanctions relief. The purpose is two-fold: (1) to clarify what sanctions will remain enforced after a nuclear deal so as to ensure future sanctions compliance; and (2) to allow the private sector the opportunity to take advantage of newly-permissible opportunities for trade with Iran so as to ensure Iran likewise fulfills its nuclear-related commitments pursuant to a deal.
Such guidance will prove all the more important due to the amorphous concept of a “nuclear-related” sanction. While certain sanctions are clearly unrelated to Iran’s nuclear program (e.g., designations made under the authority of Executive Order 13224 or Section 104(c)(2)(A)(ii)), many other are and have been the subject for ongoing negotiation.
As such, those interested in pursuing the potential for future trade with Iran should be on the lookout for the text of a JCPOA should one be reached in the days ahead. While nuclear-related sanctions define the scope of sanctions relief under a deal, a detailed understanding of the phrase will only follow the release of the text of the JCPOA and any sanctions-related annex.