Negotiators extend temporary sanctions in Iran talks

On Friday, 18 July, the P5+1 countries (China, France, Germany, the Russian Federation, the United Kingdom, and the United States), supported by the European Union, agreed with Iran to extend the Joint Plan of Action (JPOA) that suspended some economic sanctions against Iran as part of the overall talks regarding Iran’s nuclear related activities. The JPOA originally went into effect for a six-month period beginning 20 January 2014, and was scheduled to expire 20 July 2014. The JPOA commitments are now to be extended until 24 November 2014. The additional four-month period gives negotiators additional time to seek a final agreement.

1. United States

Yesterday the Office of Foreign Assets Controls (OFAC) issued guidance on how the extensions will be executed and administered. The guidance covers the various areas to which the extension applies, including transactions relating to Iran’s auto industry, civil aviation industry, gold, and other precious metals, and Iran’s exports of petrochemical products and crude oil as well as provisions relating to the facilitation of humanitarian and certain other transactions involving Iran. The guidance addresses selected issues such as insurance in greater detail, including a statement that claims arising from incidents that occur during the period may be paid after 24 November 2014, provided that all other activities are compliant. The guidance also discusses certain U.S. government waivers being executed to facilitate the execution of these extensions. This guidance, along with various other explanatory documents can be found here.

The extension of the negotiations is likely to precipitate a renewed debate within the U.S. Congress whether or not to enact additional sanctions legislation while the talks are continuing. Critics of the Obama administration will argue that legislation imposing additional sanctions – or at least threatening to impose additional sanctions if the talks fail – will give the administration additional leverage in this new round of talks. Sen. Mark Kirk (R-IL), an active proponent of tougher sanctions against Iran, issued a statement in the wake of the extension announcement calling for passage of tougher sanctions legislation he and Sen. Robert Menendez (D-NJ) have sponsored. Senate Majority Leader Harry Reid (D-NV), a supporter of the administration’s efforts, worked during the first six-month JPOA period to block any such legislative efforts in the Senate. He is likely to play the same role during this extension. However, renewed criticism of the administration and the possibility for landscape-changing developments make this situation potentially volatile. Therefore, the congressional dimension of this debate bears watching.

2. European Union

For its part, the European Union on 21 July extended the JPOA suspension of the relevant EU restrictive measures on Iran until 24 November 2014, by Council Decision 2014/480/CFSP. The EU suspension allows: the provision of insurance and transport in relation to Iranian crude oil sales to current customers, the import, purchase, or transport of Iranian petrochemical products, as well as trade in gold and precious metals with the Iranian government and its public bodies. The increase in thresholds for authorizing financial transfers to and from Iran also remains in force.