Last week, the EU and the United States announced the relaxation of sanctions against Iran in accordance with the nuclear pact Iran reached with the United States, the United Kingdom, France, Germany, China and Russia in November of last year.

We reported at the time the pact was reached that the first stage of EU and U.S. implementation of the pact’s conditions would be limited to sanctions relief related to the petroleum, civil aviation, automotive, insurance and transportation sectors.

EU Sanctions

As expected, the EU has suspended for six months prohibitions on (i) providing insurance or transportation services relating to Iranian crude oil sales to non-EU countries and (ii) importing Iranian petrochemical products (but not crude oil) into the EU or otherwise purchasing or transporting Iranian petrochemical products. The EU also suspended its ban on trading in gold and other precious metals with the Iranian government or the Central Bank of Iran. In addition, the EU eased limits on money transfers to and from Iran by raising the thresholds for what transfers require prior authorization from EU member states.

All other EU sanctions, however, remain in place, including prohibitions on (i) importing Iranian crude oil into the EU, (ii) exporting to Iran goods, services or technology related to Iranian military activities, nuclear development or petroleum or petrochemical development and (iii) dealing with individuals and entities the EU has identified as persons with whom dealings are prohibited.

U.S. Sanctions

The United States has also suspended a limited number of sanctions against non-U.S. persons for the next six months. Penalties will not be imposed against non-U.S. individuals or entities involved in (i) the export of petrochemical products from Iran, (ii) the Iranian automotive or civil aviation sectors, (iii) the trade of gold or other precious metals or (iv) the export of Iranian petroleum or petroleum products to China, India, Japan, South Korea, Taiwan or Turkey.

All other U.S. sanctions against Iran remain in place, including prohibitions on (i) U.S. persons and foreign subsidiaries of U.S. entities engaging in transactions related to Iran, (ii) exporting anything from the United States to Iran, (iii) importing anything from Iran into the

United States and (iv) dealing in property or interests in property of anyone on the Treasury Department’s Specially Designated Nationals List if the property or interest in property is in the United States or in the possession or control of a U.S. person.

The United States will, however, consider issuing export licenses to (i) U.S. persons, (ii) U.S.-owned or -controlled foreign entities and (iii) non-U.S. persons involved in the export of U.S.-origin goods or technology in order for such persons to engage in transactions related to Iranian commercial passenger aircraft.

The Future

Whether EU and U.S. sanctions are further relaxed depends on whether Iran fulfills its pact obligations over the next six months, during which it must prove it has halted a variety of nuclear development activities.

Members of Congress who have been critical of the Administration’s participation in the Iranian nuclear negotiations have said they will be monitoring Iran’s activities closely and are poised with proposed legislation that would increase U.S. sanctions against Iran. One bill introduced in Congress, for example, would authorize the President to prohibit foreign companies from being awarded U.S. government contracts if they supply goods, technology or services to Iran.

Neither the EU nor the United States has provided details about how sanctions will be further relaxed if Iran fulfills its obligations under the current pact.