The EU and US have started the partial suspension of economic sanctions targeting Iran in line with the Joint Plan of Action (“JPOA”) agreed in Geneva last November.
On 20 January 2014, Iran began a six-month process of reducing its stockpile of 20% enriched uranium while also halting any further progress in its nuclear programme. The EU and US will in return suspend certain economic sanctions until 20 July 2014. The suspension may be prolonged by mutual consent.
The EU has issued Council Decision 2014/21/CFSP and Council Regulation (EU) No 42/2014 which suspend the measures previously prohibiting:
- The transport of Iranian crude oil and petroleum products. N.B. The prohibition on the import or purchase of Iranian crude oil and petroleum products remains in place.
- The provision of insurance and re-insurance relating to the import, purchase, or transport of Iranian crude oil.
- The import, purchase or transport of Iranian petrochemical products and related services.
- The provision of vessels enabling the transport of Iranian crude oil.
- The trade in gold, precious metals and diamonds with the Iranian government, its public bodies and the Central Bank.
Contracts taking advantage of the above suspensions “would have to be executed” during the period of 20 January to 20 July 2014. The measures envisage the release of frozen funds to the Iranian Ministry of Petroleum to the extent necessary for the execution of contracts for the import or purchase of Iranian petrochemical products.
The measures also include a tenfold increase in the authorisation thresholds for financial transfers to and from Iran. The threshold is now EUR 1,000,000 for transactions regarding foodstuffs, healthcare, medical equipment, or for agricultural or humanitarian purposes; EUR 400,000 for transfers regarding personal remittances; and EUR 100,000 for all other transfers. The requirement to notify a competent authority of any transfer above EUR 10,000 remains in place.
The US has announced limited, targeted and reversible sanctions relief for the same six- month period. To qualify, the transactions must both be initiated and completed within the six-month period of the JPOA, beginning 20 January 2014.
The relief is limited to so-called “secondary sanctions” imposed on non-US persons that do Iran-related business, including restrictions on US correspondent accounts, blocking of US assets, or “menu-based” sanctions such as restrictions on US bank loans, US government contracts or other US-related business. The relief does not rescind any part of the “primary sanctions” applicable to US persons and their subsidiaries, though in some instances the Treasury Department will more liberally grant specific licences. The partial relaxation of secondary sanctions is effected by waivers, where authorised by statute, and by a stated policy of non-enforcement when waivers are not legally available.
As outlined in guidance jointly issued by the US State and Treasury Departments, the sanctions relief includes:
- Pausing US efforts to reduce Iranian crude oil exports by allowing the six countries currently on the “substantial reduction” list (China, India, Japan, South Korea, Taiwan and Turkey) to continue purchasing Iranian oil at current levels for the remainder of the JPOA period, without the imposition of secondary sanctions on non-US companies involved in such trade.
- Establishing financial channels to allow Iran to make payments for humanitarian transactions and medical expenses, university tuition payments for Iranian students studying abroad and the payment of Iran’s UN obligations.
- Suspending secondary sanctions on non-US companies for transactions related to Iran’s petrochemical exports, trade in gold and precious metals, and the provision of goods and services to Iran’s automotive sector.
- Licensing US companies and their subsidiaries to engage in transactions for spare parts, inspections and associated services necessary for the safe operation of Iranian commercial passenger aircraft.
The sanctions relief extends to any insurance, transportation or financial service ordinarily incident to the underlying activity covered by the JPOA, provided that the provision of such services does not involve any persons or entities identified on the US Treasury Department's Office of Foreign Asset Control's (“OFAC”) List of Specially Designated Nationals and Blocked Persons.
Links relating to EU measures
Links relating to US measures