Tyler Cullis

Tyler Cullis

Tyler Cullis joined NIAC in March 2014 as a Policy Associate. In this position, he provides legislative and advocacy outreach, research and writing, and legal analysis. Tyler is a recent law graduate of the Boston University School of Law, where he specialized in the U.S. sanctions on Iran and the Iran nuclear issue. Tyler tweets at @TylerCullis.

It’s Up to Europe to Save the Iran Deal

This is not a drill, folks. Following a fight inside the White House over recertifying Iran’s compliance with the Joint Comprehensive Plan of Action (JCPOA) — the nuclear accord between Iran and six major world powers, including the United States — President Donald Trump has signaled his intent to refuse such certification when the issue comes up again in October. Dissatisfied with the State Department’s adherence to the facts at hand, the president has set up a team at the White House to give him options on how to leave the agreement. Make no mistake, though: Decertification would risk undermining the nuclear deal, reimposing U.S. sanctions lifted under the agreement, and resuscitating the risk of war.

Trump’s abandonment of the JCPOA would be a major blow, but it need not be a fatal one. The agreement, after all, is not a bilateral deal between the United States and Iran — European countries (as well as Russia and China) also struck the deal and now have the opportunity to deter Trump from sabotaging it. If it has the political courage to chart a course independent of Trump, Europe can protect both American and European interests by preserving the deal.

To start, Europe should preemptively and publicly communicate that it will not follow Trump’s lead if the United States leaves the deal, absent serious indication of Iran’s noncompliance with its nuclear-related obligations. Following the breakdown of nuclear talks in 2005, Brussels agreed to cooperate in imposing sanctions on Tehran under the belief that the United States and the European Union had a shared interest in halting the Islamic Republic’s nuclear progress. If the Trump administration indicates that it intends to abandon the JCPOA, European leaders would have reason to question Washington’s commitment to their shared interests. As a result, Europe should make clear that cooperation on any future sanctions regime will be at serious risk, including in areas where the United States and Europe ostensibly face shared threats like Russia.

Europe can also act preemptively to mitigate the consequences of any potential reimposition of U.S. sanctions by revitalizing an EU regulation forbidding European compliance with American extraterritorial sanctions. This regulation — which has fallen into relative disuse — prohibits European companies from acting in compliance with the Iran Sanctions Act, which, at the time, threatened sanctions on foreign energy giants investing in Iran’s energy sector. The EU should amend this regulation to add all U.S. sanctions lifted under the JCPOA. In doing so, Europe will send a clear message to the Trump administration that if it intends to abandon American and European interests as outlined in the agreement, it will do so alone.

The practical effect of this move will be twofold. First, it will provide European countries with confidence that their home governments will protect them from the extraterritorial application of U.S. sanctions. Second, it will deter the United States from effectively applying its sanctions to European companies. Europe would do well to note that the United States failed to enforce the Iran Sanctions Act during the entirety of its first decade in existence as a result of this regulation.

Europe will also need to think in the long term. The potency of American sanctions stems from the power of the U.S. dollar: Most international trade is conducted in dollars, and financial transfers related to such trade need to be processed through the United States. Efforts to create offshore dollar-clearing facilities to avoid the United States have been tepidly pursued thus far, but Brussels can take a big leap forward by announcing its intent to encourage and promote the development of such a facility.

Together, these moves can serve as potent warning shots to those who believe that Trump — thanks to the passivity of Europe — can revive America’s sanctions leverage. American and European interests should not be held hostage by a rabid pack of ideologues in the White House. Sanction-happy U.S. officials will not stop pushing for ever increasing economic warfare until they see a credible threat to America’s unique role in the global financial system.

Finally, Europe can encourage its international partners to enact measures ensuring that any reimposed U.S. sanctions have a limited effect on the Iran deal. It has done so before: When the United States first sought to aggressively impose extraterritorial sanctions on Iran in the late 1990s, Europe was not alone in resisting those efforts. Japan, South Korea, Canada, Mexico, and other countries either imposed or threatened to impose similar blocking statutes that prohibited home companies from complying with U.S. sanctions. Europe can once again encourage its partners to take preemptive action aimed at warning off the Trump administration from derailing the nuclear deal.

Trump is in clear breach of America’s JCPOA commitments, including its pledge to prevent interference with Iran’s realization of the full benefit from the original sanctions lifting. He has also openly stated his determination to blow up the Iran deal. Friends don’t let friends drive drunk, and on the international level, enabling this belligerence need not be the prerequisite for maintaining strong transatlantic relations. Before the nuclear deal was successfully negotiated in July 2015, it was conventional wisdom in Washington that Iranian leaders only respond to pressure. That myth was shattered two years ago, but it looks increasingly true today about the Trump administration. Europe would be wise to proceed accordingly.

This piece originally appeared in Foreign Policy.

Trump Is Violating The Iran Deal

With two years of successful implementation in the books, Washington should be celebrating the anniversary of a historic Iran nuclear deal. Instead, President Trump is violating the pact and prompting its demise. With each passing day, it becomes less plausible that his violations are mistakes rather than malicious. This is all the more ironic given reports that his administration plans to once again re-certify Iran’s compliance with its Joint Comprehensive Plan of Action (JCPOA) commitments. However, reaffirming that Iran is fulfilling its end of the bargain does not mean America is doing the same. As the deal turns two, all parties to the deal should consider three key points about their landmark diplomatic achievement as it exists today.

First, it is now clear that the Trump administration intends to flout the full scope of U.S. obligations under the JCPOA so as to limit promised business ties with Iran. For instance, a White House press briefing revealed that President Trump spent his time at last week’s G-20 Summit urging nations to stop doing business with Iran. Trump’s directive to world leaders is the latest in a string of evidence that the U.S. is acting in material non-compliance with its express obligations under the JCPOA. These obligations include not just the formal lifting of nuclear-related sanctions, but also express commitments to “refrain from any policy specifically intended to directly and adversely affect the normalization of trade and economic relations with Iran…” and “from any action inconsistent with the letter, spirit, and intent of [the] JCPOA that would undermine its successful implementation.” 

Considering, too, that the U.S. has the positive obligation to “agree on steps to ensure Iran’s access in areas of trade, technology, finance, and energy,” Trump’s private urging to foreign countries to withdraw business ties with Iran puts the U.S. in irrefutable breach of the JCPOA.  No one can any longer remain agnostic or in denial as to this basic fact.

Second, in breaching the JCPOA, the Trump administration appears keen on adopting the failed playbook of the past.  Soon after taking office in 2001, the Bush administration skirted U.S. obligations under the Agreed Framework, prompting North Korea’s departure from the Nuclear Non-Proliferation Treaty (NPT) and effectively weaponizing North Korea’s nuclear program. Neoconservative champions of that approach – one that haunts us to this day – are now pushing this same disastrous policy with Iran, hoping that  death-by-a-thousand-paper cuts will sink the Iran deal and place Washington and Tehran back on the path towards war. To this end, the Trump administration is taking deliberate steps to breach the JCPOA and provoke an Iranian response.

So far, though, the effect of Trump’s policy is to isolate only the United States. Next week, the Joint Commission to the JCPOA will meet to discuss implementation of the deal, and there can be little doubt that a central focus of that meeting will be America’s failure to abide by the terms of the agreement. The Trump administration will have effectively inverted the order of things at the Joint Commission so that America, not Iran, is the subject of the meeting and its lack of commitment to the deal bemoaned by other world powers.  

In the upside-down world of Washington, this is the position of “strength” from which the U.S. can challenge Iran. Pipe dreams aside, though, there can be no mistaking the fact that the U.S. has effectively ceased to be a constructive party to the nuclear deal. With the rest of the JCPOA parties indicating that they will move ahead with the nuclear accord regardless, the Trump administration has successfully cratered U.S. influence and caused the other parties to the deal to balance against it. 

Finally, it cannot be overstated that all of this was entirely avoidable – because the Obama administration had put U.S.-Iran relations on an entirely different trajectory. Multiple channels of dialogue were established, and both sides sought to use the JCPOA as a foundation from which dialogue on additional points of contention could grow. The clock ran out on Obama’s second term before more progress could be made, but Trump could have picked up where his predecessor left off. Heightened tensions with Tehran were not a fait accompli, and that is precisely the problem: The Trump administration has chosen to double down on discord that was in the process of being managed six months ago. 

There is time to reverse Trump’s policy direction. Iran’s foreign minister, Javad Zarif, will be in New York next week. It would be the height of diplomatic malpractice if Trump does not send a cabinet-level official to privately meet with him. Hawks in Washington can no longer deny that diplomacy with Iran can help achieve American interests because the JCPOA is the receipt from Obama’s efforts. Whether or not Trump chooses to rip up that receipt remains to be seen, but the current trajectory on the Iran nuclear deal’s second anniversary should alarm anyone who thinks more war in the Middle East is a bad idea.

This piece originally appeared in The Huffington Post.

U.S. Sanctions Targeting the IRGC: Existing Measures and the Risk of New Proposals

The Islamic Revolutionary Guard Corps (IRGC) – a central component of Iran’s armed forces – is today one of the most sanctioned entities in the entire world.  The IRGC or its special forces unit – the Qods Force – are designated under at least five separate U.S. sanctions programs, including for their role in Iran’s ballistic missile program, its human rights abuses, its involvement in the Syrian civil war, and its support for U.S.-designated terrorist groups.  Moreover, current U.S. sanctions impose restrictions on foreign parties, including foreign financial institutions, transacting or otherwise dealing with the IRGC and its designated agents, affiliates, and officials.  Together, these sanctions have effectively severed the IRGC from the global financial system, all the while eroding the IRGC’s ability to engage in cross-border commercial transactions.    

Despite these broad U.S. sanctions, Congress and the Trump administration are seeking to impose a range of additional sanctions on the IRGC and entities alleged to operate under its ownership or control. The practical consequences for the IRGC of such new sanctions would be negligible, duplicating existing U.S. sanctions.  But the damage to the Iran nuclear accord and the danger such measures could pose for the security of U.S. military personnel serving in Iraq would be considerable.  Outlined below are current sanctions in place against the IRGC, as well as a brief analysis of the implications of additional IRGC sanctions now under consideration in Congress.

Existing Sanctions Targeting the IRGC

WMD & Ballistic Missile-Related Sanctions

Pursuant to Executive Order 13382, “Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters,” the U.S. Department of State designated the IRGC for its involvement in Iran’s development of ballistic missiles capable of carrying a nuclear warhead.  Under EO 13382, any property in the United States or within the possession or control of a U.S. person, wherever located, in which the IRGC holds an interest is blocked and cannot be paid, transferred, withdrawn, or otherwise dealt in, and U.S. persons are broadly prohibited from engaging in transactions or dealings with the IRGC.  Furthermore, non-U.S. parties that provide material support to the IRGC, including financial or technical support, would meet the designation criteria laid out in EO 13382 and thus risk being placed on U.S. sanctions lists.     

Following passage of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”), secondary sanctions attached to this designation.  Specifically, foreign banks risk correspondent or payable-through account sanctions if they facilitate a significant transaction or provide significant financial services to the IRGC.  As a result, foreign banks are effectively barred from engaging in most transactions with the IRGC.         

Human Rights Sanctions

The IRGC is designated under multiple sanctions authorities for its involvement in Iran’s human rights abuses.  Pursuant to Executive Order 13553, “Blocking Property of Certain Persons with Respect to Serious Human Rights Abuses by the Government of Iran and Taking Certain Other Actions,” the IRGC was designated for its responsibility for the serious human rights abuses that occurred in Iran following the June 2009 presidential election.  Separately, the IRGC was also designated for its suppression of online information and its role in identifying and arresting protestors involved in the post-election unrest following the June 2009 presidential elections.  Both of these designations impose blocking sanctions on the IRGC – i.e., all property and interests in property of the IRGC within the United States or within the possession or control of a U.S. person, wherever located, are blocked – and prohibit U.S. person dealings with the IRGC.  Such sanctions entirely duplicate those imposed pursuant to EO 13382.

Following passage of the Iran Freedom and Counter-Proliferation Act of 2013 (“IFCA”), which was incorporated into the National Defense Authorization Act for FY2012, secondary sanctions attached to these designations as well.  Specifically, Section 1247(a) of IFCA imposes correspondent or payable-through account secondary sanctions on foreign financial institutions that knowingly facilitate a significant financial transaction on behalf of any Iranian person placed on OFAC’s Specially Designated Nationals and Blocked Persons List (“SDN List”).  As a result, foreign banks remain effectively barred from engaging in transactions with the IRGC.      

Secondary Sanctions

Pursuant to Section 104(c) of CISADA, foreign banks risk the imposition of correspondent and payable-through account sanctions if such banks facilitate a significant transaction or provide significant financial services for the IRGC or any of its agents or affiliates whose property and interests in property are blocked pursuant to the International Emergency Economic Powers Act (“IEEPA”).  Moreover, Section 1247(a) of IFCA prohibits foreign banks from knowingly facilitating a significant financial transaction on behalf of the IRGC so long as the IRGC remains on OFAC’s SDN List.

Moreover, Section 302(a) of the Iran Threat Reduction Act (“TRA”) imposes menu-based sanctions on foreign persons, including foreign companies, who materially assist, sponsor, or provide financial, material, or technological support for, or goods or services in support of, the IRGC of any of its officials, agents, or affiliates blocked pursuant to IEEPA, as well as foreign persons who engage in significant transactions with the same.  In doing so, Section 302(a) of the TRA effectively severs the IRGC’s commercial relations with the outside world, as non-U.S. persons engaged in transactions with the IRGC or its agents or affiliates blocked pursuant to IEEPA risk the imposition of broad-based U.S. secondary sanctions.

OFAC’s 50 Percent Rule

To ensure that U.S.-designated parties are not allowed to undertake operations through or hide assets in shell (or front) companies, OFAC has adopted a 50 Percent Rule under which “any entity owned in the aggregate, directly or indirectly, 50 percent or more by one or blocked persons is itself considered to be a blocked persons.  The property and interests in property of such an entity are blocked regardless of whether the entity itself is [placed on U.S. sanctions lists]…”  As a result, U.S. and foreign parties interested in engaging Iran’s market must undertake appropriate due diligence on their Iranian counterparties to ensure that such parties are not owned 50% or more by the IRGC or its designated agents or affiliates, either separately or in aggregate.  If non-U.S. parties, for instance, engage in a transaction with an Iranian company in which the IRGC or its designated agents or affiliates have a 50% or greater ownership interest, then those non-U.S. parties could be engaged in sanctionable activities.

Moreover, OFAC has provided notice to U.S. and foreign parties to act with caution in dealing with Iranian entities over which the IRGC or its designated agents or affiliates exercise “control” but have no ownership interest.  For example, in its Revised Guidance on the 50 Percent Rule, OFAC states that “U.S. persons are advised to act with caution when considering a transaction with a non-blocked entity in which one or more blocked persons has a significant ownership interest that is less than 50 percent or which one or more blocked persons may control by means other than a majority ownership interest.  Such entities may be the subject of future designation or enforcement action by OFAC.”  Furthermore, OFAC’s Frequently Asked Questions Relating to the Lifting of Certain U.S. Sanctions Under the JCPOA recommends that foreign parties “exercis[e] caution when engaging in transactions with such entities to ensure that such transactions do not involve Iranian or Iran-related persons on [U.S. sanctions lists].”  In other words, OFAC has provided clear warning that such dealings may become sanctionable if the Iranian entity is subject to designation or enforcement action.  The practical effect of OFAC’s policy is to dissuade foreign entities from dealing with IRGC-related companies, regardless of whether a specific IRGC-related entity is designated or constructively blocked under OFAC’s 50 Percent Rule.    

Miscellaneous Sanctions

IRGC-affiliated entities and individuals are also subject to a wide range of other U.S. sanctions authorities.  For instance, the IRGC-Qods Force was designated as a Specially Designated Global Terrorist under Executive Order 13324, as well as for its support for the Syrian regime of Bashar al-Assad.  These designations blocked the property and interests of property of the Qods Force and subjected the entity to secondary sanctions, as described above.  

Current Proposals for Targeting the IRGC

Proponents of additional U.S. sanctions targeting the IRGC have advocated for the Trump administration to designate the IRGC a terrorist group – whether a Foreign Terrorist Organization (FTO) or a Specially Designated Global Terrorist (SDGT) – and to designate hundreds of Iranian companies alleged to be under the ownership or control of the IRGC.  Both of these proposals would have few, if any, sanctions consequences for the IRGC, but could undermine continued implementation of the Iran nuclear accord and unnecessarily place at risk U.S. military personnel sharing the battlefield in Iraq with Iran-backed militias.

The Senate has introduced a bill that likely has the effect of designating the IRGC an SDGT pursuant to EO 13224.  Such a designation would have no sanctions consequences for the IRGC.  Even proponents of the sanctions provision admit as much.  It would duplicate existing sanctions by imposing a block on all property and interests in property held by the IRGC and by subjecting the IRGC to secondary sanctions. As a result, U.S. sanctions objectives vis-à-vis the IRGC would not be advanced in any manner whatsoever by designating the IRGC a terror group.  However, the U.S. defense establishment has warned that any designation of the IRGC as a terror group could place U.S. military personnel at risk of retaliation from Iran-backed militias in Iraq.  Indeed, the Trump administration itself backed off its own proposal to designate the IRGC a terror group after receiving significant pushback from the U.S. defense and intelligence establishments. Designating the IRGC a terror group would thus achieve no U.S. sanctions objectives, but would undermine the security interests of U.S. military personnel overseas.  

Pressure is also building for the Trump administration to designate hundreds of Iranian entities alleged to be under the ownership or control of the IRGC.  However, such action would have few, if any, sanctions consequences for the IRGC.  As discussed above, Iranian entities under the effective ownership of the IRGC or its designated agents or affiliates are already constructively blocked and thus are subject to U.S. primary and secondary sanctions.  Moreover, OFAC has cautioned against foreign dealings with Iranian companies under the effective control of the IRGC or its designated agents or affiliates – the practical effect of which has been to dissuade foreign parties from dealing with such entities.  Designating hundreds of additional Iranian entities alleged to be under the ownership or control of the IRGC would thus have limited sanctions consequences, while having the effect of deterring foreign trade and investment in the broader Iranian economy.  Such a chilling effect could provoke Iran to abandon the nuclear deal and frustrate the objectives of our European allies in cementing stronger commercial ties with Tehran.  In such an instance, the United States will be viewed as having taken unilateral steps to undermine the nuclear accord, all without having accomplished its underlying sanctions objectives.

Will Congressional Democrats Give Trump Cover to Kill the Iran Deal?

Donald Trump and his administration are on a roll – threatening historical allies, undermining major international accords, and risking nuclear war. So it is strange to watch leading Congressional Democrats prepare to hand over to President Trump new authorities to undo the Iran nuclear accord – a historic agreement that places long-term restrictions on Iran’s nuclear program while avoiding a costly and altogether unnecessary war. For what reason do Democrats seek a share of the blame if and when President Trump leads us into a cataclysmic war with Iran?

Sometime over the next several weeks, Congress is likely to vote on new sanctions that would mandate and encourage President Trump to impose sanctions on Iran – some of which could fatally undermine the U.S.’s JCPOA commitments and scuttle the nuclear accord. Democrats have signed up as co-sponsors for Senate and House legislation, believing their political fortunes best lie in supporting aggressive action against Iran rather than acting as a buffer against the Trump administration’s efforts to derail a nuclear accord that, by all accounts, is working as intended.

Democrats are risking a historic mistake – an error in judgment that could end up both alienating their progressive base and costing them hoped-for electoral gains, not to mention setting the stage for a new conflict in the Middle East. Instead of allying themselves with Republican-led assaults on the JCPOA, Congressional Democrats should be seeking to protect President Obama’s signature foreign policy achievement from attack, including by limiting – not aggrandizing – President Trump’s authorities to undercut the nuclear accord. Several issues merit consideration:

First, Democrats appear to be miscalculating the political moment. We are no longer in the Obama era, where Congress could push new sanctions on Iran that risked the nuclear accord with confidence that President Obama would act as a backstop, utilizing his executive authorities to insulate the agreement from bad legislation. Instead, we have a Trump administration that is keen on undermining or altogether scuttling the nuclear accord and will use Congressional encouragement as a ripe excuse to render its fatal blow to the agreement. In short, Congress is no longer firing blanks: If Congress passes new sanctions legislation that threatens to undermine or undo the nuclear accord, it will be Congress that absorbs the political consequences – not a President Trump. Congressional Democrats – particularly those who offered their support for the Senate and House legislation – will not be immune from these consequences.

Democrats will be sure to face the music from their progressive base, which almost unanimously views Trump’s conduct of foreign policy as irrational, unpredictable, and aggressive. Just last week, President Trump was engaged in close consultation with John Bolton – a man who has long advocated war with Iran – and has refused to rein in hawkish NSC voices that have threatened to undo the JCPOA. Democratic voters will be unlikely to forgive those who entrusted a historic diplomatic agreement – President Obama’s signature foreign policy legacy – to a President unmoored from either convention or sense.

Second, if new U.S. sanctions undermine or undo the Iran nuclear accord, a diplomatic resolution to the Iran nuclear dispute will be forever out of reach and the road to war will have been paved. Contra U.S. hawks, Iran will not return to the negotiating table if the United States fails to live up to its JCPOA obligations. Instead, Congress and the Trump administration will have confirmed the predictions of Iran’s own hardliners that the U.S. cannot be trusted to follow through on its commitments, undermining Iranian moderates and foreclosing a political settlement. In doing so, the Trump administration will be left with two options: either accede to an unrestricted Iranian nuclear program or prepare for war with Iran. It is unnerving that Democrats trust a President Trump to handle with care such indelicate options.

Third, undoing the Iran nuclear accord will deal a serious blow to U.S. credibility overseas and spell doom to the possibilities for a diplomatic resolution to the budding crisis with North Korea. Much as with Iran, the United States has sought leverage over North Korea by imposing sanctions and restricting North Korea’s access to global trade markets. Any potential diplomatic resolution will thus require the United States to lift these trade restrictions in favor of limitations on elements of North Korea’s nuclear program.

However, if the Trump administration fails to live up to its JCPOA obligations or upends the nuclear accord – especially with bipartisan support from Congress – not only will a peaceful settlement to the Iran nuclear dispute have been inevitably scuttled, but any diplomatic resolution with North Korea will have been effectively foreclosed. North Korea will view the U.S.’s abrogation of the Iran nuclear accord as clear evidence that the U.S. cannot be trusted to keep to its commitments and will refuse to deal with the Trump administration. In this case, peace will be impossible and war inevitable. Congress’s failings on Iran will spill over and deter peaceful settlement in other areas of conflict such as the Korean peninsula. Democrats will be on the hook once again.

Rather than encouraging President Trump to take steps to undermine or undo the nuclear accord, Congressional Democrats should be acting as a buffer between the Trump administration and the JCPOA – ensuring the sustenance of the nuclear accord and keeping the frame of the Iran debate one of peace versus war. This should not be a perplexing issue: the Iran deal is working as intended and continues to draw the unanimous support of the international community. Democrats who see political benefit in effectively allying with President Trump and Republican-led attacks on the JCPOA are gravely misjudging the moment and will be sure to assume the political costs of leading us down the path to war.

This piece originally appeared in The Huffington Post.

Has Donald Trump Learned To Love The Iran Deal?

trump-huffpoAll this Republican party fighting over the Iran nuclear deal, it’s almost enough to forget that it’s America’s greatest foreign policy achievement in years. At least that’s what the Trump administration has seemingly acknowledged. In a statement released late Tuesday evening, they certified that Tehran continues to comply with its end of the bargain. The statement also says Trump has directed a National Security Council-led interagency review of the Iran deal that will evaluate whether America’s sanctions relief obligations outlined in the JCPOA are vital to U.S. national security interests. Now that Trump publicly acknowledges “the worst deal ever negotiated” is actually working, does he no longer want to “tear it up”? Looking ahead, we see three key takeaways.

First, it is ostensibly standard practice for new administrations to review existing policies during their first few months in office. The Obama administration conducted an Iran policy review in early 2009. The key difference here is that Trump’s specific review of the Iran deal makes zero sense from a practical policy and security perspective. The vast majority of American officials who negotiated and constructed the JCPOA are career government officials who transcend political parties, not Obama administration political appointees. Every aspect of the deal has repeatedly gone through a rigorous interagency review conducted by those same career government officials before, during, and after its approval.

The only difference today: A group of political appointees with long track records of opposing the JCPOA – and diplomacy with Iran, more generally – now sit in the White House surrounding the president. Thus, despite yesterday’s good news, the Trump administration still runs a severe risk of politicizing and damaging the most rigorous nonproliferation agreement ever negotiated without a viable Plan B.

Second, yesterday’s certification of Iran’s JCPOA compliance might not prove the best indicator of where the Trump administration will land in its aforementioned review. In some respects, certification of Iran’s compliance was preordained. The reason has to do with the underlying legislation: Under the Iran Nuclear Agreement Review Act, the president is required to provide certification of Iran’s compliance to Congress every 90 days. Failure to do so triggers certain legislative procedures and the potential re-imposition of the sanctions lifted under the nuclear accord.

In other words, if the Trump administration failed to make the required certification, it would have triggered the re-imposition of sanctions on Iran and its review of the JCPOA would have been effectively preempted. While many are understandably interpreting Tuesday night’s move as evidence that the Trump administration will respect the JCPOA, that might be reading too much into it: the State Department was clear that the administration is in the process of reviewing the nuclear accord, including whether it lies within U.S. interests to continue the JCPOA’s lifting of sanctions. Undoubtedly, certification of Iran’s compliance complicates the picture for an administration keen on unsettling the deal – as it will frustrate efforts to build an international consensus in support of the re-imposition of U.S. sanctions – but JCPOA proponents would be wise not to over-interpret Tuesday night’s certification and assume that the Trump administration has come to its sense regarding the merits of the accord.

Third, Trump’s certification of Iran’s JCPOA compliance is not inconsistent with the approach being advocated by Iran hawks to kill the deal. Indeed, if the administration intends on successfully undermining the JCPOA, its most likely approach is to take action that aggravates Iran, nullifies Iran’s economic benefit, and causes Iran’s defection from the nuclear accord. In the weeks and months ahead, the Trump administration will have several opportunities to render the deal defunct.

For instance, Congress is likely to present a new sanctions bill for the president’s signature that will contradict U.S. commitments under the JCPOA – dissolving the modicum of trust that was built between the two countries – and provide the political cover necessary for the White House to aggressively ramp up sanctions against Iran. The Trump administration will regard these sanctions as consistent with the JCPOA, insofar as they will be imposed for reasons separate and apart from Iran’s nuclear program, and will thus seek to nullify the benefit to Iran of its nuclear bargain. In doing so, the Trump administration can kill the nuclear accord without launching a frontal attack on it: Iran’s compliance will be certified and the lifting of sanctions will continue, but the JCPOA will be undone regardless.

To his credit, Trump has now officially acknowledged that the Iran deal is working and Tehran is fully living up to its end of the bargain. Thus, following through on promises to tear up the accord or renegotiate it make no sense from the perspective of American national interests or global security. Looking ahead, the current crisis with North Korea over its nuclear weapons program is a sobering reality that shows Trump what will likely happen if Washington doesn’t uphold its JCPOA commitments. He’s now learning that it’s easy to snipe at the deal from the sidelines, but the burden of governing reveals what some of us have long argued: Diplomacy or war – choose one. Yesterday’s affirmation has not fully quelled concerns that he may still stumble into the latter.

This piece originally appeared in The Huffington Post.

Trump’s Syria Strikes Don’t Bode Well for Iran Policy

trump-pointingTwenty-four hours after launching missiles at Syria, Donald Trump’s decision to increase America’s bombing campaign in the Middle East has received much fanfare and little public debate. Regardless of whether these strikes are a one-off, the beginning of a more robust regime change effort, or something in between, over 25 years of uninterrupted U.S. bombing in the region highlights an inconvenient truth: For every action, there is a reaction. One key area where the reverberations will likely be felt is Trump’s emerging Iran policy. Three specific issues stand out.

First, Trump’s repeatedly stated goal of defeating the Islamic State and al-Qaeda is not possible without some form of sustained U.S.-Iran cooperation. Durable solutions to conflict require the buy-in of each country with the capacity to wreck the solution, and Iran is one of few Middle Eastern countries to display a stable commitment to defeating these terrorist organizations. U.S. experiences in Iraq and Afghanistan should be illustrative for Syria. The more aggressive and uncoordinated U.S. military efforts become, the less likely Iran is willing to cooperate and de-conflict—and the more damage American interests absorb. Trump and Iran need each other, but none of his actions to date reflects this reality.

Second, U.S. escalation in Syria increases the risks of a direct military confrontation with Iran. Most egregiously, former CIA head James Woolsey appeared on CNN to argue that the Syrian government’s use of chemical weapons has “give[n] [the U.S.] an opportunity…to use force against the Iranian nuclear program.” For some Iran hawks, every outrage in the Middle East is an excuse to carpet-bomb Tehran. But even if Trump does not intend direct confrontation with Iran, America’s targeting of Syrian government forces risks Iranian casualties as a result of their proximity on the battlefield. Although some in Washington would welcome such a development, it needs to be weighed against its likely consequence: Iranian retaliation against U.S. forces through its allies in Syria and Iraq, setting off a chain reaction with the highly probable outcome of a growing conflict that expands the humanitarian tragedy and leads to a broader regional war.

Third, the civil war’s prolongation and intensification also poses substantial risks for the sustainability of the Iran nuclear accord. The Joint Comprehensive Plan of Action (JCPOA) is the strongest nuclear accord ever negotiated, but it is unlikely to survive a direct military conflict between the U.S. and Iran.

There are also less obvious ways in which Syria’s war can negatively impact the durability of the deal. Congress is currently considering a broad sanctions bill targeting the Syrian government, which would mandate the imposition of sanctions on parties providing it support. As demonstrated by the White House talking points released following its strike on Syria, in which Iran and its “allied Shia militant foot soldiers were held responsible for “the killing of hundreds of thousands of Syrians,” Iran would be an obvious target for such sanctions. If the president re-imposed sanctions on Iranian parties removed from U.S. sanctions lists under the JCPOA or otherwise negatively affected Iran’s re-integration into the global economy, Trump would risk violating America’s treaty obligations and undermining the deal altogether.

A Middle East without an Iran nuclear deal would throw us back to 2013, when the United States was on the precipice of a major war with Iran, a country four times the size of Iraq.

Trump’s team could be telling the truth when it says that the bombing of Syria was a single strike and it has no current plans for escalation. But Barack Obama (Libya), George W. Bush (Iraq, Afghanistan), Bill Clinton (Iraq), George H.W. Bush (Iraq), and Ronald Reagan (Lebanon) might tell Trump that war in the Middle East doesn’t always go as planned. The White House may not be looking to start another war, but yesterday’s bombing of the Syrian government certainly risks opening a broader conflict than Trump intends.

This piece originally appeared in LobeLog.

Don’t Label the IRGC

In February, the Donald Trump administration was considering designating Iran’s Islamic Revolutionary Guard Corps (IRGC) a Foreign Terrorist Organization—only to shelve its plans after encountering opposition in Washington. Noting the White House’s recent difficulties, Mark Dubowitz and Ray Takeyh urge the Trump administration to sanction the IRGC under Executive Order 13224, which created the Specially Designated Global Terrorist Sanctions Program (“Labeling Iran’s Revolutionary Guard,” March 6). Doing so, however, would invite the same problems associated with designating the IRGC an FTO—such as endangering U.S. forces in Iraq and undermining the nuclear accord between Iran and six world powers—and would have little effect on the IRGC’s operations.

Dubowitz and Takeyh argue that designating the IRGC a terrorist group would weaken the IRGC’s “financial empire”—a prerequisite, they write, for “stabiliz[ing] the Middle East.” But the IRGC is already one of the most sanctioned entities in the world—a fact that the 2015 nuclear deal did little to change. What is more, the U.S. Department of the Treasury’s Office of Foreign Assets Control, or OFAC, has designated the IRGC for its involvement in Iran’s ballistic missile program, its human rights abuses around Iran’s June 2009 presidential election, and its disruption and monitoring of Iranian citizens’ communications, imposing the same sanctions as would follow from a terrorist designation under Executive Order 13224. Designating the IRGC a terrorist group under the executive order would thus duplicate current U.S. sanctions.

The Office of Foreign Assets Control also administers and enforces tough secondary sanctions on the IRGC, punishing foreign banks and firms implicated in transactions involving the guards or its designated affiliates with exclusion from the U.S. market. Those restrictions go beyond those that a terrorist designation would produce: whereas a terrorist designation would freeze the assets of the IRGC and any of its designated affiliates that came within the United States or into the control of an American entity, the existing secondary sanctions limit the activities of non-U.S. individuals and entities who might consider dealing with the IRGC, creating an effective worldwide boycott of the group. Few foreign companies have bet against the United States’ enforcement of those sanctions. Firms interested in doing business with Iran have shown caution in their approach. 

 

Dubowitz and Takeyh argue that Trump should “significantly [expand] the number of IRGC entities and individuals subject to sanctions from the current 60 to include the thousands of front companies operated by the guards.” They do not mention that, under OFAC’s so-called 50 percent rule, any entity of which a designated person or group (such as the IRGC) has majority ownership is already subject to U.S. sanctions. It is true that OFAC does not impose sanctions on entities in which the IRGC has less than a majority stake—but OFAC has also stated that such entities “may be the subject of future designation or enforcement action by OFAC.” This warning has deterred foreign firms from dealing with the kinds of front companies to which Dubowitz and Takeyh refer. 

If the benefits of designating the IRGC a terrorist group are hazy, the costs are obvious. Doing so would undermine the nuclear deal by dramatically escalating tensions with Iran. It would also derail the tacit cooperation between Washington and Tehran in the fight against the Islamic State, or ISIS, in Iraq, since the IRGC and the Shiite militias it backs would likely respond by trying to frustrate the United States’ efforts in the country. As U.S. military officials have argued, that could endanger the lives of U.S. troops. More broadly, it is not clear that additional sanctions could force Iran to meaningfully change its behavior without sacrificing other U.S. interests and putting the two countries on a path to conflict.

This piece originally appeared in Foreign Affairs.

Trump Didn’t Start The Anti-Iranian Fire

Last week, Adam Purinton – a 51-year-old white man – reportedly stepped into a bar in Kansas and shot at two Indian men, killing one. He then left the bar and went to a restaurant where he allegedly confided to a barmaid that he had just killed two “Iranians.” With that act, the anti-Muslim and anti-immigration rhetoric that rode Donald J. Trump to the White House has now spilled over into fear for the physical safety and security of Iranian Americans.

Yet Trump is not the sole author of this newfound dread. He was not present when the foundation for the climate of fear and hate that so suffocates our politics today was being laid. Instead, Trump built on and rode the wave of a project that has been years in the making. While there can be no mistaking Trump’s contribution to this project, Trump is nothing but the most outward symptom of an affliction that has long plagued our country. To chalk up the killing in Kansas to him and him alone – while ignoring the anti-Muslim and anti-Iran rhetoric that has long toxified our discourse – risks misdiagnosing a cause for its most prominent champion.

We believe that it is time to deal with the root causes. We can start by calling out those who have forged and dedicated themselves to a project aimed at treating the Muslim world writ large as an enemy of the United States and as a threat to the safety and security of “ordinary Americans.” We can start by calling out those who pushed war with Iraq – cratering a country and subjecting its people to a paroxysm of violence that has yet to dissipate more than a decade later – as well as those who remain intent on pushing war with Iran.  It is these individuals and organizations that have utilized the most exaggerated rhetoric, up to and including the threat of nuclear holocaust and domestic terrorism, to build a climate of fear so that Americans unflinchingly support U.S. adventurism and aggression overseas.  It is these individuals and organizations that have helped lay the groundwork for Trump and his Breitbart acolytes to take the reins of power and push repressive anti-Muslim and anti-immigrant policies.

For more than a decade, there has been an organized effort on the part of groups like the Foundation for Defense of Democracies (FDD), The Israel Project (TIP), Secure America Now, and United Against Nuclear Iran (UANI) and propagandists like Michael Rubin, Eli Lake, Adam Kredo, and Josh Block to push war with Iran in the most hyperbolic terms, all the while defaming those – most particularly, those in the Iranian-American community – who urge a peaceful resolution to the historical tensions between the two countries.  Many of these seek to do nothing more than reprise their role during the lead-up to the war in Iraq by exaggerating the threats from Iran. Nor is it a surprise that their mode of argumentation – their modus operandi – so closely resembles that of the most hardline and pro-war elements in Iran, who for decades have likewise worked diligently, but unsuccessfully, to make the Iranian public fear and hate America, while accusing voices for reconciliation of being U.S. spies and agents.

Memo: Key Legislative Principles to Uphold the U.S.’s JCPOA Commitments

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The Joint Comprehensive Plan of Action (JCPOA) imposes long-term restrictions on Iran’s nuclear program in return for the United States’ lifting of all nuclear-related sanctions targeting Iran, as well as taking steps to ensure Iran’s access in areas of trade, technology, finance, and energy.[1]

Some have nevertheless adopted the false belief that the United States can impose broad new sanctions on Iran or re-impose those that were lifted under the JCPOA –nullifying the benefit of Iran’s bargain – without upsetting the broader agreement. Such a view is estranged from realities on the ground: the JCPOA is a political accord that will either succeed or fail depending on whether it proves a positive-sum deal for all parties involved. If the nuclear accord’s benefits do not accrue to all, then the JCPOA will erode to each party’s detriment.

For this reason, the United States must show sophistication in how it addresses Iranian activities anathema to U.S. interests, such as Iran’s continued development of its ballistic missile program and its support for U.S.-designated terror groups.  Several pending legislative proposals, as well as policy intimations from the new Trump administration, risk severely undermining the nuclear accord by either imposing broad-based sectoral sanctions on Iran’s economy or re-imposing sanctions that were lifted as part of the JCPOA. In undermining the JCPOA, such legislation poses serious damage to core U.S. interests, while also threatening the security of U.S. global allies and partners.

Efforts aimed at responding to Iran’s non-nuclear activities must recognize that Iran’s nuclear program posed the most significant and enduring threat to U.S. interests. As a result, any proposed legislation must be carefully tailored to conform to the U.S.’s JCPOA commitments. Below, we identify key principles for U.S. legislators to consider when analyzing any proposed sanctions legislation targeting Iran.

Broad-based sanctions – including those targeting whole sectors of Iran’s economy – violate the U.S.’s JCPOA commitments and fatally undermine the nuclear deal.

Pursuant to the JCPOA, the United States is obligated to abstain from steps that adversely affect the normalization of trade and economic relations with Iran consistent with the JCPOA or interfere with Iran’s realization of the full benefit of the JCPOA’s sanctions-lifting.[2] Even if Congress targets Iran’s non-nuclear activities, the imposition of broad-based sectoral sanctions on Iran would fatally undermine the practical value to Iran of the sanctions-lifting and, in so doing, constitute a violation of the JCPOA.  

The imposition of new nuclear-related sanctions on Iran or the re-imposition of those sanctions lifted under the JCPOA is a violation of the nuclear accord.

The United States is committed to refrain from imposing new nuclear-related sanctions targeting Iran or re-imposing the sanctions lifted pursuant to Annex II of the JCPOA. Iran has stated that it would view the re-imposition of sanctions lifted under the nuclear accord as grounds to cease performing its own nuclear-related commitments under the JCPOA.[3] In order to act consistent with the U.S.’s JCPOA obligations, proposed legislation must not re-impose the sanctions outlined in Annex II of the JCPOA.  That means, as an example, that Congress could not seek to limit Iran’s ability to repatriate its overseas oil revenues, as doing so would be a re-imposition of a sanction that was lifted pursuant to the JCPOA.

Re-imposition of sanctions on Iran-related individuals and entities whose designations were rescinded pursuant to the JCPOA violates the nuclear deal.

Under the nuclear accord, the United States removed hundreds of Iranian individuals and entities from the Specially Designated Nationals and Blocked Persons List (“SDN List”) administered by the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC). This includes almost all of Iran’s major financial institutions. In so doing, the U.S. lifted most sanctions on such parties, including on foreign parties’ ability to engage in transactions or other dealings with them. Proposed legislation must refrain from re-imposing sanctions on such Iran-related parties, as failure to do so would constitute a clear violation of the JCPOA and risk the broader nuclear accord.        

Legislation must avoid reversing policy decisions undertaken pursuant to or coincident with implementation of U.S.’s JCPOA commitments.

Pursuant to the JCPOA, the United States is obligated to “take adequate administrative and regulatory measures to ensure clarity and effectiveness with respect to the lifting of sanctions…”[4] Such measures includes the publication of “relevant guidelines” and “publicly accessible statements on the details of the sanctions…[that] have been lifted under [the] JCPOA.” In accordance with this, OFAC has published extensive guidance on the lifting of sanctions, including scores of Frequently Asked Questions (FAQs) that have been updated as OFAC receives feedback from the private sector. For example, OFAC’s FAQs note that U.S. sanctions do not reach non-U.S., non-Iranian financial institutions processing U.S. dollar-denominated transactions involving Iranian parties, so long as those Iranian parties are not otherwise designated on OFAC’s SDN List. Legislative proposals that seek to reverse this guidance – such as a prohibition on non-U.S., non-Iranian banks providing U.S. dollars to Iranian parties, even when the provision of such dollars does not touch the United States or involve designated Iranian persons – would be viewed as a violation of the U.S.’s JCPOA commitments.

Legislation must avoid revoking or unduly impeding license authorizations that were issued pursuant to the nuclear accord.

Pursuant to the JCPOA, OFAC issued several licenses: (1) a general license authorizing U.S.-owned or -controlled foreign parties to engage in all transactions involving Iran that had been otherwise prohibited under 31 C.F.R. § 560.215; (2) a general license for the import of Iranian-origin carpets and certain foodstuffs; and (3) specific licenses to U.S. and foreign aircraft manufacturers – such as Boeing and Airbus – for the export or re-export of commercial passenger aircraft and related parts.[5] Several legislative proposals have specifically sought to limit the Executive’s ability to issue specific licenses for the sale of aircraft to Iran. These proposals, if enacted, would uniformly violate the nuclear deal, as they would prohibit the U.S. government from implementing its express obligations under the JCPOA. Moreover, legislative proposals that add onerous conditions to the specific licenses – e.g., that Iran provides full payment for the aircraft in an escrow account under U.S. or U.S. person control – would also violate the nuclear accord insofar as such conditions are designed to effectively bar the sale of aircraft to Iran and would betray the U.S.’s good-faith implementation of the JCPOA.

Legislation must avoid interference with the U.S.’s JCPOA commitment to agree on steps to ensure Iran’s access to trade, technology, finance, and energy.

Under the JCPOA, the United States and other major powers are obligated to agree on steps with Iran to ensure Iran’s access to trade, technology, finance, and energy. In other words, the JCPOA imposes an affirmative obligation on the United States to take steps to ensure Iran receives practical value from the JCPOA’s sanctions-lifting. Sanctions legislation that would place significant burdens on Iran’s ability to access the global financial system, for instance, could be construed as a violation of the JCPOA – even if such sanctions are neither nuclear-related or a re-imposition of sanctions lifted pursuant to the nuclear deal.

Legislation that is otherwise consistent with the JCPOA but that antagonizes Iran with no discernible benefit to U.S. interests should be avoided.

Even legislative proposals claiming to be consistent with the JCPOA should be closely analyzed to determine whether they are being pushed merely to provoke Iran or are instead aimed at seriously addressing issues of U.S. concern. For instance, some have proposed designating the Islamic Revolutionary Guard Corps (IRGC) a Foreign Terrorist Organization.  Considering that the IRGC or its affiliates are designated under at least five U.S. sanctions program at present, designating the IRGC an FTO would have no actual value to the United States.  Such a designation could, however, put at risk American lives and prevent future diplomatic contacts between the two countries, as U.S. defense and intelligence officials have long warned. 

[1] See JCPOA Main Text ¶ 33.

[2] JCPOA Main Text ¶¶ 26 and 29.

[3] JCPOA Main Text ¶¶ 26.

[4] JCPOA Main Text ¶ 27.

[5] JCPOA Annex II § 5.

Policy Memo: Understanding U.S. Sanctions-Related Obligations Under the JCPOA

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It is an elemental condition of the Joint Comprehensive Plan of Action (“JCPOA”) –- the nuclear accord between the United States, other major world powers, and Iran – that the U.S. ensure that Iran receives the full benefit of the lifting of sanctions under the nuclear agreement. Most U.S. observers, however, have adopted a false belief that the U.S.’s JCPOA obligations begin and end with the formal lifting of sanctions outlined in Annex II of the JCPOA. Such a view misunderstands the scope of U.S. commitments under the JCPOA and risks inhibiting the Obama administration from taking the steps required to faithfully implement the U.S.’s sanctions-related obligations. It undermines ongoing efforts to remedy problems related to the lifting of sanctions and threatens the ultimate sustainability of the nuclear accord.

This memo serves as a much-needed corrective at a time in which U.S. implementation of its JCPOA obligations has come under question. It is our view that a more appropriate reading of U.S. obligations under the JCPOA evidences a U.S. commitment to not just formally lift all nuclear-related sanctions, but also to prevent any interference with Iran receiving the full benefit of the sanctions-lifting and to ensure that Iran has access in areas of trade, technology, finance, and energy. This is a much broader view of the U.S.’s JCPOA commitments than commonly understood in Washington, but it is one that is nonetheless faithful to the text of the JCPOA and central to the sustenance of the nuclear accord. Understanding the proper scope of U.S. sanctions-related obligations is thus key to cementing the decades-long restrictions on Iran’s nuclear program.          

US Sanctions-Related Obligations

Most observers regard the U.S.’s primary commitment under the JCPOA to involve the formal lifting of U.S. nuclear-related sanctions outlined in Annex II of the JCPOA. While the lifting of such sanctions is indeed a fundamental commitment of the United States, it is far from the only U.S. sanctions-related obligation. The Main Text of the JCPOA and its preambular paragraphs, often ignored by proponents and opponents of the JCPOA alike, outline the full scope of U.S. sanctions-related obligations. These obligations can be broken down into three constituent (and equally valuable) parts:

1)    Lift all nuclear-related sanctions outlined in Annex II of the JCPOA;

  • Prevent any interference with Iran receiving the full benefit of the sanctions-lifting and with the normalization of trade and economic relations consistent with JCPOA; and
  • Take affirmative steps to ensure Iran’s access to trade, finance, energy, and technology.

Each of these obligations merit reflection, particularly as observers have failed to appreciate the latter two elements of the U.S.’s sanctions-related commitments in ways detrimental to the administration’s efforts to resolve lingering concerns. An understanding of the full range of U.S. sanctions-related JCPOA obligations provides appropriate context for recent (and prospective) actions by the administration to ensure full implementation of the JCPOA.

Lifting the Sanctions

It is a fundamental commitment on the part of the United States to lift all of the sanctions outlined in Annex II of the JCPOA, including sanctions inhibiting Iran’s access to finance, energy, trade, and technology. Section 4 of Annex II spells out in specific detail the sanctions that are to be lifted under the nuclear accord – whether via use of the President’s waiver authorities; the termination of Executive orders; or the rescission of U.S. sanctions designations.[1]  , and to license both the import into the U.S. of Iranian-origin carpets and certain foodstuffs and transactions by U.S.-owned or –controlled foreign entities (i.e., foreign subsidiaries of U.S. companies) involving Iran otherwise prohibited by 31 C.F.R. § 560.215.[2] Together, the lifting of such sanctions constitute the most elemental condition for which Iran agreed to decades-long restrictions on its nuclear program.  

The Obama administration has faithfully implemented these commitments in full. On Implementation Day, the day on which Iran fulfilled its initial nuclear-related obligations, President Obama waived the imposition and application of certain sanctions, revoked certain Executive orders, and rescinded the designations of hundreds of Iranian and non-Iranian entities and individuals, as required.[3] Moreover, the U.S. issued licenses for the import of Iranian-origin carpets and foodstuffs and for U.S.-owned and –controlled foreign entities to re-engage in transactions involving Iran.[4] Currently, the U.S. Treasury Department is working with aircraft manufacturers to determine the license conditions for the sale and export of commercial passenger aircraft to Iran.

Preventing Interference with Iran’s Full Benefit 

Under the JCPOA, the United States is obligated to take certain affirmative steps and to refrain from taking other measures in order to ensure that Iran receives the full benefit of the lifting of U.S. nuclear-related sanctions. Few observers, though, have taken adequate note of these commitments, which are central to the JCPOA and explain the Obama administration’s outreach to the global banking and business communities.

First, the United States is committed to refrain from imposing new nuclear-related sanctions targeting Iran or re-imposing the sanctions lifted pursuant to Annex II of the JCPOA.[6] There has been some debate over the scope of this latter provision, particularly whether it would prohibit the U.S. from re-imposing the lifted sanctions on non-nuclear grounds. While the Obama administration has been less than clear as to how it interprets the relevant JCPOA commitment, the fairest reading of paragraph 26 of the JCPOA would indeed bar the United States from re-imposing the lifted sanctions on a pretext separate from Iran’s nuclear program. In other words, for example, the United States could not re-designate certain Iranian financial institutions under Executive Order 13382 – including its major state-owned banks –  , as that would constitute the effective re-imposition of the sanctions lifted as part of the JCPOA. Evidencing this point, paragraph 26 of the JCPOA notes that Iran would view the re-imposition of sanctions lifted under the nuclear accord as an abridgment of U.S. obligations and would thus cease its own nuclear-related commitments under the JCPOA as a result.

It is no secret that Congressional opponents of the nuclear accord are seeking to push the Obama administration to publicly adopt a narrow interpretation of this provision, so as to permit Congress to re-impose sanctions on Iran’s financial institutions on pretextual non-nuclear grounds. While the administration has not adopted a broader reading of this provision, it is clear that such a narrow reading would lead to the effective collapse of the JCPOA, as Iran’s benefit under the JCPOA would be nullified insofar as the same sanctions lifted would be re-imposed under a new pretext. This would fatally undermine Iran’s incentive to continue complying with the terms of the JCPOA.

Besides refraining from re-imposing the sanctions lifted under the JCPOA, the United States is also obligated to “refrain from any policy specifically intended to directly and adversely affect the normalization of trade and economic relations with Iran inconsistent” with the nuclear accord.[7] It is due to this provision that high-level U.S. officials have stated that the United States will no longer stand in the way of legitimate business activities with Iran – a subtle but significant change in U.S. policy towards Iran. This provision obligates the U.S. to do more than to refrain from legislation aimed at undermining U.S. commitments, but also to ensure that no federal government policies are designed to undercut the benefit to Iran of its nuclear bargain. Pursuant to this provision, for instance, Iran has complained that passage of a new visa law subjecting business travelers to Iran to a heightened standard of review is intended to adversely affect the normalization of trade and economic relations between Iran and the European Union – a complaint that made it into the United Nations Secretary General’s recent report on UNSCR 2231.  

In tandem with this, the United States also committed “to prevent interference with the realization of the full benefit by Iran of the sanctions lifting specified in Annex II.”[8] Effectively, the U.S. is obligated to ensure that no measures of its own are standing in the way of Iran reaping the full benefit of the sanctions-lifting under the JCPOA. For purposes of illustration, because the JCPOA lifted sanctions on correspondent banking relationships between non-U.S., non-Iranian financial institutions and certain Iranian financial institutions, the United States is committed to ensuring that neither U.S. law nor policy is standing in the way of non-U.S. banks resuming correspondent banking relations with their Iranian counterparts. If U.S. laws or policies are interfering with Iran realizing the full benefit of the lifting of sanctions on Iran’s financial institutions, then the U.S. is required to take steps to ensure that those laws or policies no longer are running such interference. To do so could require additional changes to U.S. laws or policies governing the issue.

Taking Affirmative Steps to Ensure Iran’s Benefit 

Besides preventing interference with Iran receiving the full benefit from the JCPOA’s sanctions-lifting, the United States is also committed to take certain affirmative steps to ensure that Iran does receive practical value from the lifting of sanctions.

Most immediately, the United States is obligated to   Importantly, there is no time-limit under which this obligation ends, meaning that the U.S. is committed through the duration of the nuclear deal to ensure that parties interested in undertaking legitimate business activities involving Iran have a clear understanding as to the scope and application of the sanctions-lifting under the JCPOA. It is this commitment that explains in part the Obama administration’s robust efforts to engage with the international business community – including via a global roadshow – in order to respond to persistent questions and concerns regarding the lifting of sanctions under the nuclear accord.

Beyond the issuance of guidance, however, the U.S. is obligated to lift certain additional nuclear-related sanctions should such sanctions be “preventing the full implementation of the sanctions-lifting [under the JCPOA].”[12] This is an issue that arose during the recent controversy over whether the U.S. would license U-turn transactions – a transaction in which Iran would have limited but effective access to U.S. dollar-clearing facilities – due to the fact that global banking institutions have signaled their reluctance to re-engage their Iranian counterparts so long as Iran’s access to the U.S. dollar is effectively prohibited. While the common wisdom is that re-authorizing the U-turn license would be an unwarranted concession to Iran – above and beyond the express terms of the JCPOA – few understand that the U.S. does have an express obligation to consult with Iran in order to resolve outstanding banking issues and that such consultation could lead to the lifting of the prohibition on U-turn transactions. Far from being alien to the nuclear accord, the licensing of U-turn transactions would have been consistent with U.S. obligations to lift additional sanctions that stand in the way of the effective implementation of the JCPOA.

Even further, the U.S. is also committed to “agree on steps [with Iran] to ensure Iran’s access in areas of trade, technology, finance, and energy.”[13] It is not enough for the U.S. to formally lift sanctions, to issue relevant regulatory guidelines to ensure effective implementation, or even to prevent interference with Iran receiving the full benefit of the lifting of sanctions: the United States also has an affirmative obligation to agree on steps with Iran that are designed to ensure Iran’s access to trade, technology, finance, and energy. This means that should Iran not be able to access the global financial system due to the reluctance of major global banks to re-engage their Iranian counterparts, the U.S. is obligated to take certain agreed-upon steps to ensure such access for Iran. This is a far-reaching obligation deliberately tailored to ensure that Iran receives practical value from the lifting of nuclear-related sanctions.      

Conclusion

Despite the formal lifting of U.S. nuclear-related sanctions, implementation of U.S. obligations under the JCPOA has not proceeded altogether smoothly. In order to safeguard the decades-long restrictions on Iran’s nuclear program, the U.S. must faithfully observe its JCPOA sanctions-related obligations in full. To do so, though, there must be a common understanding as to the full scope of those U.S. sanctions-related commitments. Failing this, the Obama administration (and its successors) will be inhibited from taking the action required to address ongoing problems related to the lifting of sanctions. This could endanger the long-term viability of the nuclear accord in a manner that puts at risk core U.S. national security interests.

[1] The scheme of Annex II of the JCPOA underscores the argument that U.S. obligations go beyond the mere formal lifting of sanctions. While § 4 of Annex II spells out the precise sanctions to be lifted pursuant to the JCPOA, § 7 of Annex II outlines the “effects of the lifting of U.S. economic and financial sanctions.” If the U.S.’s JCPOA obligations were indeed limited to the mere formal lifting of sanctions, then § 7 of Annex II would be a superfluity. Interpretive rules dictate that we not treat such provisions as superfluities.    

[2] JCPOA, Annex II, § 5.1.

[3] Implementation Day occurred on January 16, 2016.

[4] See, respectively, 31 C.F.R. §§ 560.534 and 560.535, as well as General License H.

[5] JCPOA, Annex V, § 21.

[6] JCPOA, Main Text, ¶ 26.

[7] JCPOA, Main Text, ¶ 29.

[8] JCPOA, Main Text, ¶ 26.

[9] JCPOA, Main Text, ¶ 27.

[10] Id.

[11] Id.

[12] JCPOA, Main Text, ¶ 24.

[13] JCPOA, Main Text, ¶ 33.

It’s pointless to be the last country sanctioning Iran

America will have more influence, not less, if we lift the embargo.


In 1971, President Richard Nixon lifted the United States’ trade embargo of China — a decisive turn in U.S.-China relations that was part of a broader rapprochement. In doing so, the Nixon administration bet that American interests were best served with a globally integrated China, rather than one that remained isolated and insulated from American influence.

That bet paid off. And it’s one that President Obama should make now when it comes to lifting the U.S. embargo on Iran.

The ultimate objective of the embargo — blanket trade sanctions implemented through a series of executive orders — has been to change Iran’s foreign policy. But several decades of these unilateral American restrictions haven’t achieved that goal. Rather than softening Iran’s policies, a nuclear standoff escalated until the Obama administration eventually shifted toward diplomacy, backed by multilateral sanctions.

The result was last year’s nuclear agreement, the lifting of multilateral sanctions and Iran beginning to rejoin the global economy. The U.S. embargo, though, remains in place, limiting our ability to further shift Iranian policy. We would be better served by lifting the embargo, increasing commerce between Iranian and American firms, and drawing Iran into the American-led global economy, making Tehran more responsive to the United States economically.

To do this, Obama should begin to lift sanctions related to finance, energy and technology while maintainingtargeted sanctions related to Iranian human rights abuses and sponsorship of terrorism. Critics will undoubtedly call this an unacceptable concession, particularly after trade-offs already made with Iran in the nuclear deal. But while Iran would certainly benefit economically from increased trade, lifting the embargo ultimately serves America’s long-term interests.

Americans won’t succeed at influencing the decisions of Iran’s leadership, or the opinions of the Iranian people, without increasing ties with Iran. The Obama administration has already taken steps to permit the export of personal communications technologies, which has begun to facilitate the integration of Iranians into the global tech community — imagine the impact on U.S.-Iran relations if leaders in Tehran were forced to factor in the impact of financial and energy sector ties in their policy deliberations.

And consider the purely commercial incentive for lifting the embargo. According to our 2014 study, unilateral sanctions have cost the U.S. economy as much as $175.3 billion in lost export opportunities over 18 years. Those costs are set to accelerate, particularly as Iran opens itself up to foreign business and reforms its markets. Over the long term, barring U.S. commerce with Iran would lead to an unnecessary loss in American prestige, power and profit.

This is, in part, because with or without U.S.-Iran trade, Iran is unlikely to remain economically isolated. Since the nuclear deal’s implementation, delegations from Europe and Asia have headed to Tehran seeking renewed business. Germany sent its first trade delegation to Iran soon after the signing of the nuclear accord. In May, South Korean President Park Geun-Hye led a 230-member delegation to Iran, where the two countries committed to tripling annual trade to $18 billion.

The pace of trade is still slower than it can and should be, in some measure because the “wariness of western banks to work with Iranian institutions” — a symptom of the embargo — has kept the brakes on Iran’s reintegration. Which in turn means that Iranians have, so far, not fully realized the benefits of its nuclear bargain with Western powers, and that the West hasn’t maximized its leverage with Iran. As Iranian Foreign Minister Mohammad Javad Zarif explains, the nuclear deal “will be sustainable if everybody feels they are making gains.” It will work better, in other words, if the Iranian regime stays invested in it.

The good news is that the current administration has signaled a subtle shift in U.S. policy, publicly statingthat it will no longer stand in the way of legitimate business activities involving Iran and businesses around the world — a significant break with the recent past.

But if Obama is, indeed, breaking with the past and no longer committed to fencing Iran off from the world, he should consider completely lifting the embargo to boost America’s ability to meaningfully influence the Iranian regime. And, unlike America’s Cuba embargo, he has the power to lift the Iran embargo without Congress’s approval.

As the president has said, Iran has the opportunity and capability to become “a very successful regional power.” It should follow, then, that Iran is too important a country to cede to the influence of geopolitical rivals like Russia and China. But that’s exactly what we’re doing by fencing ourselves off from Tehran. Permitting competitors’ unrivaled influence over one of the region’s major powers, the United States risks losing its ability to shape favorable outcomes in the Middle East, whether in the Syria conflict, the sectarian stalemate in Iraq or the transit of U.S. naval forces in the Persian Gulf.

As President George W. Bush recognized, in 2004, when it comes to Iran, in the absence of commercial ties, Americans have been “relying upon others, because we’ve sanctioned ourselves out of influence with Iran.”

It doesn’t need to be this way. Just as commercial ties between the United States and China predated restoration of diplomatic relations, so, too, can lifting of the Iran embargo be a precursor to an eventual change in the tenor of a long-fraught relationship. If Obama lifts the embargo and draws Iran toward the U.S.-led economy, the dividend will be influence for years to come.

This piece originally appeared in The Washington Post.