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July 22, 2015

5 Key Sanctions Questions on the Iran Deal

As lawmakers consider their position on the Joint Comprehensive Plan of Action (JCPOA), there are a number of questions about key elements of this detailed agreement. We’ve summarized some of the top questions regarding sanctions that we are hearing on the Hill and provided concise answers to each of them below. For a more detailed analysis of the non-nuclear sanctions that remain in place under the agreement, see this NIAC policy memo.

(1) Does the Deal Lift the Conventional Arms Embargo?
 
The nuclear deal does not lift the embargo on Iran’s arms until 2020. More importantly, key UN sanctions will remain in place on the transfer of arms to Hezbollah and the Houthis, and significant U.S. sanctions will be kept in place to target arms transfers to Iran.
 
(2) Does the Deal Lift Restrictions on Iran’s Ballistic Missile Technologies?
 
The nuclear deal does not lift restrictions on the transfer to Iran of sensitive technologies used to develop ballistic missiles until 2023. Moreover, a key international ballistic missile arms control regime and U.S. sanctions will remain in place to prevent the transfer to Iran of such technologies after 2023.
 
(3) Does the Deal Enable Iran’s Support for Terrorism?
 
The nuclear deal does not enable Iran to fund its troublesome activities in the region. Instead, the deal allows Iran access to what are known as its “restricted funds” – i.e., oil revenues that have been held in overseas escrow accounts since 2013. These funds are not “frozen” and can, even without the deal, be used to purchase goods or services from the country holding Iran’s funds. Moreover, with or without a nuclear deal, the U.S. cannot expect other countries to hold onto Iran’s money indefinitely.
 
(4) Does the Sanctions Snapback Work?
 
The snapback provision allows the United States to re-impose both its own sanctions and the previous UN sanctions should it believe Iran to be violating its nuclear-related obligations. This flexibility allows the U.S. to deal with non-compliance issues large and small as they arise. The snapback mechanism is notable because none of the P5 states, including Russia, can veto the reimposition of sanctions. This mechanism is the best way to keep the international sanctions regime intact. Under any alternative – i.e. were US negotiators to have rejected this deal or if Congress votes to block it – it would be next to impossible to convince the international community to maintain, snap back or impose new sanctions.
 
(5) Does the Deal “Grandfather” Contracts Signed with Iran?
 
The nuclear deal does not “grandfather” contracts and investments made in or with Iran prior to the snapback of UN sanctions. Snapback sanctions will simply not have retroactive effect for contracts and investments that were permissible at the time they were entered. This clause allows for wind-down provisions (i.e., provisions that force foreign companies to end their business in or with Iran during a certain period of time) and has no effect on re-imposed U.S. sanctions
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