July 29, 2016

Major Sanctions Renewal Risks Complicating Iran Deal

WASHINGTON – Congress is expected to consider legislation soon to renew the Iran Sanctions Act, the law that mandates many of the existing U.S. sanctions on Iran’s energy sector and which expires at the end of the year. Legislators from across the aisle have pledged to renew the bill but failed thus far to coalesce around a single proposal. Many supporters of the Iran deal, however, are wary that Congressional efforts could exacerbate ongoing tensions over sanctions relief and even provide a vehicle for new poison-pills that could unravel the nuclear agreement.

The Iran Sanctions Act was first passed by Congress in 1996 as a means to target Iran for its alleged pursuit of Weapons of Mass Destruction (WMD) and was the first to impose extraterritorial sanctions against investments in Iran’s energy sector. While the bill has been renewed every five years and significantly expanded, the Iran nuclear agreement relieves many of the ISA sanctions. The President currently uses waiver authorities under ISA to suspend rather than fully lift the sanctions – a formal removal of the sanctions is not mandated until year eight of the agreement, or 2023.

The Obama administration has stated it is open to discussing the ISA renewal with Congress, though it has proceeded cautiously and avoided specifying what form of renewal it might support. In April testimony before the Senate Foreign Relations Committee, Under Secretary of State for Political Affairs Thomas Shannon indicated the administration would discuss an extension with Congress “assuming that [the renewal] does not complicate or prevent us from meeting JCPOA commitments.” The Obama Administration has also made clear that, even if ISA were to expire, the President retains wide-ranging authority to re-impose those sanctions on Iran in the event of a JCPOA violation.

There is a danger that passage of new sanctions legislation, even if it is to renew sanctions already on the books, could exacerbate tensions over JCPOA sanctions relief. The prospect of Congress renewing ISA, especially extending them beyond the 2023 deadline for lifting sanctions, could send troubling signals regarding the U.S. commitment to the JCPOA at a time of ongoing political uncertainty. Iranian officials and many in the broader Iranian public say the sanctions relief promised under the deal has not been delivered. The House has passed provocative legislation that would block Boeing from selling commercial aircraft to Iran as promised under the deal. And one of the two major candidates for the White House has pledged to unwind the nuclear agreement.

There also is risk that legislation to renew ISA could become a vehicle for opponents of the deal to pass additional Iran-related measures that could complicate or violate the agreement. That has not dissuaded lawmakers on both sides of the aisle from asserting that extending the ISA is necessary to ensure that a potential snapback of sanctions would be mandated by Congress. A number of ISA extension proposals have thus far been introduced, though there has yet to be significant bipartisan support for any of the bills thus far:

  • Last June, the first ISA extension was proposed by Sen. Robert Menendez (D-NJ) and Sen. Mark Kirk (R-IL) while the nuclear deal was still being negotiated. Instead of a traditional five-year extension, the bill doubled the time of the ISA extension to ten years – beyond the eight year deadline for lifting the sanctions that was subsequently negotiated under the JCPOA. Kirk and Menendez, both avowed opponents of the Iran deal who led sanctions efforts to halt the nuclear negotiations, say the bill is merely intended to provide Congress ”leverage to snapback sanctions if Iran cheats.”

  • Sen. Menendez also introduced the Countering Iranian Threats Act of 2016 earlier this month, along with Senate Foreign Relations Chairman Bob Corker (R-TN), which extends the ISA for 10 years and includes new sanctions on Iran’s ballistic missile program. The bill also restrics the President’s ability to use sanctions relief to negotiate with Iran. It is supported exclusively by Senators who voted against the deal, including original cosponsors Sens. Marco Rubio (R-FL) and Joe Manchin (D-WV).

  • Sen. Kelly Ayotte (R-NH) has introduced the “Iran Ballistic Missile Sanctions Act of 2016” (S.2725), which extends the ISA for 15 years, until 2031, and includes far-reaching additional sanctions on Iran. The bill currently has the support of 18 co-sponsors, all of whom are Republicans who opposed the nuclear agreement. A House bill (H.R. 5631), introduced by Majority Leader Kevin McCarthy (R-CA), adopted many of Ayotte’s proposals and passed just before Congress adjourned for the summer. The House version, however, did not extend the ISA.

  • On July 14, Senate Democratic Leader Harry Reid (D-NV) introduced a bill (S.3281) that extends the Iran Sanctions Act for 10 years but does not include any additional potential poison pills. It is cosponsored by 13 Democrats, some who supported the deal and many who did not – including Reid’s likely successor as Democratic Leader, Sen. Chuck Schumer (D-NY). The bill is significant in that it is the only proposal thus far that is supported by both supporters and opponents of the nuclear agreement.

  • Recently announced Democratic Vice Presidential candidate Sen. Tim Kaine (D-VA) and Sen. Chris Murphy (D-CT) have also proposed a bill (S.2988) to link the sunset of the ISA to the day the IAEA reaches its “Broader Conclusion” on Iran’s nuclear program. Under the nuclear agreement, the sanctions must be lifted by year eight–or “Transition Day”– but could be lifted sooner if the IAEA produces a definitive assessment that Iran’s nuclear activities are wholly peaceful. The Kaine-Murphy bill seeks “to effectuate the [JCPOA],” by automatically linking the repeal of the ISA to the IAEA decision. There is a strong possibility that the IAEA does not reach its broader conclusion until after Transition Day – which means an act of Congress may still be required to lift the ISA sanctions under the Kaine-Murphy proposal.  

It is unclear which, if any, of the proposals will receive sufficient support for passage – or if an alternative compromise bill will emerge before or after Election Day in November. If Congress seeks passage of an additional sanctions bill on Iran before the end of the year, the effort is likely to center around an ISA extension.

Back to top