April 11, 2014

Sanctions Relief Could be Biggest Obstacle to Iran Deal


While by all accounts nuclear negotiations with Iran are making serious progress, several reports over the past week have indicated that Iran is encountering problems receiving sanctions relief under the Joint Plan of Action (JPOA).   This issue foreshadows the major challenge ahead in providing concrete sanctions relief in any final nuclear deal.

According to the Wall Street Journal, Iran has been unable to withdraw much of the unfrozen oil revenues that have been released under the interim nuclear deal.  Following the conclusion of nuclear negotiations in Vienna, a senior U.S. administration official indicated that the administration has “done everything that we committed to doing” under the interim nuclear agreement.  This is likely true. But while the U.S. is upholding its commitment to unfreeze Iranian funds in exchange for Iranian compliance with the deal, complications from the sanctions regime have helped prevent the delivery of sanctions relief.

The challenges of trying to permit limited sanctions relief while maintaining the overarching sanctions regime extend beyond unfrozen Iranian oil revenues.  Despite the fact that medicine and other humanitarian goods are technically exempt from sanctions, for several years banks and companies have refused to conduct humanitarian trade with Iran out of a fear of U.S. sanctions.  And while the JPOA includes a provision to establish a financial channel to alleviate humanitarian shortages, these shortages reportedly persist.  21 members of Congress highlighted these continuing problems last week in a letter to the President while urging that the administration take action to rectify the issue.

Further, while the airline company Boeing has received a permit from the U.S. Treasury Department to sell spare parts to Iran for its aging civilian aircraft, Al Monitor has reported that another major international airline company has refused to conduct repairs, citing concerns that it could not complete the work within the limited six month window allowed by the JPOA.

These challenges risk playing directly into the Iranian hardline narrative that the U.S. never intends to relieve sanctions, regardless of Iranian actions.  As the Los Angeles Times reported, despite fears that limited sanctions relief would start “melting the iceberg” of the sanctions regime, “many Iranians think the interim accord has done little to help them.”  This creates a vulnerability for Iranian President Rouhani – if he fails to demonstrate that a pragmatic diplomatic approach yields results, he opens his approach to attack from those that want to see the nuclear deal fail, which in turn will limit his flexibility for a final deal.  Thus, as negotiations proceed, it is critical for the U.S. not just to make sure that Iran is abiding by its JPOA commitments, but also to make sure that sanctions relief provided in the JPOA is delivered.

Further, the difficulties of providing sanctions relief under the interim deal likely pale in comparison to the political and technical challenges of lifting sanctions if a final nuclear deal is struck. As Paul Pillar, a former intelligence officer with the CIA, asserts, “We have already seen how hard it is to redirect the sanctions machine. Aircraft carriers do not turn around on a dime, and neither do sanctions, especially ones as complicated and extensive as the ones on the Iranian pile.”

But to redirect the sanctions regime, the administration must bring in Congress, which to date has been more inclined to add sanctions on Iran than permit their relief.  If the administration fails to convince Congress of the merits of lifting sanctions for protections against a nuclear-armed Iran in a final deal, it will be the U.S. that is violating the terms of an internationally-brokered agreement.  Such a failure would risk dissolving international support for the sanctions regime, removing limitations and oversight over Iran’s nuclear program, and raising the threat of military conflict – risks that the U.S. can ill afford.


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