November 19, 2018 Comments are off NIAC
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Restoring U.S. Credibility: Returning to the Iran Nuclear Agreement

INTRODUCTION

By withdrawing from the Joint Comprehensive Plan of Action (“JCPOA”) — the nuclear accord between the United States, other major world powers, and Iran and endorsed by the United Nations Security Council — the Donald J. Trump administration caused substantial damage to U.S. national security interests, the repercussions of which currently may only be faintly understood. Already, Trump’s decision has led to substantial reputational damage to the country, shaken the transatlantic alliance, and engendered international efforts to undo the U.S.’s effective domination of the global financial system. These consequences will far outlast the Trump administration if decisive efforts are not undertaken now to mitigate the damage and to ensure Trump and his team do not make good on their disastrous efforts to fully terminate the JCPOA and instigate a war with Iran.

There is still time to salvage the JCPOA and prevent further disastrous consequences. Much of the world, including America’s closest allies and supporters of the JCPOA inside Iran, are looking for a signal that Trump’s assault on the JCPOA and those who continue to uphold the agreement can be reined in. Indeed, with the 2018 midterm elections in the rearview mirror, the Trump administration may now be entering a lame-duck period. Seeking to return the United States into the JCPOA should be a significant foreign policy priority for the incoming Congress and central to the foreign policy platform of those seeking to challenge Trump in 2020. That, however, will require efforts in the interim period to signal that Congress and any successor administration will seek to realign the U.S. with long-standing international norms. Failing this, the damage done to U.S. interests might be irreparable and the U.S.’s position as global leader substantially weakened as the JCPOA collapses and the U.S. and Iran speed toward a military confrontation.

SUSTAINED DAMAGE TO U.S. NATIONAL INTERESTS

On May 8, 2018, President Trump announced his decision to withdraw the United States from the JCPOA and to re-impose all nuclear-related sanctions lifted under the nuclear accord following 90- and 180-day wind-down periods. The Trump administration also promised to utilize existing U.S. sanctions authorities to aggressively target Iran and companies engaged in sanctionable conduct therewith.

President Trump’s decision was met with dismay. The Joint Commission for the JCPOA — comprised of remaining participants in the nuclear accord — signaled their “regret” over the U.S.’s action and redoubled their commitments to upholding the accord. UN Secretary-General Antonio Guterres urged all UN member-states to support the JCPOA and for the JCPOA’s remaining participants to abide by its terms.

Even America’s closest allies refused to fall in line, with the European Union (EU) most significantly announcing its development of alternative payment mechanisms by which legitimate trade with Iran could be facilitated. The French foreign ministry stated that these measures may go beyond Iran and be used to circumvent extraterritorial U.S. sanctions in the future.

Europe also took steps to amend an EU blocking regulation that prohibits European companies from complying with re-imposed U.S. sanctions targeting Iran, absent prior authorization from the relevant EU authorities. Under this amended regulation, if European companies sustain pecuniary damages from U.S. authorities for engaging in legitimate trade with Iran, such European companies can seek to recover damages from the United States, including — most dramatically — through the seizure of U.S. property held in Europe. More symbolically, Europe’s reinvigoration of the blocking regulation signaled the end of more than two decades of fervent cooperation between the U.S. and Europe on sanctions enforcement related to Iran and brought forth a new era where Europe will no longer accede to U.S. whims.

Beyond the consequences for U.S. leadership and influence with the international community, these damages to U.S. interests may pale in comparison if the U.S.-Iran conflict escalates into military action. While Trump himself routinely pillories the 2003 decision to invade Iraq, he has surrounded himself with hawks who seek the same fate for Iran. National Security Advisor John Bolton and Secretary of State Mike Pompeo have in the past openly called for regime change and bombing Iran. Secretary of Defense Jim Mattis, a relative moderate within this administration who has cautioned against withdrawing from the JCPOA and may soon be headed for the exits, has even listed his three top threats in the region as “Iran, Iran and Iran.” Moreover, as former Secretary of State John Kerry has warned, Iran’s rivals in the region urged the Obama administration vociferously to bomb Iran. “Every leader I met with in the region…” warned Kerry, “said, ‘You have to bomb Iran, that is the only thing they understand and that is the only way you will stop them having a nuclear weapon.’” Those leaders hoping to “fight the Iranians to the last American” – in the words of former Defense Secretary Robert Gates – have since gained influence with the Trump administration by leaps and bounds. 

Even if Trump himself wants to avoid further military entanglements, it is his advisors in Pompeo and Bolton who maneuvered Trump out of the JCPOA and appear to be working closely with hawkish advisors outside the administration to edge the U.S. toward military confrontation. If they succeed in goading Iran to leave the constraints of the JCPOA, Bolton and Pompeo would have all the ammunition they need to replicate the Iraq war playbook and tee up a preventive war to stop Iran’s alleged nuclear ambitions. Even if they fail, the spark for a massive military conflagration with Iran could come from multiple directions in the absence of deconfliction channels. A clash in the tight waterways of the Persian Gulf, U.S. maneuvers to push Iran out of Syria, or Iranian retaliation for perceived foreign support for terror within Iranian borders could be all warhawks in Washington and Riyadh would need to push headlong into a disastrous war.

RECOMMENDATIONS TO SALVAGE THE JCPOA AND REHABILITATE THE UNITED STATES ON THE GLOBAL STAGE

Given the risks of President Trump and his administration fully collapsing the JCPOA and instigating war with Iran, the work needs to begin now in order to rein in the White House and prevent a disastrous war.

In this context, a top priority must be to signal that there is political will in Washington to reenter the JCPOA.

RECOMMENDATION #1: LEGISLATION TO SUSPEND NUCLEAR-RELATED SANCTIONS AND RETURN THE U.S. INTO COMPLIANCE WITH THE JCPOA

Lawmakers in the U.S. Congress should introduce legislation that would seek to return the U.S. to the JCPOA. Such legislation could indefinitely suspend all nuclear-related sanctions and additional sanctions contrary to U.S. JCPOA obligations. While such legislation may face an uncertain pathway to becoming law, it would send an important signal that there is significant political will in the United States to salvage the agreement.

RECOMMENDATION #2: 2020 CONTENDERS SHOULD ANNOUNCE INTENTION OF NEXT ADMINISTRATION TO RETURN THE U.S. INTO COMPLIANCE WITH THE JCPOA

Contenders for the 2020 Presidential elections should similarly make crystal clear that their intent is to return to the JCPOA if elected and build on it as the floor, rather than the ceiling. Wide support among 2020 contenders and key legislators in Congress would send a clear signal to all parties seeking to sustain the JCPOA that there is light at the end of the Trump tunnel. This would increase the likelihood that Europe and others can maintain the agreement and that Iran remains within the constraints of the JCPOA, reducing the threat of an Iranian exit instigating a crisis that leads to war.

RECOMMENDATION #3: LEGISLATION TO CONSTRAIN THE PRESIDENT’S ABILITY TO START A WAR OF CHOICE

Signals on reentry to the JCPOA should be coupled with strong steps to constrain the present administration’s ability to start a war. In the 115th Congress, legislation has been introduced by Sen. Tom Udall that would prohibit the administration from using funds to launch an unauthorized war against Iran. This builds on earlier efforts, including an acknowledgment in the conference report for the FY2019 National Defense Authorization Act, which clarified that Congress is not aware of any legislative authorization for Trump to use force against Iran. Such efforts must be redoubled, with anyone concerned about the prospect of war with Iran demanding that any defense authorization include explicit prohibitions against Trump triggering war with Iran.

RECOMMENDATION #4: HOLD ADMINISTRATION ACCOUNTABLE TO HUMANITARIAN EXEMPTIONS UNDER SANCTIONS

Additional steps could push back on the Trump administration’s bankrupt pressure campaign. The administration’s Oct. 16 and Nov. 5 announcements of new sanctions designations signal a clear intent to escalate financial war against Iran, with banks that were far removed from sanctionable activity and crucial to enabling some degree of humanitarian trade under previous administrations now subjected to sanctions under terrorism authorities. The intent appears to be to complicate future efforts to relieve sanctions in exchange for Iranian concessions, while starving the Iranian people of all basic goods, including humanitarian goods, in a dangerous move to destabilize the country and provoke an uprising. Not only is such a move immoral and likely illegal under international law, it is almost certain to backfire and empower hardline forces like the Islamic Revolutionary Guard Corps that thrive under sanctions. As a result, a strong effort should be made to effectuate humanitarian exemptions under Iran sanctions. Congress should seek accountability from the administration regarding the measures it is taking to ensure that trade in food, medicine, and other humanitarian goods for Iranians can continue.

REPAIRING THE DAMAGE: THE U.S. RETURN TO THE JCPOA

The incoming Congress and a successor administration can respectively halt and repair much of the damage from Trump’s JCPOA exit by signaling the political will and intent for the U.S. to re-enter the JCPOA’s fold and resume obligations thereto, including via the lifting of nuclear-related sanctions.

Resuming commitments under the JCPOA would deliver profound benefits for the U.S. national interest. First, it would signal to the world that the U.S. is a responsible actor in the international arena; the U.S. intends to live up to the political agreements that it makes with other countries; and the Trump administration was nothing more than an unfortunate aberration in the American political system. Nothing has caused more serious damage to U.S. interests than the growing trust deficit towards the United States. If states are unable to trust the United States, then not only is U.S. global leadership severely undermined but the international system that has been predominate since the end of the Second World War risks unraveling. By clearly showing the world that the U.S. intends to fully observe the commitments that it makes, a successor administration can begin to repair the damage wrought by President Trump. 

Second, the U.S.’s re-entrance into the JCPOA would have important non-proliferation benefits by effectively disincentivizing Iran from exiting the JCPOA itself and thus undoing the risk of a burgeoning nuclear crisis in the Middle East. In so doing, the U.S. would ensure the survivability of the tough and far-reaching constraints on Iran’s nuclear program that will be imposed by the JCPOA through 2030 and beyond. Iran’s nuclear program does not pose the risks it did in the pre-2015 era, and that is fully thanks to the JCPOA and the restrictions it imposes. Any policymaker should be eager to return to the JCPOA and, in so doing, re-secure hard-fought concessions that take an Iranian nuclear weapon and war with Iran over its nuclear program off the table for the foreseeable future.

Third, reentry to the JCPOA would signal to the kingdom of Saudi Arabia that Donald Trump’s blank check for their increasingly brazen behavior is at an end, and that the U.S. has alternatives to outsourcing American policy in the region to an erratic kingdom that – in the words of Sen. Lindsey Graham – has double dealt on terror. Perversely, both the Trump administration and numerous Washington pressure groups have warned that the administration’s pressure campaign against Iran would be jeopardized if the U.S. dared to impose consequences on the kingdom over the brutal murder of Saudi journalist and U.S. resident Jamal Khashoggi. Such warnings expose the current administration’s approach to the region as so hopelessly unbalanced that is susceptible to extortion by one morally bankrupt regime against another. The U.S. needs to move to a transactional relationship with both Saudi Arabia and Iran where we can impose consequences on each for such brazen misbehavior. In Iran, the U.S. has sanctioned itself out of influence, whereas with Saudi Arabia the U.S. is too afraid to use its substantial leverage to rein in the kingdom’s destructive course – whether on the disastrous war in Yemen or on the kingdom’s mounting human rights abuses. An alternative is available, and it should start with re-entry to the JCPOA.

Finally, U.S. participation in the JCPOA Joint Commission would guarantee diplomacy with Iran that does not presently exist amid the administration’s pressure campaign, and could lead to follow-on negotiations addressing the full spectrum of America’s concerns with Iran – including regional security and human rights. The present Trump administration approach of exiting the JCPOA and seeking its destruction prohibits the U.S. from affecting Iran’s calculations on issues beyond the nuclear file. Any policymaker with justifiable concerns with Iranian behavior or who seeks political solutions to the proxy conflicts that have gripped the region should be urging a return to the JCPOA.

Returning to the JCPOA and restoring U.S. credibility and influence with Iran is unlikely to be without cost, but will not be nearly as costly as the alternative. The U.S. reneged on its commitments and, barring Congressional intervention or a change of heart from President Trump himself, will have materially breached the accord by snapping back nuclear-related sanctions for a period of at least 32 months if there is a change in administration after the 2020 elections. Judging by recent sanctions designations, as well, the Trump administration does not appear intent to sit idly in the months ahead, but will proceed with a dramatic expansion of sanctions designations that may go well beyond previous sanctions campaigns. These will have a tremendous negative effect on the Iranian economy and the Iranian people’s aspirations, in addition to the economies of our allies in Europe seeking to comply with the UNSC-endorsed JCPOA.

As a result, the next administration should seek to reenter the JCPOA by providing assurances that sanctions relief will flow as intended under the accord. For example, this could include immediately licensing the sale of commercial aircraft to Iran that was delayed and ultimately reneged on by the Trump administration. Moreover, the next administration should address the credible challenges that arose in effectuating sanctions relief while the U.S. was party to the deal.

Time will be of the essence to demonstrate good faith and restore American credibility. While the U.S. should refrain from seeking to influence Iran’s domestic political balance in any direction, Iran will hold pivotal parliamentary elections in May 2020 and Presidential elections in 2021. The current Supreme Leader, Ayatollah Khamenei, is also 79 years old and Iran’s various factions are already jockeying over his potential successor. The political dynamics inside Iran may well determine how forward leaning the next administration can be in seeking to resolve remaining sources of conflict with Iran and it is critical that the U.S. act before it is too late to salvage the JCPOA and with it the political space to pursue diplomatic solutions.

CONCLUSION

The stakes of salvaging the JCPOA are incredibly high for American and regional security. At risk are the dual threats of a nuclear-armed Iran and a disastrous war that could make the Iraq war pale in comparison. The American people do not want to repeat the mistakes that led to the war in Iraq with Iran, and policymakers who clearly affirm their opposition to Donald Trump’s march to war are likely to be rewarded for their stand. Bold leadership is needed for the U.S. to navigate the treacherous waters ahead under Trump and re-enter and reinvigorate the key opening with Iran represented by the JCPOA.

November 19, 2018 Comments are off NIAC
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Restoring U.S. Credibility: Returning to the Iran Nuclear Agreement

For a text version of this report, please click here.

NIAC JCPOA Report

Hear from experts who support re-entering the JCPOA:

Lawrence Wilkerson, Col, USA (Ret), former chief of staff to secretary of state Colin Powell:
“NIAC’s report, “Restoring U.S. Credibility – Returning to the Iran Nuclear Agreement”, is not only a powerful indictment of the Trump Administration’s security policy, it is a clear and clarion call for redress. The report makes quite clear that without a resumption of our agreed responsibilities under the JCPOA, alliances will fracture, de-dollarization movements will proceed apace, enemies will gain ground, and Iran will not be substantially prevented from acquiring a nuclear weapon. War could even result. The wonder is that the U.S. withdrew from the agreement in the first place; even more of a marvel–but entirely wise and proper–would be a successful return. Every concerned party should be working toward that end.”

Hooman Majd, Iranian-American writer:
“It almost goes without saying that the best option for de-escalating tensions in the Middle East, and preventing nuclear proliferation, is for the U.S. to return to the JCPOA nuclear accord. It is unimaginable that Iran would agree to a new deal—or indeed any other deal on other issues of contention—without the U.S. first abiding by the commitments that it made when it signed on, along with five other powers, to the nuclear deal with Iran.”

Ned Price, Director of Policy and Communication at National Security Action:
“There is much that we still don’t know about the Trump administration’s plans and intentions regarding Iran, but here’s what we do know: the withdrawal from the Iran deal was a political maneuver designed solely to satisfy the President’s base. It was manifestly not in our national security interest, as it has the potential to free Iran from the most stringent verification and monitoring regime ever negotiated, while also simultaneously setting us on a possible path toward another disastrous Middle Eastern conflict. What we also know, however, is that the new Democratic House now has the oversight tools to spotlight and constrain the administration’s recklessness, just as we begin to clear the path for the next administration’s reentry into the deal. There may be tactical disagreements regarding how to most effectively confront Iran’s destabilizing regional activities, but there must be a strategic recognition that only the JCPOA provides a baseline that allows us to achieve our most important objective: a nuclear weapons-free Iran.”

Barbara Slavin, Director of the Future of Iran Initiative at The Atlantic Council:
“I concur that the next US administration should return to the JCPOA– assuming Iran has remained compliant — and also lift the travel ban. The US should also request new talks with Iran both on repairing the damage from the unilateral withdrawal from the JCPOA and on other issues of mutual concern.

Narges Bajoghli, Assistant Professor at Johns Hopkins School of Advanced International Studies:
“It is crucial for America’s standing in the world that we work to re-enter the JCPOA in the near future. This report provides concrete steps that Congress can take now to ensure that we return to the promises we made to the international community. Without doing so, America will continue to act as a force of instability in the Middle East.”

Farideh Farhi, Independent Scholar and Affiliate Graduate Faculty at the University of Hawai’i at Manoa:
“The Trump Administration’s ill-conceived rejection of the JCPOA and policy of ‘maximum pressure’ can no doubt inflict pain on the Iranian people. It can also court disaster in risking Iran’s resumption of its nuclear activities, further destabilization of the Middle East, and possibly even another costly US war in the region. Remaining quiet in the face of these predictable harms is not an option. This report offers timely and reasonable recommendations for keeping the JCPOA alive as a pathway for the re-emergence of a saner approach to Iran.”

Bijan Khajehpour, economist and a managing partner at Eurasian Nexus Partners:
“The US rejoining the JCPOA and helping to sustain a multilateral agreement will not only reduce the likelihood of an unnecessary nuclear arms race in the Middle East, but also prevent a radicalisation of Iranian politics. A moderate Iran is important for regional stability, the containment of jihadist movements and the future energy security for US allies globally.”

Nicholas Miller, Assistant Professor of Government at Dartmouth College
“The JCPOA has successfully curtailed Iran’s nuclear program and remains the surest tool for preventing an Iranian bomb. The new Congress should do what it can to limit the serious damage done by the Trump administration’s withdrawal from the deal. If the administration’s ‘maximum pressure’ campaign continues to escalate, the odds increase that Iran will exit the agreement and move closer to a nuclear weapon, which could in turn spark a costly war.”

Paul Pillar, Nonresident Senior Fellow at the Center for Security Studies at Georgetown University:
“Candidates and legislators of all political persuasions would do well to read and heed this report. The Trump administration’s abandonment of arms control and diplomacy in favor of conflict and confrontation has brought the United States only isolation and infamy as well as heightened risk of war. It is not too late to return to compliance with the JCPOA and to a course that demonstrably serves U.S. interests better than the current policy does.”

Ellie Geranmayeh, Deputy Head MENA program at The European Council on Foreign Relations
“President Trump’s decision to withdraw the US from the JCPOA, after months of negotiations with European allies earlier this year on pathways to sustain the agreement, was significantly damaging for transatlantic ties. This wound has been deepened by the manner in which the White House has sidelined European security interests and tried to impede their efforts to preserve the JCPOA, as enshrined by a UN Security Council. This report highlights the urgent need for the US executive and legislative branch to reassure European allies that in matters of foreign policy, the United States is a credible and consistent partner. Moreover, the US should reassure European capitals and companies that US sanctions policy will not seek to illegitimately target allies in pursuit of a maximalist policy that is unlikely to trigger fundamental changes in Iranian behaviour.”

August 6, 2018 Comments are off NIAC Staff
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Memo: Consequences of Sanctions Snapback on Iran

Not satisfied with withdrawing from the Iran nuclear accord, or Joint Comprehensive Plan of Action (“JCPOA”), the Trump administration intends to start sanctioning foreign parties that seek to comply with the terms of the international agreement. As outlined by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the Trump administration will begin re-imposing those sanctions lifted pursuant to the JCPOA on August 7, 2018 and continuing up until November 4, 2018, at which time all formerly lifted sanctions will be re-imposed on Iran.

Because such U.S. sanctions primarily target foreign parties transacting or otherwise dealing with Iran, the Trump administration will be actively undermining efforts by the international community to act consistent with the JCPOA and ensure its survivability. This includes, most dramatically, undermining efforts by foreign countries and entities to take those measures identified in the JCPOA to reduce or eliminate the risk of nuclear proliferation in Iran. This move is a dangerous gambit that pits the U.S. in opposition to the rest of the world—including the U.S.’s closest partners and allies—and risks re-invigorating nuclear proliferation efforts in Iran.

Considering the dramatic consequences for U.S. national security and foreign policy interests, the Trump administration should not be given free reign to plunge the United States into a confrontation with its closest allies and partners — such as those in Europe — and risk a new war in the Middle East. Congress should assert its own constitutional prerogatives and ensure that the Trump administration acts consistent with long-standing U.S. policy objectives, including those related to nuclear non-proliferation. This could include, for instance, legislative measures to restrain the Trump administration from abrogating the JCPOA or sanctioning foreign parties seeking to comply with the terms of the nuclear accord. At the very least, Congress should hold hearings to adjudicate the potential negative consequences of the Trump administration’s decision to withdraw from the JCPOA and undo the global consensus in favor of the diplomatic agreement aimed at restraining Iran’s nuclear program.

Re-Imposition of U.S. Sanctions Lifted Under the JCPOA

Beginning August 7, 2018, the Trump administration will take steps to re-impose those U.S. sanctions lifted pursuant to the JCPOA. In its initial phase, this will include the immediate re-imposition of sanctions on:

  • The purchase or acquisition of U.S. dollar banknotes by the Government of Iran;
  • Iran’s trade in gold or precious metals;
  • The direct or indirect sale, supply, or transfer to or from Iran of graphite, raw, or semi-finished metals such as aluminum and steel, coal, and software for integrating industrial processes;
  • Significant transactions related to the purchase or sale of Iranian rials or the maintenance of significant funds or accounts outside the territory of Iran denominated in the rial;
  • The purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt; and
  • Iran’s automotive sector.

By November 4, 2018, the United States will re-impose all remaining sanctions targeting Iran that had been lifted pursuant to U.S. commitments under the JCPOA. This will include the re-imposition of sanctions on:

  • Iran’s port operators and shipping and shipbuilding sectors;
  • Petroleum-related transactions with the National Iranian Oil Company, Naftiran Intertrade Company, and the National Iranian Tanker Company, including the purchase of petroleum, petroleum products, and petrochemical products from Iran;
  • Transactions by foreign financial institutions with the Central Bank of Iran and designated Iranian financial institutions;
  • The provision of specialized financial messaging services to the Central Bank of Iran and certain Iranian financial institutions;
  • The provision of underwriting services, insurance, or reinsurance; and
  • Iran’s energy sector.

In addition, the Trump administration intends to re-impose those sanctions that applied to persons removed from OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDN List”) and other U.S. sanctions lists pursuant to U.S. commitments under the JCPOA. This includes, for instance, the re-imposition of sanctions on most of Iran’s financial institutions, including the Central Bank of Iran.

Undermining International Compliance with a Successful Nonproliferation Agreement

The re-imposition of U.S. sanctions will pose immense difficulties for other major world powers’ compliance with the terms of the JCPOA.  Failure by the remaining JCPOA participants to fulfill the terms of the nuclear accord will prompt Iran to abandon some or all of the JCPOA’s limitations on its nuclear program, thus risking renewed proliferation efforts in Iran and threatening a new war in the Middle East.   

Pursuant to the JCPOA, major world powers — including Europe, Russia, and China — agreed to take steps to ensure effectiveness relating to the lifting of national and international sanctions. These commitments were geared towards ensuring that Iran received practical economic benefit from its agreement to maintain long-term restrictions on its own nuclear program. The JCPOA obligated all parties to take adequate measures “to ensure . . . effectiveness with respect to the lifting of sanctions under th[e] JCPOA” and committed JCPOA participants to “agree on steps to ensure Iran’s access in areas of trade, technology, finance, and energy.” The JCPOA was envisioned as an effective quid pro quo, whereby Iran agreed to long-term limitations on its nuclear program in return for practical economic benefits — including the lifting of nuclear-related sanctions — from major world powers.  

The re-imposition of U.S. sanctions, however, will risk the compliance of remaining JCPOA participants, as Europe and other JCPOA parties will have grave difficulties ensuring “effectiveness” with respect to the lifting of sanctions under the JCPOA. For instance, while the European Union and its respective states intend to continue the lifting of national and Union-wide sanctions targeting Iran–consistent with the JCPOA–European companies and persons will nonetheless remain subject to U.S. secondary sanctions targeting their own transactions or dealings with Iran.

The most notable consequences in this respect will be oil and banking transactions. To the extent that Iran is unable to export its oil and repatriate its oil revenues, the JCPOA will become a moot agreement, as Iran is highly unlikely to continue its adherence to limitations on its nuclear program while deriving no practical economic benefit from the nuclear accord. Re-imposed U.S. sanctions expressly target foreign banks — including foreign central banks — and foreign parties engaged in transactions related to the import of Iranian-origin oil. The Trump administration has sent conflicting signals as to whether it will grant exemptions to foreign countries importing Iranian-origin oil — including China, Europe, India, Japan, and South Korea. Similarly, to the extent that Iran’s financial institutions are isolated from the global financial system and unable to reconnect to foreign banks to process trade-related and other transactions, the Iran nuclear deal will not survive. Re-imposed U.S. sanctions will re-designate most Iranian financial institutions for sanctions and render foreign bank dealings with such Iranian financial institutions as sanctionable, thus expressly targeting foreign countries’ compliance with the nuclear accord.

Sanctioning Beneficial Work at Arak and Fordow

Pursuant to the JCPOA, Iran agreed to convert its enrichment facility at Fordow into a research center absent of proliferation risk. To do so, however, Iran required international collaboration, including in the form of scientific joint partnerships in agreed areas of research. In addition, the JCPOA required Iran — as part of an international partnership — to redesign and rebuild a modernized heavy-water reactor in Arak that would drastically reduce its potential output of plutonium.

However, these measures aimed at reducing the risk of nuclear proliferation in Iran are under serious threat, as re-imposed U.S. sanctions render sanctionable conduct by foreign parties with respect to Iran’s nuclear program. For instance, the Trump administration has stated that it will re-impose those sanctions that applied to persons removed from OFAC’s SDN List pursuant to the JCPOA. This appears to include the re-designation of the Atomic Energy Organization of Iran (“AEOI”) — the body responsible for Iran’s nuclear program — pursuant to Executive Order 13382. By designating the AEOI pursuant to E.O. 13382, entities that provide or attempt to provide financial, material, technological, or other support for, or goods or services in support of, the AEOI would be exposed to U.S. sanctions and risk designation under E.O. 13382 themselves. Foreign parties participating in an international partnership with the AEOI — consistent with the JCPOA — to convert the Arak nuclear reactor into a reactor absent of proliferation risk would thus be engaged in sanctionable conduct, as such parties would be prima facie engaged in the provision of material support to the AEOI  — thus meeting the criteria for designation under E.O. 13382.  

In addition, the U.S.’s re-designation of the AEOI pursuant to E.O. 13382 will render foreign financial institutions that facilitate significant transactions for or on behalf of the AEOI — including transactions consistent with the terms of the JCPOA — exposed to U.S. sanctions under § 104(c)(2)(E) of the Comprehensive Iran Sanctions Accountability and Divestment Act (“CISADA”) and § 1247 of the Iran Freedom and Counter-proliferation Act (“IFCA”). Such financial institutions would risk being cut off from the U.S. financial system and would thus be unlikely to facilitate transactions involving the AEOI, even if such transactions are consistent with the JCPOA and reduce the risk of proliferation in Iran.  

In the Trump administration’s zeal to kill the Iran nuclear deal, the administration will perhaps fatally undermine efforts to ensure the conversion of Iran’s nuclear facilities into facilities absent of proliferation risk, thus gravely undermining U.S. and regional security.

The Need for Congressional Intervention

The Trump administration’s withdrawal from the JCPOA and its re-imposition of U.S. sanctions targeting Iran risks splitting the United States irrevocably from its historical allies and partners, including those in Europe; threatens to undermine the future use of economic sanctions to secure national security and foreign policy objectives; and encourages the reinvigoration of nuclear proliferation risks in Iran. Such consequences implicate critical U.S. national security and foreign policy interests and warrant increased oversight over the administration’s actions.

Congress should be involved in any decision implicating U.S. national security and foreign policy interests. In this case, Congress should assert its own prerogatives in the realm of foreign policy and resume U.S. compliance with the JCPOA, including, but not limited to, the continued lifting of U.S. sanctions as obligated under the nuclear accord. Absent such a dramatic measure, however, Congress should seek to restrain the President from re-imposing those U.S. sanctions lifted under the JCPOA and should at least limit the damage re-imposed U.S. sanctions could cause to the transatlantic alliance between the United States and Europe. If the U.S.’s historical allies and partners in Europe believe that their own national security interests demand their continued compliance with the JCPOA, then the Trump administration should be restricted from imposing sanctions on European companies engaged in commercial trade with Iran that is permissible under European law.

Shockingly, Congress — which held numerous hearings on the U.S.’s assent to the JCPOA — has proven unwilling to conduct significant oversight regarding the potential consequences inherent in the Trump administration’s withdrawal from the JCPOA and its re-imposition of U.S. sanctions targeting Iran. In failing to assess the risks and dangers associated with the Trump administration’s actions, Congress has rendered itself incapacitated on an issue of critical import to U.S. national security. Following midterm elections, Congress should reassert its prerogatives in the field of national security and ensure that the Trump administration is not able to undermine long-standing U.S. foreign policy objectives — including the objective of nuclear non-proliferation — through its rash decision to withdraw from the Iran nuclear accord and re-impose those U.S. sanctions lifted under the JCPOA.

¹ Other U.S. sanctions may be applicable to transactions involving the AEOI and incident to the fulfillment of the terms of the JCPOA, including, for instance, menu-based sanctions on foreign parties that sell, supply, or transfer to Iran graphite, raw, or semi-finished metals such as aluminum and steel, coal, and software for integrating industrial processes, if the material is sold, supplied, or transferred for use in connection with Iran’s nuclear program. Section 1245(a)(1)(C) of IFCA does not distinguish between those transactions aimed at converting Iran’s nuclear facilities into facilities absent of nuclear proliferation risk and is thus likely to counteract international efforts to reduce the risk of nuclear proliferation in Iran.  

September 10, 2006 0 Comment Trita Parsi
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Giving Diplomacy a Chance

Although both the United States and Iran express the desire for a diplomatic solution to the conflict over Iran’s nuclear program, the present situation poses a significant risk of military confrontation between the two countries.

Finding a diplomatic solution is a more intricate task than initiating war. In order to find a negotiated solution, the United States needs accurate information and sound analysis of the intentions of the other side. This means understanding Iranian national security interests and the strategic calculations of the political elite, so that signals from Iran are correctly interpreted.

(more…)