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.

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.”

Policy Memo: Barriers to Lifting US Sanctions in a Final Deal with Iran

Introduction

The most commonly stated rationale behind U.S. sanctions has been to convince Iran’s government to enter negotiations and accept strict limits on its nuclear program in order to have sanctions lifted. But the sanctions now threaten negotiations by withholding from the President the ability to lift them should a deal with Iran be reached. Below, NIAC details the existing authorizations for the President to waive and terminate the sanctions and discusses the problems posed by these limited authorities.

For the past decade, the United States has imposed a wide array of sanctions on Iran motivated primarily by the nuclear issue. With the implementation of the Joint Plan of Action by Iran and the P5+1, negotiations are now underway towards a comprehensive nuclear agreement in which Iran resolves concerns about its nuclear program in exchange for lifting of all ‘nuclear-related’ sanctions.

However, lifting the U.S. sanctions will be no small task. While the President retains the authority to issue time-limited waivers as to most of the sanctions, in most cases terminating the sanctions will require an affirmative act of Congress. This presents problems that will require a solution should the negotiations lead to a nuclear deal.

Below, we detail the energy, financial, and trade-related U.S. sanctions in place and the statutory authorizations for waiver and termination that currently exist. The limited nature of these authorizations – particularly for lifting the sanctions – poses a significant obstacle to securing a strong nuclear deal with Iran. If the White House relies solely on offering temporary waivers that must be continually renewed and thus subject to domestic political considerations, a final deal is unlikely to inspire the confidence necessary for Iran to see meaningful sanctions relief. In such case, Iran is likely to reciprocate the U.S.’s limited and reversible sanctions relief with nuclear concessions that are similarly limited and reversible. This will not be a recipe for a successful deal.

To secure a truly comprehensive nuclear deal, it is critical that Congress and the administration reevaluate the current authorizations for sanctions relief and ensure that the necessary authorities exist to not just waive sanctions on a time-limited basis, but to terminate them completely. Doing so will allow U.S. negotiators to fully leverage sanctions relief at the negotiating table to procure significant and lasting nuclear concessions from Iran, and will make certain that the President has the tools needed to follow through on any agreement reached.

U.S. Sanctions

U.S. sanctions have targeted Iran’s energy and financial sectors and have exacted a de facto U.S. trade ban with Iran. Most of these sanctions will need to be lifted as part of a final deal that places limits and transparency measures over Iran’s nuclear program in exchange for sanctions relief.

Energy-Related Sanctions

Energy-related sanctions have limited Iran’s ability to develop and export its energy resources, thereby cutting Iran off from a significant source of revenue. Energy sanctions have included virtual bans on:

  • U.S. and foreign investment in Iran’s energy sector (ISA Sec. 5(a)(1))
  • The purchase of crude oil and petrochemical products from Iran (E.O. 13622 and NDAA 2012 Sec. 1245(d)(4)(C))
  • The provision of shipping services for the sale of crude oil from Iran (ISA Sec. 5(a)(7))
  • The sale of goods and services that aid Iran’s energy sector (ISA Sec. 5(a)(5))
  • The sale of refined petroleum products to Iran (i.e., gasoline) (ISA Sec. 5(a)(3))
  • The sale of goods and services that aid Iran’s domestic production of refined petroleum products (ISA Sec. 5(a)(2))
  • The provision of insurance for Iran’s oil entities (e.g., NIOC) (ITRA Sec. 212)

 

Termination Authorities: For the above Iran Sanctions Act (ISA)-related sanctions, the President can lift sanctions only if he makes the following certifications to Congress:

  1. Iran has ceased efforts to acquire WMD and ballistic missile technologies
  2. Iran has been removed from the list of state sponsors of terrorism
  3. Iran no longer poses a significant threat to U.S. national security or U.S. allies

It is highly improbable a final nuclear deal will enable the President to make these certifications. Nuclear negotiations are unlikely to address non-nuclear WMD; Iran’s ballistic missile program; Iran’s support for U.S.-designated terror groups like Hezbollah; or other issues unrelated to Iran’s nuclear program.

Waiver Authorities: The President can issue time-limited waivers of the above ISA-related sanctions under ISA Section 4(c) upon certification to Congress that such waiver is “vital to the national security interests of the United States.” Under this statutory provision, sanctions can be waived for a period of up to 180 days, with opportunities for successive renewal. (Non-ISA energy-related sanctions have similar provisions for presidential waiver.)

Financial Sanctions

U.S. sanctions have taken direct aim at Iran’s ability to access the international financial system. These sanctions are designed to limit Iran’s ability to either receive or access payments made from its sale of crude oil abroad, as well as curb Iran’s access to foreign exchange. Financial sanctions targeting Iran have:

  • Declared Iran a ‘jurisdiction of primary money laundering concern’ (NDAA 2012 Sec. 1245(b))
  • Blocked purchase of the sovereign debt of Iran and related bonds (ITRA Sec. 213)
  • Erected a ban on trade and accounts denominated in the Iranian rial (E.O 13645)
  • Prohibited the sale, supply, or transfer of precious metals (i.e., gold) to Iran (IFCA Sec. 1245, E.O. 13645)
  • Imposed sanctions on any foreign financial institution that:
    • Processes ‘significant’ financial transactions with designated Iranian entities (CISADA Sec. 104)
    • Processes payments to Iran’s Central Bank and other designated Iranian financial institutions (NDAA Sec. 1245)

 

Termination Authorities: With few exceptions, the President has no termination authority for financial sanctions. In some cases (as in the ITRA-related sanctions), the President may terminate the sanctions only by making certifications to Congress on subjects beyond the nuclear issue.

Waiver Authorities: The President retains discretion to temporarily waive several of the financial sanctions on a time-limited basis that would require subsequent renewal. For instance:

  • The imposition of sanctions on any foreign financial institution that processes payments to Iran’s Central Bank and other designated Iranian entities can be waived by the President for a period up to 120 days with the option for successive renewal, upon a determination that such waiver is “in the national security interest of the United States.”
  • With regard to purchasing, or facilitating the issuance of, the sovereign debt of Iran, the President can waive sanctions for a period up to 180 days upon certification that such waiver is “vital to the national security interests of the United States,” with the opportunity for successive periods of renewal.

The President does have the power to amend or revoke financial sanctions imposed through Executive Order and not tied to a legislative mandate, such as the prohibition on trade in the rial and the keeping of accounts denominated in the rial.

Trade-Related Sanctions

Since 1995, the United States has imposed a comprehensive ban on domestic trade with Iran. This ban has taken the form of several successive orders, as well as codification in Section 103 of the Comprehensive Iran Sanctions and Divestment Act. While the trade ban applies to U.S. persons and entities – and not non-U.S. persons in the way the energy and financial sanctions do – it may be in both the U.S. and Iran’s interest to lift these sanctions, especially if energy and financial sanctions are lifted on non-U.S. persons and firms.

Termination Authorities: U.S. sanctions on trade with Iran are located in a series of executive orders, which the President has the discretion to amend or revoke. However, the trade-related sanctions were codified into law in 2010. These sanctions are subject to a sunset provision (Sec. 401(a)), where the ban on trade terminates 30 days after presidential certification that Iran:

  • “Has ceased providing support for acts of international terrorism and no longer satisfies the requirements for designation as a state sponsor of terrorism” and
  • “Has ceased the pursuit, acquisition, and development of [WMD] and ballistic missiles and ballistic missile launch technology”

Because a final comprehensive nuclear deal is unlikely to address the topics of terrorism or Iran’s ballistic missile program, presidential certification triggering CISADA’s sunset provision (which is a de facto termination provision) is highly improbable. The President is thus limited to time-limited waiver of the trade ban.

Waiver Authorities: Under Section 401(b) of CISADA, the President is authorized to waive the imposition of sanctions upon a determination that such waiver is “in the national interest of the United States.” Unlike the waiver provisions for energy and financial sanctions, Sec. 401(b) does not have a time-limit for waiver and waiver can thus be indefinite.

Under Section 103(d) of CISADA, the President also has the authority to “prescribe regulations . . . which may include regulatory exceptions” to the trade-related sanctions. Such exceptions would act so as to permit certain trade with Iran, enabling the President to both open certain channels of trade with Iran and use the promise of open trade as leverage during the ongoing negotiations with Iran. The sole restriction on the President’s discretion is for the “commercial importation of an Iranian-origin good” that was prohibited at the time of CISADA’s passage under the ITR, in which case the President would need to certify to Congress that the exception is “in the national security interest of the United States.”

Appendix: Major U.S. sanctions on Iran

         
  Iran Sanctions Act (ISA)
  Section Sanctioned Person/Activity Waiver Authority Termination Authority
  Sec. 5 (a)(1) U.S. and foreign investment in Iran’s energy sector President can waive for up to 6 months the sanctions in ISA Section 5(a) with respect to a national of a country if the President certifies to Congress at least 30 days before such waiver is to take effect that such waiver is vital to national security interests of U.S. (Sec. 4(c)(1)) – President can renew waiver for up to 6 months at a time if President determines that waiver is appropriate (Sec. 4(c)(2)) President can terminate sanctions if he determines and certifies to Congress that Iran (Sec. 8(a)): – Has ceased efforts to design, develop, etc. a nuclear explosive device or related materials; chemical or biological weapons; and ballistic missiles and related technology (Sec. 8(a)(1)) – Has been removed from the list of state sponsors of terrorism (Sec. 8 (a)(2)) – Poses no significant threat to U.S. national security, interests, or allies (Sec. 8 (a)(3))
  Sec. 5 (a)(2) Provision of goods, services, etc., that aid Iran’s domestic production of refined petroleum products
  Sec. 5 (a)(3) Sale or provision of refined petroleum products to Iran
  Sec. 5 (a)(3) Provision of goods, services, etc., that aid Iran’s ability to import refined petroleum products, including: – Provision of insurance or reinsurance for provision of such goods, etc.;
  – Financing or brokering such sale or provision;
  – Providing shipping services to deliver refined petroleum products;
  – Bartering;
  – Purchasing, subscribing, or facilitating issuance of sovereign debt of Iran, including government bonds
  Sec. 5 (a)(4) Joint ventures with Iran for the development of petroleum resources outside of Iran
  Sec. 5 (a)(5) Provision of goods, services, etc., that aid Iran’s ability to develop petroleum resources located in Iran or Iran’s domestic production of refined petroleum products
  Sec. 5 (a)(6) Provision of goods, services, etc., that aid Iran’s domestic production of petrochemical products
  Sec. 5 (a)(7) Provision of shipping services used to transport crude oil from Iran to another country
  Sec. 5 (a)(8) Concealment of Iranian origin of crude oil or refined petroleum products transported on a vessel
  Sec. 5(b)(1) Export or transfer of any goods, services, technology, etc. to any person with knowledge that such would be transferred to Iran and would materially contribute to Iran’s ability to acquire WMD or destabilizing numbers of advanced conventional weapons The President can waive, on a case-by-case basis, sanctions imposed under section 5(b) for no longer than a year if the President determines and reports to the appropriate congressional committees that it is vital to the national security interests of the United States. (Sec. 9(c)(1)(B))  None
 
  Sec. 5 (b)(2) Joint ventures with Iran for mining, production, or transportation of uranium President can renew this waiver on a case-by-case basis for an additional one year period, not later than 30 days before the waiver expires. (Sec. 9 (c)(1)(C))  None
  Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA)
  Section Sanctioned Person/Activity Waiver Authority Termination Authority
  Sec. 103 (b)(1) Imports of Iranian-origin goods and services President can waive the application of sanctions under Section 103(b), the requirement to impose sanctions with respect to a person under Section 105(a), the requirement to include a person on the list required by section 105(b), the application of the prohibition under section 106(a), etc., if the President determines that such waiver is in the national interest of the United States (Sec. 401(b)) *President can prescribe regulatory exceptions to the sanctions described in Section 103(b), though the commercial importation of Iranian-origin goods may require certification to Congress that such exception would be in national interest of the United States (Sec. 103(d)) Sanctions terminate upon President’s certification that:
  Sec. 103 (b)(2) Exports of U.S.-origin goods, services, and technology to Iran – Iran has ceased providing support for acts of international terrorism and no longer satisfies the requirements for designation as a state sponsor of terrorism
  Sec. 104 (c)(2) Foreign financial institutions that: – Facilitate Iran’s efforts to acquire or develop WMD or to provide support for organizations designated as FTOs Secretary of Treasury can waive application of prohibitions or conditions imposed with respect to foreign financial institution in Sec. 104(c) if: – Secretary determines such waiver is necessary to the national interest of the United States and submits to Congress a report describing reasons for determination (Sec. 104(f)) – Iran has ceased the pursuit, acquisition, and development of nuclear, biological, and chemical weapons and ballistic missiles and ballistic missile launch technology (Sec. 401(a))
  – Facilitate activities of person subject to financial sanctions under UN Res. 1737, 1747, 1803, or 1929  
  – Engage in money laundering to carry out above activities  
  – Facilitate efforts by Central Bank of Iran or any other Iranian financial institution to carry out above activities  
  – Facilitate significant transaction or provide significant financial services for Iran’s Revolutionary Guard Corps or a financial institution whose property is blocked pursuant to IEEPA  
  Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (cont.)
  Section Sanctioned Person/Activity Waiver Authority Termination Authority
  Sec. 105(b) Persons who are officials of Iran’s Government or persons acting on behalf of the Government that President determines are responsible for the commission of serious human rights abuses against citizens of Iran President can waive the application of sanctions under Section 103(b), the requirement to impose sanctions with respect to a person under Section 105(a), the requirement to include a person on the list required by section 105(b), the application of the prohibition under section 106(a), etc., if the President determines that such waiver is in the national interest of the United States (Sec. 401(b)) Sanctions imposed under Sec. 105 can terminate upon President’s certification that Iran has (Sec. 105(d)):
  – Released all political prisoners (Sec. 105(d)(1))
  – Ceased its practices of violence, unlawful detention, torture, and abuse of citizens of Iran while engaging in peaceful political activity (Sec. 105 (d)(2))
  – Conducted transparent investigation into killings, arrests, and abuse of peaceful political activists in aftermath of June 2009 elections and prosecuted individuals responsible for such killings, arrests, and abuse (Sec. 105 (d)(3))
  – Made public commitment to establishing an independent judiciary and respecting human rights recognized in UDHR (Sec. 105(d)(4))
  Sec. 106(a) Head of U.S. executive agency may not enter into a contract for the procurement of goods or services with a person that exports sensitive technology (i.e., hardware, software, etc., that President determines to be used specifically to restrict the flow of information in Iran or to disrupt, monitor, or restrict Iranians’ speech) to Iran President can waive the application of sanctions under Section 103(b), the requirement to impose sanctions with respect to a person under Section 105(a), the requirement to include a person on the list required by section 105(b), the application of the prohibition under section 106(a), etc, if the President determines that such waiver is in the national interest of the United States (Sec. 401(b)) Sanctions terminate upon President’s certification that:
  – Iran has ceased providing support for acts of international terrorism and no longer satisfies the requirements for designation as a state sponsor of terrorism
  – Iran has ceased the pursuit, acquisition, and development of nuclear, biological, and chemical weapons and ballistic missiles and ballistic missile launch technology (Sec. 401(a))
  National Defense Authorization Act of 2012 (NDAA 2012)
  Section Sanctioned Person/Activity Waiver Authority Termination Authority
  Sec. 1245(b) Designated Iran’s financial sector a primary money laundering concern   None
  Sec. 1245 (d)(1) Foreign financial institution that conducts a significant financial transaction with the Central Bank of Iran or a designated Iranian financial institution President can waive the imposition of sanctions for up to 120 days if the President determines that such waiver is in the national security interest of the United States and submits to Congress a report justifying waiver and including cooperation President has received or expects to receive as result of waiver
  Sec. 1245 (d)(3) Foreign financial institution owned or controlled by a foreign country, if that financial institution conducts a significant financial transaction for the sale or purchase of petroleum products to or from Iran – Waiver is renewable for periods of up to 120 days *(Sec. 1245(d)(5)) Sanctions imposed shall not apply to a financial institution if the President determines and reports to Congress, not later than 90 days after the President makes the determination required and every 180 days thereafter, that the country with primary jurisdiction over the foreign financial institution has significantly reduced its volume of crude oil purchases from Iran (Sec. 1245 (d)(4)(D))
  Iran Threat Reduction and Syrian Human Rights Act of 2012 (ITRA)
  Section Sanctioned Person/Activity Waiver Authority Termination Authority
  Sec. 211(a) Provision of vessels or insurance or reinsurance for the transportation to or from Iran of goods that could aid Iran with respect to WMD proliferation or support for acts of international terrorism President can waive imposition of sanctions with respect to a person under Sec. 211 if President determines that such waiver is in the national security interests of the United States (Sec. 211(c) Sections 211, 212, 220, 221, and 501 terminate upon President’s certification that:
  Sec. 212(a) Provision of underwriting services or insurance or reinsurance for NIOC or NITC Waiver provisions of ISA Section 4(c) apply with respect to Sec. 212 (Sec. 212(d)(1)) – Iran has ceased providing support for acts of international terrorism and no longer satisfies the requirements for designation as a state sponsor of terrorism
  Sec. 220(b) Provision of specialized financial messaging services to the Central Bank of Iran or a designated Iranian financial institution *President not required impose sanctions under Sec. 220 – Iran has ceased the pursuit, acquisition, and development of nuclear, biological, and chemical weapons and ballistic missiles and ballistic missile launch technology (Sec. 605, referencing CISADA Sec. 401(a))
  Sec. 221 (a)(1) Senior officials of Iran’s Government involved in: President can waive imposition of restrictions on individuals listed under Sec. 221 if President determines waiver essential to U.S. national security interests (Sec. 221(e))  
  – Illicit nuclear activities or proliferation of WMD  
  – Support for international terrorism, or  
  – Serious human rights abuses against citizens of Iran  
  Iran Threat Reduction and Syrian Human Rights Act of 2012 (cont.)
  Section Sanctioned Person/Activity Waiver Authority Termination Authority
  Sec. 301(a) Foreign persons who are officials, agents, or affiliates of the IRGC President can waive imposition of sanctions under Sec. 301 if President determines waiver to be vital to U.S. national security interests (Sec. 301(e))  None
  Sec. 302(a) Foreign persons who: President can waive imposition of sanctions under Sec. 302 if President determines that person has ceased the activity for which sanctions would be imposed or determines waiver to be essential to U.S. national security interests (Sec. 302(d) and (e)) *President not required to identify foreign persons for sanctions under Sec. 302 if he notifies Congress that it would cause damage to U.S. national security interests President can terminate a sanction imposed on a foreign person pursuant to subsection (b) if the President determines that the person no longer engages in the activity for which the sanction was imposed and can assure that the person will not engage in any activity in section (a)(1) in the future (Sec. 302(c))
  – Provide financial, material, or technological support for, or goods and services in support of, the IRGC or any of its blocked agents
  – Engage in significant transaction with IRGC, etc.
  – Engage in significant transaction with person subject to UN financial sanctions or person acting on behalf of such person
  Sec. 501(a) Citizens of Iran that seek to enter the U.S. to study in preparation for a career in Iran’s energy sector or in nuclear science or nuclear engineering  None Sections 211, 212, 220, 221, and 501 terminate upon President’s certification that:
  – Iran has ceased providing support for acts of international terrorism and no longer satisfies the requirements for designation as a state sponsor of terrorism
  – Iran has ceased the pursuit, acquisition, and development of nuclear, biological, and chemical weapons and ballistic missiles and ballistic missile launch technology (Sec. 605, referencing CISADA Sec. 401(a))
  National Defense Authorization Act of 2013, Subtitle D (NDAA 2013)
  Section Sanctioned Person/Activity Waiver Authority Termination Authority
  Sec. 1244 (c)(2)(A) Persons part of the energy, shipping or shipbuilding sectors of Iran President can waive imposition of sanctions for period of up to 180 days if President determines such waiver is vital to U.S. national security and submits report to Congress (Sec. 1244(i))  
  Sec. 1244 (c)(2)(B) Persons operating a port in Iran  
  Sec. 1244 (c)(2)(C) Provision of significant financial, material, technological support to, or goods and services in support of, any activity of transaction on behalf of:  
  – Persons part of the energy, shipping, or shipbuilding sectors of Iran,  
  – Person operating a port in Iran, or  
  – Iranian persons included on list of SDNs and blocked persons  
  Sec. 1244 (d)(1)(A) Sells, supplies, or transfers to or from Iran of goods and services used in connection with energy, shipping, or shipbuilding sectors of Iran  
  Sec. 1245 (a)(1) Sells, supplies, or transfers to or from Iran of: President can waive imposition of sanctions for period of up to 180 days, with periods of successive waiver, if President determines such waiver is vital to the national security interest of the U.S. and submits report to Congress (Sec. 1245(g))  None
  – Precious metal  
  – Graphite, raw or semi-finished metals like aluminum, steel, coal, and software for integrating industrial processes (either for barter, swap, or any other transaction, or to be used in connection with the energy, shipping, or shipbuilding sectors of Iran, etc.)  
  Sec. 1246 (a)(1) Provision of underwriting services or insurance or reinsurance to or from any person with respect to the energy, shipping, or shipbuilding sectors of Iran for which sanctions are imposed, etc. President can waive imposition of sanctions for period of up to 180 days, with periods of successive waiver, if President determines such waiver is vital to the national security of the U.S. and submits report to Congress (Sec. 1246(e))  
  Sec. 1247 (a) Facilitation of a significant financial transaction on behalf of Iranian person included on list of SDNs and blocked persons President can waive imposition of sanctions for period of up to 180 days, with periods of successive waiver, if President determines such waiver is vital to the national security of the U.S. and submits report to Congress (Sec. 1247(f))  
  Sec. 1248 (b)(1) Islamic Republic of Iran Broadcasting and President of the IRIB Waiver under CISADA Sec. 401(b) applies to Sec. 1248 above (also President has discretionary authorities to impose sanctions under this section similar to CISADA Sec. 105(d)) (Sec. 1248(b)(3))

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