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Haley has said panel wages ‘pathological’ anti-Israel campaign
U.K.’s Johnson has said council is flawed but has value
The Trump administration plans to announce its withdrawal from the United Nations Human Rights Council on Tuesday, making good on a pledge to leave a body it has long accused of hypocrisy and criticized as biased against Israel, according to two people familiar with the matter.
Secretary of State Mike Pompeo and U.S. Ambassador to the UN Nikki Haley plan to announce the withdrawal at the State Department in Washington at 5 p.m., the people said. They asked not to be identified discussing a decision that hadn’t yet been made public.
The 47-member council, based in Geneva and created in 2006, began its latest session on Monday with a broadside against President Donald Trump’s immigration policy by the UN’s high commissioner for human rights. He called the policy of separating children from parents crossing the southern border illegally “unconscionable.”
The U.S. withdrawal had been expected. National Security Adviser John Bolton opposed the body’s creation when he was U.S. ambassador to the UN in 2006. In a speech to the council last year, Haley called out the body for what she said was its “relentless, pathological campaign” against Israel. She has also called for ways to expel members of the council that have poor human rights records themselves.
Won’t ‘Sit Quietly’
“For our part, the United States will not sit quietly while this body, supposedly dedicated to human rights, continues to damage the cause of human rights,” Haley said at the time. “In the end, no speech and no structural reforms will save the members of the Human Rights Council from themselves.”
A State Department spokeswoman didn’t immediately respond to a request for comment, while the UN said it hadn’t received a notification that the U.S. was withdrawing.
The move comes as the Trump administration is under intense criticism from business groups, human rights organizations and lawmakers from both parties over its recently imposed decision to separate children from parents who enter the U.S. illegally.
Even some critics of the human rights council have called for continuing to push for a revamping of the body rather than quitting it.
On the opening day of the council’s current session, British Foreign Secretary Boris Johnson criticized the body’s perennial agenda item dedicated to Israel and the Palestinian territories, calling it “damaging to the cause of peace.” Nonetheless, he said the U.K. wasn’t “blind to the value of this council.”
The council is scheduled to discuss Israel and the Palestinian territories on July 2, according to its agenda.
*** Sheesh, judged by the company you keep eh? As a reminder, GW Bush removed the United States and Barack Obama reversed that.
While the United States has terminated it’s role in the JCPOA, the Iranian nuclear deal, Europe appears to be dedicated to remain. Meanwhile, Israeli Prime Minister Benjamin Netanyahu is traveling in Europe meeting with leaders on the sole topic of Iran. As this item is published he is meeting with Theresa May of Britain.
***
On May 8, 2018, the President announced his decision to cease the United States’ participation in the Joint Comprehensive Plan of Action (JCPOA), and to begin re-imposing the U.S. nuclear-related sanctions that were lifted to effectuate the JCPOA sanctions relief, following a wind-down period. In conjunction with this announcement, the President issued a National Security Presidential Memorandum (NSPM) directing the U.S. Department of the Treasury and other Departments and Agencies to take the actions necessary to implement his decision.
Consistent with the President’s guidance, Departments and Agencies will begin the process of implementing 90-day and 180-day wind-down periods for activities involving Iran that were consistent with the U.S. sanctions relief specified in the JCPOA. To effectuate the wind-down periods, today the State Department issued the necessary statutory sanctions waivers to provide for a wind-down period and plans to take appropriate action to keep such waivers in place for the duration of the relevant wind-down periods. As soon as is administratively feasible, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) expects to revoke, or amend, as appropriate, general and specific licenses issued in connection with the JCPOA. At that time, OFAC will issue new authorizations to allow the wind down of transactions and activities that were authorized pursuant to the revoked or amended general and specific licenses. At the end of the 90-day and 180-day wind-down periods, the applicable sanctions will come back into full effect.
OFAC posted today to its website additional frequently asked questions (FAQs) that provide guidance on the sanctions that are to be re-imposed and the relevant wind-down periods.
Why the big push on all of this? Iran has launched new uranium enrichment plans with meet the red line. But, could that enrichment exceed agreed limits? Yes and no one would know due in part to refused access by IAEA officials for inspection.
(Reuters) – Iran’s declaration that it could increase its uranium enrichment capacity if a nuclear deal with world powers falls apart risks sailing close to the “red line”, France’s foreign minister said on Wednesday. Supreme Leader Ayatollah Khamenei said on Monday he had ordered preparations to increase uranium enrichment capacity if the nuclear agreement collapsed after the United States withdrew from the deal last month.
It also informed the U.N. nuclear watchdog of “tentative” plans to produce the feedstock for centrifuges, which are the machines that enrich uranium.
“This initiative is unwelcome. It shows a sort of irritation,” Jean-Yves Le Drian told Europe 1 radio. “It is always dangerous to flirt with the red lines, but the initiative taken … remains totally within the framework of the Vienna (nuclear) deal.”
Tensions between Iran and the West have surged since President Donald Trump pulled the U.S. out of the 2015 nuclear deal with Tehran last month, calling it deeply flawed and reimposing unilateral sanctions.
European powers are scrambling to save the deal – under which Iran curbed its nuclear program in return for a lifting of international sanctions – as they regard it as the best chance to stop Tehran developing an atomic bomb.
However, they have warned Iran that if it were not to abide by the terms of the deal, then they would also be forced to pull out and reimpose sanctions as Washington has done.
“If they go to a higher level then yes the agreement would be violated, but they need to realize that if they do then they will expose themselves to new sanctions and the Europeans will not remain passive.”
Le Drian, who said Iran was for now still abiding by its commitments, was speaking a day after Israel’s leader urged France to turn its attention to tackling Iran’s “regional aggression”, saying he no longer needed to convince Paris to quit a 2015 nuclear deal between various world powers with Tehran as economic pressure would kill it anyway.
** There is yet another item that has bubbled to the surface. Enter Barack Obama.
(AP) — The Obama administration secretly sought to give Iran access — albeit briefly — to the U.S. financial system by sidestepping sanctions kept in place after the 2015 nuclear deal, despite repeatedly telling Congress and the public it had no plans to do so.
An investigation by Senate Republicans released Wednesday sheds light on the delicate balance the Obama administration sought to strike after the deal, as it worked to ensure Iran received its promised benefits without playing into the hands of the deal’s opponents. Amid a tense political climate, Iran hawks in the U.S., Israel and elsewhere argued that the United States was giving far too much to Tehran and that the windfall would be used to fund extremism and other troubling Iranian activity.
The report by the Senate Permanent Subcommittee on Investigations revealed that under President Barack Obama, the Treasury Department issued a license in February 2016, never previously disclosed, that would have allowed Iran to convert $5.7 billion it held at a bank in Oman from Omani rials into euros by exchanging them first into U.S. dollars. If the Omani bank had allowed the exchange without such a license, it would have violated sanctions that bar Iran from transactions that touch the U.S. financial system.
The effort was unsuccessful because American banks — themselves afraid of running afoul of U.S. sanctions — declined to participate. The Obama administration approached two U.S. banks to facilitate the conversion, the report said, but both refused, citing the reputational risk of doing business with or for Iran.
“The Obama administration misled the American people and Congress because they were desperate to get a deal with Iran,” said Sen. Rob Portman, R-Ohio, the subcommittee’s chairman.
Issuing the license was not illegal. Still, it went above and beyond what the Obama administration was required to do under the terms of the nuclear agreement. Under that deal, the U.S. and world powers gave Iran billions of dollars in sanctions relief in exchange for curbing its nuclear program. Last month, President Donald Trump declared the U.S. was pulling out of what he described as a “disastrous deal.”
The license issued to Bank Muscat stood in stark contrast to repeated public statements from the Obama White House, the Treasury and the State Department, all of which denied that the administration was contemplating allowing Iran access to the U.S. financial system.
Shortly after the nuclear deal was sealed in July 2015, then-Treasury Secretary Jack Lew testified that even with the sanctions relief, Iran “will continue to be denied access to the world’s largest financial and commercial market.” A month later, one of Lew’s top deputies, Adam Szubin, testified that despite the nuclear deal “Iran will be denied access to the world’s most important market and unable to deal in the world’s most important currency.”
Yet almost immediately after the sanctions relief took effect in January 2016, Iran began to complain that it wasn’t reaping the benefits it had envisioned. Iran argued that other sanctions — such as those linked to human rights, terrorism and missile development — were scaring off potential investors and banks who feared any business with Iran would lead to punishment. The global financial system is heavily intertwined with U.S. banks, making it nearly impossible to conduct many international transactions without touching New York in one way or another.
Former Obama administration officials declined to comment for the record.
However, they said the decision to grant the license had been made in line with the spirit of the deal, which included allowing Iran to regain access to foreign reserves that had been off-limits because of the sanctions. They said public comments made by the Obama administration at the time were intended to dispel incorrect reports about nonexistent proposals that would have gone much farther by letting Iran actually buy or sell things in dollars.
The former officials spoke on condition of anonymity because many are still involved in national security issues.
As the Obama administration pondered how to address Iran’s complaints in 2016, reports in The Associated Press and other media outlets revealed that the U.S. was considering additional sanctions relief, including issuing licenses that would allow Iran limited transactions in dollars. Democratic and Republican lawmakers argued against it throughout the late winter, spring and summer of 2016. They warned that unless Tehran was willing to give up more, the U.S. shouldn’t give Iran anything more than it already had.
At the time, the Obama administration downplayed those concerns while speaking in general terms about the need for the U.S. to live up to its part of the deal. Secretary of State John Kerry and other top aides fanned out across Europe, Asia and the Middle East trying to convince banks and businesses they could do business with Iran without violating sanctions and facing steep fines.
“Since Iran has kept its end of the deal, it is our responsibility to uphold ours, in both letter and spirit,” Lew said at the Carnegie Endowment for International Peace in March 2016, without offering details.
That same week, the AP reported that the Treasury had prepared a draft of a license that would have given Iran much broader permission to convert its assets from foreign currencies into easier-to-spend currencies like euros, yen or rupees, by first exchanging them for dollars at offshore financial institutions.
The draft involved a general license, a blanket go-ahead that allows all transactions of a certain type, rather than a specific license like the one given to Oman’s Bank Muscat, which only covers specific transactions and institutions. The proposal would have allowed dollars to be used in currency exchanges provided that no Iranian banks, no Iranian rials and no sanctioned Iranian individuals or businesses were involved, and that the transaction did not begin or end in U.S. dollars.
Obama administration officials at the time assured concerned lawmakers that a general license wouldn’t be coming. But the report from the Republican members of the Senate panel showed that a draft of the license was indeed prepared, though it was never published.
And when questioned by lawmakers about the possibility of granting Iran any kind of access to the U.S. financial system, Obama-era officials never volunteered that the specific license for Bank Muscat in Oman had been issued two months earlier.
According to the report, Iran is believed to have found other ways to access its money, possibly by exchanging it in smaller quantities through another currency.
The situation resulted from the fact that Iran had stored billions in Omani rials, a currency that’s notoriously hard to convert. The U.S. dollar is the world’s dominant currency, so allowing it to be used as a conversion instrument for Iranian assets was the easiest and most efficient way to speed up Iran’s access to its own funds.
For example: If the Iranians want to sell oil to India, they would likely want to be paid in euros instead of rupees, so they could more easily use the proceeds to purchase European goods. That process commonly starts with the rupees being converted into dollars, just for a moment, before being converted once again into euros.
U.S. sanctions block Iran from exchanging the money on its own. And Asian and European banks are wary because U.S. regulators have levied billions of dollars in fines in recent years and threatened transgressors with a cutoff from the far more lucrative American market.
This was a Congressional Budget Session for the State Department Fiscal year 2019.
The Congressman Gregory Meeks got on his high horse about the commitment to diplomatic security. Meeks in his last comment proved to be an ass. Check out that little 3 minute snippet here.
Now, we can’t know if this is a ‘to-do’ list for himself or those of his staff but an Associated Press photographer captured an interesting photo.
So, let’s go down the list shall we?
#7 Meet IG.:There are several that have been published recently with regard to the State Department. They include: Operation Inherent Resolve and Operation Pacific Eagle, a Fraud Alert and Operation Freedom’s Sentinel. (The Freedom’s Sentinel is a quarterly report) Click here to see those IG reports.
#8 Jim Donovan: Last year, Donovan was on the short list to be Deputy Treasury Secretary and withdrew his name. He is a managing director and partner at Goldman Sachs and has close ties to Jeb Bush and Mitt Romney.
#9 Call Lavrov: Well we should all know him, he is the Minister of Foreign Affairs of Russia. Now this is an interesting call because Lavrov is on his way to visit the DPRK, you know lil Kim Jung Un and Lavrov has is nurturing a relationship with Zohrab Mnatsakanyan, the Foreign Minister of Armenia. Or how about telling Lavrov, ‘he dude, this meddling thing and propaganda gig against the U.S. comes with consequences‘.
#10 Mexico Ambassador: This could have a couple of options. a) Our National Guard on the border b) The U.S ambassador to Mexico resigned in March and we presently don’t have one. Under consideration is Edward Whitacre Jr., a former CEO at General Motors and AT&T. Whitacre has also worked previously with Carlos Slim, Mexico’s richest man.
#12 Robert Reilly: Reilly has a long history at the State Department and in global media. He is a conservative and a senior policy fellow at the America Foreign Policy Council, The Claremont Institute. He was part of the Information Strategy Office at the Pentagon as well as a senior advisor on Operation Iraqi Freedom.
#13 Need help…no idea
#14 Diversity Data….hummm
Could bad math have us skipping to #20? Sam Feist: Well, perhaps Pompeo has a whole truck load of stuff to discuss with Sam. He is the Senior Vice President, Washington Bureau Chief for CNN.
Meanwhile: Pompeo says Singapore is “still” a go, cites “the preparations for our historic meeting with North Korea, still scheduled for June 12. We have a generational opportunity to solve a major national security challenge.” “We are clear-eyed about the regime’s history. It’s time to solve this once and for all. A bad deal is not an option. The American people are counting on us to get this right. If the right deal is not on the table, we will respectfully walk away.”
Pompeo assumed a similarly hard line on resuming talks with Iran, promising to “apply unprecedented financial pressure” and suggesting that economic sanctions are just one of several measures the United States will use against the regime in Tehran. To achieve a new nuclear deal, he added, Iran “simply needs to change its behavior.”
He did not back off the Trump administration’s threat to apply sanctions to European companies that do business with Iran, saying companies must wind down operations in Iran or else face penalties, and promised lawmakers that “we will come back to you seeking further authority” for additional measures to squeeze Tehran.
But the hearing turned combative as Democrats challenged Pompeo for presenting Congress with a State Department budget that maintains deep cuts to diplomatic and developmental activities — a budget that Rep. Eliot L. Engel (N.Y.), the ranking Democrat on the foreign affairs panel, called “insulting” and predicted that Congress would reject. More here.
This speech/policy sets the table for the North Korea talks with President Trump. Further, it advances the mission on countering militant Islam not only in the region but globally. Europe has to decide on corporate business relationship with Iran versus human rights along with worldwide terrorism at the hands of Hezbollah and the Iranian Revolutionary Guard Corps.
Since 2014, a broad range of organizations, from medical companies such as GE Healthcare to aerospace firms such as Lufthansa Technik, as well as educational institutions such as Harvard University, have obtained permission and waivers to operate in Iran.
Other U.S. institutions that were permitted to do business in Iran include: General Electric Medical and Aviation Divisions, Bausch & Lomb, Boston Scientific, Smithsonian Institute, HSBC, Philips North America, University of California San Diego, University of Wisconsin, Loyola University, New York University, BNP Paribas S.A., American Pulp and Paper and Intelsat Corporation to list a few. More here.
(Reuters) – The United States on Monday demanded Iran make sweeping changes — from dropping its nuclear program to pulling out of the Syrian civil war — or face severe economic sanctions as the Trump administration hardened its approach to Tehran.
Iran dismissed Washington’s ultimatum and one senior Iranian official said it showed the United States is seeking “regime change” in Iran.
Weeks after President Donald Trump pulled out of an international nuclear deal with Iran, his administration threatened to impose “the strongest sanctions in history,” and vowed to “crush” Iranian operatives abroad, setting Washington and Tehran further on a course of confrontation.
U.S. Secretary of State Mike Pompeo demanded sweeping changes that would force Iran effectively to reverse the recent spread of its military and political influence through the Middle East to the shores of the Mediterranean Sea.
If Washington sees tangible shifts in Iran’s policies, it is prepared to lift sanctions, Pompeo said.
“The sting of sanctions will only grow more painful if the regime does not change course from the unacceptable and unproductive path it has chosen for itself and the people of Iran,” Pompeo said in his first major speech since becoming secretary of state.
“These will be the strongest sanctions in history by the time we are done,” he added.
Pompeo took aim at Iran’s policy of expansion in the Middle East through support for armed groups in countries such as Syria, Lebanon and Yemen.
He warned that the United States would “crush” Iranian operatives and proxies abroad and told Tehran to pull out forces under its command from the Syrian civil war where they have helped President Bashar al-Assad gain the upper hand.
Iran’s president summarily dismissed Pompeo’s demands.
“Who are you to decide for Iran and the world?,” the semi-official ILNA news agency quoted Hassan Rouhani as saying.
“The world today does not accept America to decide for the world, as countries are independent … that era is over … We will continue our path with the support of our nation.”
Tension between the two countries has grown notably since Trump this month withdrew from the 2015 nuclear agreement aimed at preventing Tehran from obtaining a nuclear weapon.
A senior Iranian official said Pompeo’s remarks showed that the United States was pushing for “regime change,” a charged phrase often associated with the U.S. invasion of Iraq in 2003 and the overthrow of President Saddam Hussein.
Pompeo warned that if Iran fully resumed its nuclear program Washington would be ready to respond and said the administration would hold companies doing prohibited business in Iran to account.
“Our demands on Iran are not unreasonable: give up your program,” Pompeo said, “Should they choose to go back, should they begin to enrich, we are fully prepared to respond to that as well,” he said, declining to elaborate.
Pompeo said Washington would work with the Defense Department and allies to counter Iran in the cyberspace and maritime areas.
The Pentagon said it would take all necessary steps to confront Iranian behavior in the region and was assessing whether that could include new actions or doubling down on current ones.
Pompeo said if Iran made major changes, the United States was prepared to ease sanctions, re-establish full diplomatic and commercial relations and support the country’s re-integration into the international economic system.
Any new U.S. sanctions will raise the cost of trade for Iran and are expected to further deter Western companies from investing there, giving hardliners, including the Islamic Revolutionary Guard Corps, an opportunity to cement their grip on power.
Iran’s ruling elite are mindful of recent protests sparked by economic hardship, which is, in part, their calculation for working with the Europeans on ways to salvage the nuclear deal.
Pompeo’s speech did not explicitly call for regime change but he repeatedly urged the Iranian people not to put up with their leaders, specifically naming Rouhani and Foreign Minister Mohammad Javad Zarif.
“At the end of the day the Iranian people will get to make a choice about their leadership,” Pompeo said.
Suzanne Maloney, deputy director of the Brooking Institution think tank’s foreign policy program, said Pompeo’s speech did indeed amount to a strategy of regime change.
“There is only one way to read it and that is that Trump administration has wedded itself to a regime-change strategy to Iran, one that is likely to alienate our allies. One with dubious prospects for success,” she said.
The administration’s approach “explicitly puts the onus on the Iranian people to change their leadership or face cataclysmic financial pressure,” said Maloney who has advised the State Department on Iran in the Bush administration between 2005-2007.
Lebanese analyst Ghaleb Kandil, who has close ties to the pro-Iran Hezbollah group, said Washington’s demands have previously not worked.
“These are conditions that were tested in previous phases of American pressures, before the nuclear deal, when Iran was in more difficult circumstances than it is in these days, and it did not surrender to these conditions or accept them,” said Kandil.
Pompeo outlined 12 U.S. demands for Iran including to stop uranium enrichment, never to pursue plutonium reprocessing and to close its heavy water reactor.
It also had to declare all previous military dimensions of its nuclear program and to permanently and verifiably abandon such work, he said.
Pompeo’s demand that Tehran stop uranium enrichment goes even further than the nuclear deal. Iran says its nuclear work has medical uses and will produce energy to meet domestic demand and complement its oil reserves.
Washington’s regional allies, the Gulf and Israel, who were strong critics of the deal, praised the administration’s position on Monday.
European parties to the nuclear deal – France, Britain and Germany – are working to find a way to keep the nuclear pact in effect after Washington’s exit.
Speaking ahead of Pompeo’s speech, British Foreign Secretary Boris Johnson said it would be difficult for the United States and its allies to deal with all the issues they had with Iran at the same time.
“If you try to pull all of those into a giant negotiation, a new jumbo Iran negotiation, a new treaty…that seems to be what they envisage and I don’t see that being very easy to achieve in anything like a reasonable timescale, Johnson said in Argentina.
Let’s begin with Ploughshares, shall we? Make sure you check the credits at the end of the video. Those that contributed money to the effort are listed here.
Meanwhile, there is a meeting scheduled in Vienna where Germany, France, Britain, Russia and China are to discuss saving the Iran nuclear deal. It is being chaired by Helga Schmid. Will it soon be called the Vienna nuclear deal?
Impact of U.S. Withdrawal from the Iran Nuclear Deal
May 2018
In Short
The Situation: On Tuesday, May 8, 2018, President Trump announced that the United States has withdrawn from the Iran Nuclear Deal and will fully reimpose its suspended sanctions targeting Iran.
The Result: All currently suspended U.S. sanctions in respect of Iran, including sanctions applicable to non-U.S. persons, will be reimposed by November 5, 2018.
Looking Ahead: The reimposition of U.S. sanctions will have limited impact on U.S. companies. However, foreign companies majority-owned or controlled by U.S. persons must now begin winding down any Iran-related activities. In contrast, the impact of the reimposition of U.S. sanctions on non-U.S. companies is less clear, and as the international response develops, non-U.S. companies will increasingly face a complex compliance landscape.
As reported earlier this week, on May 8, 2018, President Trump announced that the United States will reimpose, after specified wind-down periods, all nuclear-related sanctions lifted under the Joint Comprehensive Plan of Action (“JCPOA”) (commonly known as the “Iran Nuclear Deal”). As a result, the U.S. sanctions regime will revert to its pre-JCPOA scope by November 5, 2018.
In light of the comprehensive U.S. primary sanctions that remained in place after implementation of the JCPOA, President Trump’s announcement will have little impact on U.S. companies. In contrast, foreign subsidiaries of U.S. organizations and their non-U.S. counterparts face a dramatically changed compliance landscape. With the reimposition of U.S. extraterritorial, or secondary, sanctions, non-U.S. companies must navigate increasingly complex terrain as they assess continued engagement with Iran, compliance with U.S. sanctions, and the pending response of the other JCPOA signatories.
Following a 90-day wind-down period ending on August 6, 2018, the United States will reimpose its secondary sanctions targeting activities related to:
Iran’s automotive sector;
The sale, supply, or transfer, directly or indirectly, of graphite, raw or semi-finished metals (such as aluminum and steel), coal, and software for integrating industrial processes to or from Iran; and
Certain financial and banking transactions related to Iranian sovereign debt, the acquisition of U.S. dollar banknotes by the Government of Iran, the purchase or sale of Iranian rials, Iranian rial-denominated funds or accounts, and trade in gold or other precious metals.
During the same period, the United States will revoke the following authorizations:
The general license authorizing the importation into the United States of Iranian-origin carpets and foodstuffs (as well as certain related financial transactions);
All specific licenses (and subsequent wind-down authorizations) issued in connection with the Statement of Licensing Policy for Activities Related to the Export or Re-export to Iran of Commercial Passenger Aircraft and Related Parts and Services (“JCPOA SLP”); and
General License I, which authorized certain transactions related to negotiating and entering contingent contracts for activities covered by the JCPOA SLP.
Following a 180-day wind-down period ending on November 4, 2018, the United States will reimpose its secondary sanctions targeting activities related to:
Certain transactions by foreign financial institutions with, and provision of specialized financial messaging to, the Central Bank of Iran and/or designated Iranian financial institutions;
Certain categories of transactions related to Iran’s energy sector, including certain investments (such as participation in joint ventures); provision of goods, services, technology or technical support; the purchase, sale, transport, or marketing of petroleum, petrochemical products, and/or natural gas to or from Iran; and transactions with certain designated persons (such as the National Iranian Oil Company, Naftiran Intertrade Company, and National Iranian Tanker Company);
Certain transactions involving Iran’s port operators and/or related to Iran’s shipping and shipbuilding sectors, including activities involving the Islamic Republic of Iran Shipping Lines, South Line Iran, or their affiliates; and
The provision of certain insurance, reinsurance, and underwriting services.
Effective November 5, 2018, the United States will also revoke General License H (and any subsequent wind-down authorizations issued in connection with that general license), which previously authorized foreign entities majority-owned or controlled by U.S. persons to engage in most transactions involving Iran. It appears all other Iran-related general and specific licenses, including licenses issued under the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”), issued by OFAC will remain unaffected.
Finally, no later than November 5, 2018, the United States will redesignate all persons who had been removed, through the JCPOA, from the List of Specially Designated Nationals and Blocked Persons and/or other U.S. sanctioned parties lists.
Consequently, by November 5, 2018, the United States is currently expected to have reimposed all sanctions that had been lifted pursuant to the JCPOA.
Near- and Long-Term Implications
As a practical matter, the reimposition of U.S. sanctions suspended under the JCPOA will have limited impact on U.S. companies. As noted in our prior Alerts and Commentaries, substantial U.S. sanctions in relation to Iran have remained in place and continued to prohibit U.S. persons from engaging, directly or indirectly, in virtually all transactions or dealings with Iran without authorization.
The reimposition of U.S. sanctions will, however, have immediate impact on non-U.S. organizations that are majority-owned or controlled by U.S. persons and on U.S.-linked aviation companies. As noted above, the United States intends to revoke all specific and general licenses issued in connection with the JCPOA “as soon as administratively feasible,” including General License H and aviation-specific licenses issued under the JCPOA SLP and General License I. In their place, OFAC intends to issue authorizations that will likely narrowly authorize only activities necessary to wind down previously authorized activities. Companies that rely on these authorizations should immediately reassess their existing Iran-related activities, including in-process and pending transactions, in order to prepare to wind down Iran-related activities and ensure compliance with U.S. sanctions during the wind-down period.
The near- and long-term implications of President’s Trump announcement for non-U.S. companies are less clear. Non-U.S. persons are not, with limited exceptions, subject to U.S. primary sanctions. However, U.S. secondary sanctions provide for an array of penalties that, in effect, foreclose access to U.S. markets—a meaningful deterrent for non-U.S. companies. The United States appears poised to rigorously enforce the renewed sanctions and has advised non-U.S. companies to begin winding up soon-to-be sanctionable activities to “avoid exposure to sanctions or an enforcement action when the applicable wind-down period ends.” Continued engagement with Iran will therefore become an increasingly fraught proposition for non-U.S. persons, and one that may be further complicated by the international community’s response to the United States’ withdrawal.
In that regard, following President Trump’s announcement, the European Union has reiterated its commitment to “the continued full and effective implementation of the JCPOA,” as long as Iran meets its nuclear-related obligations, adding that it “is determined to work with the international community” to preserve the deal. Although the European Union has not yet indicated any measures it may implement to preserve the JCPOA, it suggested earlier this year that it may expand its Blocking Regulation—Council Regulation (EC) No. 2271/96 of November 22, 1996—to protect EU-based organizations doing business in Iran following any U.S. withdrawal.
The Blocking Regulation was adopted in 1996 by the European Union (European Communities at the time) in response to the extraterritorial application of U.S. sanctions against Cuba, Iran, and Libya. It prohibits EU companies from complying with blocked sanctions “whether directly or through a subsidiary or other intermediary person, actively or by deliberate omission.” The importance of the Blocking Regulation in the last decade has been limited. This would change if the scope of its application is expanded to cover the U.S. secondary sanctions in relation to Iran, possibly protecting EU companies from enforcement of U.S. judgments or administrative decisions giving effect to the secondary sanctions.
Historically, enforcement of the Blocking Regulation has generally been very limited, but expanding its scope now has the potential to lead to increased enforcement actions across Europe. An expanded Blocking Regulation would, however, place EU companies squarely between the competing demands of U.S. sanctions and EU and national requirements. The European Union may also try to negotiate an exemption for EU companies from the reimposition of the U.S. sanctions. The prospects of relief for EU companies under either approach remains uncertain.
China and Russia have likewise consistently reaffirmed their commitment to the JCPOA, and in a joint statement last month confirmed their “unwavering support” for the deal. In light of current tensions between the United States and Russia and China, it seems unlikely that the U.S. withdrawal will lead Russia or China to alter its commitment to the JCPOA or have a substantial impact on Russian and Chinese business interests in Iran.
As the international response to the U.S. withdrawal from the JCPOA develops, non-U.S. companies should take steps to protect their interests in light of the pending reimposition of U.S. sanctions. In particular, non-U.S. companies should reassess their Iran-related activities to determine their potential liability under the soon-to-be imposed U.S. secondary sanctions and/or any potential blocking statutes; open dialogues with their financial institutions, insurers, and other service providers regarding any Iran-related activities; and, significantly, prepare to possibly wind down any potentially sanctionable Iran-related activities in order to move promptly to comply with U.S. secondary sanctions, if warranted.
Jones Day will continue to monitor developments and provide updates.
Three Key Takeaways
The U.S. withdrawal from the Iran nuclear agreement will result in the reimposition of sanctions that had been lifted as part of JCPOA, or, the “Iran Nuclear Deal.”
Because the comprehensive U.S. primary sanctions remained in place after implementation of JCPOA, the withdrawal and reimposition of sanctions hold few consequences for U.S. companies.
However, foreign subsidiaries of U.S. organizations and their non-U.S. counterparts face a markedly altered compliance situation, and those companies affected should take decisive and deliberate measures to protect their interests.
