Last weekend the United States, Europe, Russia, and the U.N. began lifting sanctions on Iran after the IAEA confirmed that Iran had followed the terms of last year's JCPOA Nuclear Plan.
Wondering what effects implementation will have?
Curious what lifting sanctions will change in the U.S.?
Continue to read our FAQ Page on the implementation of the Iran Nuclear Deal.
When was implementation day?
On January 16th, 2015, the International Atomic Energy Agency, or IAEA, announced that Iran has curbed its nuclear program enough to begin receiving relief on sanctions. Iran, the U.S. and five other world powers had laid out the terms under which the sanctions would be lifted last July during the historic nuclear agreement, also known as the Joint Comprehensive Plan of Action (JCPOA).
What were the terms for sanctions relief?
In order to have the nuclear-related sanctions lifted, Iran first had to fulfill a number of steps to shrink its nuclear program and render it more transparent to outsiders. Under the nuclear agreement, Iran was required to reduce its stockpile of enriched uranium by about 98 percent, remove two-thirds of its centrifuges — leaving a total of 5,060 centrifuges — and remove the core of its heavy water reactor at the Arak nuclear facility.
What will happen now that the sanctions are lifted?
Now that the sanctions are lifted, Iran is set to receive billions of dollars as its global assets are unfrozen. Estimates range from $55 billion to over $100 billion being poured into the economy. However, due to existing national debt, predictions state that Iran may only have access to $32 billion of their overseas assets. In addition, Iran will be able to rejoin the international banking system, increase its oil exports, and attract non-U.S. foreign investments for its energy and petrochemical sectors. The World Bank estimates that economic growth in Iran will surge to about 5% in 2016 from 3% this year as a result of the lifting of sanctions. The long term prospects for growth of Iran’s economy will be tied to economic reforms and its ability to attract and maintain foreign investments.
Will this impact oil prices?
The lifting of sanctions will also impact the world oil market and Iran's trading partners. According to the World Bank, "Iran's full return to the global market will eventually add about a million barrels of oil a day, lowering oil prices by US $10 per barrel next year.”
What does this mean in practice for the US?
Under the terms of the Nuclear Agreement, the U.S. agreed to lift all secondary nuclear-related economic sanctions on Iran in return for long-term constraints on Iran's nuclear program. Secondary sanctions are often directed at non-U.S. persons for certain transactions involving Iran and outside U.S. jurisdiction.
In addition, under the terms of the JCPOA, the United States will allow the granting of authorization for the sale of commercial passenger aircraft, aircraft parts and services exclusively for civil aviation to Iran, and will authorize the importation of Iranian-origin carpets and foodstuff, and certain activities conducted by foreign subsidiaries of U.S. companies. The United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued guidance, statements of licensing policy, and a few new general licenses to implement the sanctions relief that was promised. Chief amongst these new general licenses is the OFAC General License H, which authorizes U.S. owned or controlled foreign entities to engage in transactions with Iran that are otherwise prohibited by 31 C.F.R. § 560.215.
Does this mean Iran is sanction free?
It is important to note that the U.S. is only lifting a portion of its sanctions on Iran. According to the White House, "U.S. statutory sanctions focused on Iran's support for terrorism, human rights abuses, and missile activities will remain in effect and continue to be enforced.”
As such, the U.S. trade embargo with Iran, elements of which date back to 1979, will remain in place, meaning that U.S. persons or companies are barred from engaging in trade with or investment in Iran.
Why did the U.S. impose new sanctions on Iran?
The United States placed new sanctions on Iran on January 17th, 2016, after they conducted a precision-guided missile test in October of 2015, violating a United Nations Security Council Resolution. These new sanctions target 11 companies and individuals who have been involved in procuring goods for Iran’s weapons program.
These new sanctions are unrelated to the nuclear agreement. Despite Implementation Day, the U.S. government has consistently maintained that it retains a number of authorities to counter Iran’s other activities. These authorities generally mean imposing sanctions on individuals or entities under certain designated circumstances.
Disclaimer
This document is intended for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any issue with the U.S. trade embargo against Iran.
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