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Easing US Sanctions on Iran JUNE 2014 Atlantic Council SOUTH ASIA CENTER IRAN TASK FORCE BY KENNETH KATZMAN Easing US Sanctions on Iran JUNE 2014 Since the seizure of US hostages in Iran following the 1979 revolution, the US government has imposed a Atlantic Council Iran Task Force succession of economic penalties against the Islamic The Iran Task Force, launched in 2010 and chaired Republic. The complexity and severity of these by Ambassador Stuart Eizenstat, performs a uranium enrichment program in 2006. However, there landscape, as well as its role in the region and the aresanctions a variety intensified of ways tofollowing provide Iran’s extensive resumption sanctions of a world,comprehensive to answer analysis the question of Iran’s of whetherinternal politicalthere are relief should there be a deal placing long-term elements within the country and region that can build the basis for an improved relationship with the West and how these elements, if they exist, restrictionsThe November on Iran’s24, 2013 nuclear Joint activities. Plan of Action (JPA) could be utilized by US policymakers. between Iran and the “P5+1” countries (United States, Britain, France, Germany, Russia, and China) pledges The Iran Task Force is a project of the Atlantic Iran comprehensive international sanctions relief if a 1 The generously by a grant from the Ploughshares Fund. JPA does not assert that the United States is the sole Council’s South Asia Center, and is supported final settlement is reached on its nuclear program. source of existing sanctions. However, US sanctions sanctions. Despite this JPA stipulation, the document are key to sanctions relief because many US sanctions implies that the administration does not necessarily penalize foreign countries and companies that conduct have the authority to commit to an outright lifting. A later portion of the document that addresses the commitment not to impose any new sanctions for specifiedThe JPA does transactions contain several with Iran. ambiguities with respect the JPA period (January 20–July 20, 2014) says that to sanctions relief. It states that a comprehensive deal the “U.S. Administration, acting consistent with the would be implemented in reciprocal steps—a reference respective roles of the President and the Congress, will refrain from imposing new nuclear-related sanctions.” relief would not be provided immediately, but rather to US official statements that the promised sanctions This phraseology clearly represents a recognition negotiated solution. Furthermore, the JPA promises Iran by Iran that US executive branch authority to ease phased in as Iran fulfills its commitments under any nuclear program”— sanctions has limitations. This leaves open the leaving it to the negotiations to decide which sanctions possibility that the administration, as part of a lifting of “sanctions related to Iran’s are “nuclear related” and which might relate only to comprehensive nuclear settlement, might commit only to suspend sanctions rather than to outright sanctions rights record, or other issues. lifting or termination. Because either is possible as Iran’s support for terrorist organizations, its human an outcome of negotiations with Iran, this brief will Suspension versus Termination therefore address authorities and requirements for The preamble of the JPA stipulates that a suspension and nonapplication as well as outright comprehensive deal would produce a “lifting” of lifting or termination of Iran sanctions. This paper multilateral sanctions—not a “suspension” of those focuses on US sanctions, although with reference in certain circumstances to application of US sanctions to 1 Joint Plan of Action, November 24, 2013, http://eeas.europa.eu/ third countries. statements/docs/2013/131124_03_en.pdf. Kenneth Katzman Congress, or any member is a Middle of the USEast Congress. expert at the Congressional Research Service. This brief was prepared in the author’s personal capacity as an expert on Iran and does not reflect the views of the Congressional Research Service, the Library of Termination Authority • The president can terminate some Iran sanctions 30, 2012. It applies Iran Sanctions Act sanctions One Iran-specific Executive Order is 13622 of July additional action from the Congress. have purchased crude oil or petroleum products provisions under existing authority, without specific (includingto firms that petrochemicals) the administration from determines Iran. This US sanctions come into force either by congressional enactment of law or by the issuing of an executive order by the president. Sanctions imposed on Iran • provision has not been codified by law. by executive order were issued under the authority of June 2013. It imposes sanctions on companies provided to the president by the International Another Iran-specific Executive Order is 13645 Emergency Economic Powers Act (IEEPA), a law that gives the president broad authority to restrict sector.determined3 to have traded in Iran’s currency, the transactions with countries for which a “state of rial, or have supplied goods to Iran’s automotive emergency” has been declared. President Bill Clinton Executive These Orders provisions Codified have notby beenLaw–Not codified. declared a “state of emergency” with respect to Iran in Revocable by Executive Branch Alone March 1995, and that declaration has been renewed each year since. Examples of executive orders that administration cannot on its own authority revoke the impose sanctions on Iran include the following: orderWhen andan executive lift the applicable order has sanctions. been codified The followinginto law, the orders fall into this category: • Executive Order 13224 of September 2001 orders the freezing of US-based assets of and bans US US Trade and Investment Ban. Executive Order 12959 transactions with companies determined to have of May 1995 banned US trade with and investment supported the commission of acts of terrorism. in Iran. However, the provisions of that order were —Section 103 of the 2 • Executive Order 13382 of June 2005 orders Comprehensive Iran Sanctions, Accountability, and the freezing of US-based assets of and bans US subsequently codified in law transactions with companies determined to have as discussed below, Section 401 of CISADA provides facilitated the proliferation of weapons of mass authorityDivestment for Act the of administration 2010 (CISADA, to P.L. terminate 111-195). the Yet, trade destruction (WMD). These two orders above address the functional issues banBan byon makingHelping certainIran Produce certifications. Petrochemicals . Executive Order, 13590 of November 21, 2011, contains a Iran. For example, Executive Order 13224 was issued provision applying various sanctions contained in the immediatelyof terrorism andafter proliferation the September and 11, are 2011 not specific attacks to Iran Sanctions Act to companies that the president against the United States and was originally intended to determines “sells, leases, or provides to Iran goods, services, technology, or support . that could directly institutions that might have conducted transactions on behalfcut off ofUS al-Qaeda. transactions In recent with anyyears, companies both orders or financial have been applied to many Iranian entities, including over petrochemicaland significantly products.” contribute The to value the maintenance of such supplies or two dozen Iranian banks and foreign banks that have servicesor expansion must of have Iran’s a fair domestic market production value of $250,000 of or more or, during a twelve-month period, an aggregate fair market value of $1 million or more. This provision close financial affiliations with these Iranian banks. be revoked or amended by administration action These orders have not been codified by law and could Section 201 of the Iran Threat Reduction and Syria alone. Designations under these orders also trigger was codified (as part of the Iran Sanctions Act) by sanctions on foreign banks that conduct transactions not provide the administration leeway to terminate the with designated banks, as required by Section 104 of provision,Human Rights although Act of it 2012 does (P.L.provide 112-158). authority That to law waive does it. the Comprehensive Iran Sanctions, Accountability, and Sanctions on the Central Bank. Executive Order 13599 of The following two executive orders also have not Divestment Act of 2010 (CISADA, P.L. 111-195). Central Bank. Section 217 of the Iran Threat Reduction February 5, 2012 blocks the US-based property of Iran’s been entirely codified by law, and those provisions administration action alone. and Syria Human Rights Act of 2012 (P.L.112-158) not codified could be revoked or amended by codifies that provision. However, Section 217 provides 2 Executive Order 13382 was a follow-up to Executive Order 12938 of 3 Executive Order 13645, June 3, 2013, http://www.treasury.gov/ November 1994. resource-center/sanctions/Programs/Documents/13645.pdf. 2 ATLANTIC COUNCIL authority for the administration to terminate the terminate the Iran Sanctions Act and the applicable provisions of CISADA. provision if it certifies that the Central Bank is not Termination Provisions of the Iran abilityfinancing: to construct, Iran’s acquisition operate, ofor “chemical, maintain nuclear biological, Sanctions Act or nuclear weapons, or related technologies;” Iran’s The Iran Sanctions Act (ISA). ISA was enacted in 1996 or cruise missiles or destabilizing types and amounts primarily to deter major foreign energy companies from offacilities; advanced Iran’s conventional acquisition
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