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 weapons; or development the Revolutionary of ballistic Guard Corps; or entities sanctioned under Executive in Iran. Since then, it has been amended numerous Orders 13224 or 13382 (above). times,subscribing expanding to oil itsand authorities gas field development to prohibitions projects on supplying to Iran gasoline and shipping services; Sanctions on Iran’s Dealing in Precious Metals. supplying Iran energy sector equipment and services, Executive Order 13622, mentioned above, also applies including to produce petrochemicals; supplying to Iran WMD-related technology; participating in a joint determined to have helped Iran deal in precious venture with Iran to mine or produce uranium; and Iran Sanctions Act sanctions to individuals or firms purchasing or issuing Iranian government bonds. The by Section 1245 of the Iran Freedom and Counter- executive branch does have implementing latitude in metals, such as gold. This provision has been codified that ISA assigns to the administration the authority to investigate and determine violations, within a set time Proliferation Act (IFCA, Subtitle D of the FY2013 law does not provide authority for the administration frame. toNational terminate Defense the provision, Authorization although Act, P.L.it does 112-239). provide That waiver authority. ISA gives the administration the authority to terminate the Act with respect to Iran if the administration Terminating Application of Sanctions Laws all of the following conditions by Executive Action are met:4 Not all US sanctions on Iran that have been imposed by certifies to Congress that law require congressional action to achieve termination. • that Iran “has ceased efforts to design, develop, or acquire a nuclear explosive device, chemical Iran, imposed by law, which could be terminated by or biological weapons, and ballistic missile presidentialThere are a number action alone, of significant were there sanctions an administration against technology;” decision to do so. This is the case for those laws that • that Iran has been removed from the list of state sponsors of terrorism; and that, if the president determines are met, would terminatecontain provisions application that to spell Iran. out specific conditions • national security or allies.” that Iran “poses no significant threat to U.S. termination provisions are the Iran Sanctions Act 104-172,The primary as amended); examples of several laws that sanctions contain provisions specific imposed by the Comprehensive Iran Sanctions, (P.L. theAll threeadministration criteria must has be not satisfied indicated in thatorder Iran for isthe close to Accountability, and Divestment Act (CISADA); and the satisfyingpresident toany make of these the requiredcriteria. certification. To date, by the Department of State as “state sponsor of When enacted, the Iran Sanctions Act was titled the terrorism”basket of Iran (the sanctions so-called that “terrorism apply to list” Iran’s sanctions designation).

The terrorism list designation, the Iran Sanctions Iran and Libya Sanctions Act (ILSA), and all sanctions Act, and CISADA trigger a wide range of sanctions on provisions applied to both Iran and Libya. With respect Iran. The terrorism list sanctions mainly apply to US ofto UNLibya, Security terminating Council the resolutions law required related a presidential to the certification that Libya had complied with all provisions prime examples of “secondary sanctions”—sanctions firms, whereas the Iran Sanctions Act and CISADA are to1988 the bombing United States of Pan in Am 2004, flight the 103 George over W. Lockerbie, Bush with Iran. Even though the comprehensive nuclear administrationScotland. After Libyaused theturned criteria over in its the WMD law technologyto terminate dealthat penalizeis to result foreign in the firms lifting for of certain only “nuclear-related transactions sanctions” (and not terrorism-related sanctions), the requirements for terminating the terrorism list its application with respect to Libya. sanctions are discussed below because the terrorism https://www.govtrack.us/ list designation is interlocked with requirements to congress/bills/104/hr3107. 4 Iran Sanctions Act, P.L. 104-172, as amended,

ATLANTIC COUNCIL 3 Termination of Sanctions Imposed by Another section of CISADA, section 105, mandates CISADA sanctions (ineligibility for a US visa, and blockage of Aside from expanding the application of the Iran US-based property or assets), on Iranian government Sanctions Act, CISADA contained several additional Iran persons that are determined by the president to have sanctions provisions, among which are the following: committed or been complicit in serious human rights abuses against Iranian citizens after the June 12, 2009 • presidential election-related uprising in Iran.

bySection Executive 103 of Order CISADA 12959 codified of May the 1995. US ban The on ban prohibitstrade with almost and investment all transactions in Iran, between first imposed US terminate the section through executive action. Section companies and Iran, except for those involving food 105This cansection be terminated contains its in own its entirety specific by authority the president to if and medical equipment.

• the• presidentunconditionally certifies released to Congress all political that Iran prisoners has: detained in the aftermath of the June 2009 uprising; Section 104 of CISADA bars from the US financial system any foreign bank that “facilitates a significant • “ceased its practices of violence, unlawful detention, torture, and abuse of citizens of Iran while engaging companyfinancial transaction or person that or transactions has been designated or provides as a in peaceful political activity;” proliferationsignificant financial or terrorism services supporting for” any Iranian entity under Executive Order 13382 or 13224, respectively. • Conducted a transparent investigation into killings, arrests, and abuses of peaceful political activists that occurred after the uprising; and for the administration to terminate the above sanctions, wereSection there 401 an of administrationCISADA contains decision specific to requirements do so. The • that Iran has committed to and is making termination provisions are similar to—although demonstrable progress toward establishing an slightly less extensive than—the requirements for independent judiciary and respecting the human administration termination of the Iran Sanctions Act. To rights recognized in the Universal Declaration of terminate the two provisions above, the administration Human Rights. must certify to Congress all of the following:5 It is not clear that CISADA Section 105 sanctions are • That “Iran has ceased providing support for acts included in the negotiations on a comprehensive nuclear agreement. As noted above, the JPA indicates that a the requirements for designation as a state sponsor comprehensive agreement will result in the lifting of of terrorism.”international This terrorism” requirement and “nois similar longer to satisfies that “nuclear-related sanctions” and Section 105 focuses contained in the Iran Sanctions Act, above. However, exclusively on human rights issues. CISADA does not require that Iran has actually been removed from the terrorism list but merely that it Removal from the Terrorism List meets the requirements for removal. As noted above, one of the termination criteria in ISA is that Iran be removed from the “terrorism list,” thereby • And: that Iran has “ceased the pursuit, acquisition, linking terrorism-related sanctions to the overall issue of sanctions relief as part of a comprehensive nuclear its, nuclear, biological, and chemical weapons deal. Designation as a state sponsor of terrorism triggers and development of, and verifiably dismantled and ballistic missiles and ballistic missile launch a wide range of sanctions against Iran, including a technology.” This requirement is somewhat more ban on US economic aid to Iran; a ban on any US arms stringent than the equivalent requirement in exports to Iran; a restriction of any exports to Iran that could have military or WMD applications (“dual infrastructure might possess for developing the use items”); a requirement that the United States vote ISA in requiring verifiable dismantlement of the against any international lending to Iran, such as by the World Bank or International Monetary Fund; a cut in US Unlikespecified ISA, there capability. is no requirement that the president economic aid to any government that provides arms or national security or allies. also certify that Iran poses no significant threat to US to international programs that operate in Iran.6 financial support to Iran; and a cut in US contributions

5 Section 401 of the Comprehensive Iran Sanctions, Accountability, and 6 These triggers are contained in separate laws, such as the Export https://www.govtrack.us/congress/ Administration Act, the Arms Export Control Act, and provisions contained bills/111/hr2194. in a 1996 law called the Anti-Terrorism and Effective Death Penalty. Divestment Act of 2010. P.L. 111-95,

4 ATLANTIC COUNCIL The president has the authority to remove a country unimpeded foreign investment and would enable Iran to from the terrorism list, subject to congressional begin expanding oil and gas production again after many approval. If there were an administration decision to years of stagnation. In allowing the legislation to sunset, remove Iran from the list, the president must certify to the administration would not have to terminate the Act Congress that Iran: above. If Congress disagreed with the administration, it • has not provided support for acts of terrorism couldby making pass thelegislation required to certifications extend the ISA that sunset are stipulated beyond within the preceding six months; and December 31, 2016. In that scenario, the president would have the authority to veto ISA extension • has assured the United States that it will not support legislation, and enacting an extension into law would acts of terrorism in the future. require the overriding of the veto. The Arms Export Control Act provides for a Some US laws contain provisions for automatic congressional role in a decision to remove a country termination of sanctions against foreign companies or from the terrorism list. In cases where there has not persons on whom sanctions have been imposed. Section been a change of regime in the terrorism list state, the 9(b) of the Iran Sanctions Act states that sanctions imposed on companies determined to have violated the in advance of removing that country from the list. If Act will remain in effect: therepresident has beenis required a change to notifyof regime Congress in the forty-five terrorism days list • “for a period of not less than 2 years from the date If it chooses to, Congress can try to block the removal on which it was imposed; or” bystate, enacting the advance a joint notification resolution of period opposition does not to the apply. removal. However, if there were a decision to do so, • “until such time as the President determines and the president could veto that joint resolution, thereby requiring Congress to achieve a two-thirds majority in activities were the basis for imposing the sanction both chambers to override the veto and keep Iran on the iscertifies no longer to the engaging Congress in suchthat theactivities person and whose that the terrorism list. President has received reliable assurances that such person will not knowingly engage in such activities According to the Export Administration Act that set up in the future, except that such sanction shall remain the terrorism list, an administration decision to remove in effect for a period of at least one year.” a country from the list is supposed to hinge only on its termination of support for international terrorism. This provision of the Iran Sanctions Act would enable Among relevant examples, North Korea was removed the president to allow sanctions on any companies from the terrorism list in 2008 primarily in exchange determined to have violated ISA to lapse, were there a decision to do so. However, doing so would not was removed from the list because it gave up its WMD terminate the Act itself. programs,for cooperation as discussed on its nuclear above, program.although Init also2006, had Libya earlier cooperated in bringing to trial in the Hague Authority to Suspend or Avoid Application of Sanctions Pan Am 103 bombing. The president has the authority to choose how to apply Libyan agents who allegedly were responsible for the or not apply sanctions through the power to make Termination through Expiration or “Sunset” designations of sanctionability. This is considered a Some sanctions contain provisions specifying when “suspension” provision, not a “termination” provision their provisions might terminate—a so-called “sunset.” because using this authority does not change the Section 13 of the Iran Sanctions Act states that “This underlying sanctions provision itself, whether imposed Act shall cease to be effective on December 31, 2016.” by executive order or by law. In the case of an executive The original sunset of ISA was to take place by the end order, that authority is implicit, by virtue of the authority given the president by the International Emergency of the law. Congress has on two occasions extended the Economic Powers Act, under which the Iran-related sunsetof August of ISA,2001—five most recently years after from the its previousoriginal enactment sunset orders were issued. Those sanctions imposed by law give date of December 31, 2011. that authority explicitly in the form of legislative language specifying that sanctions are to be imposed on “entities Were there a decision to do so in connection with (or countries) determined by the president to have” a comprehensive nuclear settlement with Iran, the violated the stipulated provisions. There is no formal administration might decide to allow the Iran Sanctions mechanism for Congress to either accept or deny any

Act to sunset. This would reopen Iran’s energy sector to specific determination or revocation of sanctionability.

ATLANTIC COUNCIL 5 The Iran, North Korea, and Syria Non- Non-Application of Sanctions through Use Proliferation Act (“INKSNA,” P.L. 106-178, as of Exemption Provisions amended) Several sanctions laws contain provisions that give the president the authority to exempt from sanctions Nonproliferation Act and amended subsequently to add foreign countries and companies when the president applicationINKSNA, which to Syria was andfirst North enacted Korea, in 2000 gives as the the Executive Iran branch indirect authority to determine violations. or companies are cooperating with US policy objectives. Section 2 of that law requires an administration Thedetermines president and could certifies use thisto Congress authority that to easethese some entities of the sanctions against Iran if there were a decision to do provisions. The administration, therefore, could include so. orreport exclude to Congress any particular on entities entity that from violate its reports the specific to Congress as a means of avoiding imposing sanctions, Oil Purchases from Iran were there a decision to do so. Section 3 authorizes Section 1245 of the National Defense Authorization Act application of sanctions on the entities named in the administration report. the authority to determine whether “the parent country (NDAA) for FY2012 (P.L. 112-81) gives the president The Iran-Iraq Arms Non-Proliferation Act of reduced its volume of crude oil purchases from Iran 7 1992 (Title XVI of P.L. 102-484) .of . .”jurisdictionA determination over [foreign that a country banks] has significantlymade such This law is a proliferation-related sanction that imposes sanctions on any company or country that the president reductions qualifies that country’s banks to be exempt determines has supplied WMD-related technology from that law’s provisions barring them from operating or “destabilizing numbers and types of” advanced inThis the general United authority, States financial in theory, sector. could enable the conventional weaponry to Iran (or Iraq). Penalties administration to refrain from imposing new sanctions against violating companies include a ban on US exports on any Iranian or other entity, were there a decision to to and US government procurement from that company. do so, as part of a comprehensive nuclear settlement Penalties against foreign countries determined to have with Iran. However, it is not clear that the executive violated the provision include a suspension of US foreign branch would be able to make a binding commitment aid to that country, US opposition to multilateral loans to that country, a suspension of any coproduction of arms authority to make determinations of sanctionability. with that country, and suspension of militarily-useful US Suchto Iran a pledgenot to apply could sanctions potentially based amount on the to an president’s expression exports to that country. of administration intent not to enforce US law.

The Iran Sanctions Act Iran Sanctions Act “Special Rule” As noted above, the Iran Sanctions Act contains Section 4(e)(3) of the Iran Sanctions Act provides the president a “special rule” for avoiding investigating or conduct various, mostly energy-related, transactions ending an investigation of potential violations of the withnumerous Iran. Forprovisions all of those that provisions, sanction foreign the administration firms that provisions of the Act. The special rule is not a waiver, has the authority to determine whether a company has violated the Act and should therefore be subject to the with US objectives in order to avoid sanctions. The imposition of sanctions. presidentbut rather can a certification exercise the that special a company rule by is certifying complying to 8 In the case of the Iran Sanctions Act, Congress the “appropriate congressional committees” that: has enacted a limitation on this authority to make • “the person (natural person or corporation) determinations. A provision of that Act stipulates whose activity was the basis for the investigation the requirements for the administration to begin an is no longer engaging in the activity or has taken investigation of sanctionability, and sets a 180-day deadline to make a determination one way or the other. activity; and” However, these provisions do not stipulate what the significant verifiable steps toward stopping the outcome of an investigation should be—therefore still leaving in the hands of the administration the authority to decide whether any company should be sanctioned under the Act. 8 The Act stipulates that term means: the Senate Finance Committee, the 7 This exception is spelled out in Section 1245(d)(4)(D) of P.L. 112-81. Senate Banking, Housing, and Urban Affairs Committee, and the Senate Foreign Relations Committee, and the House Ways and Means Committee, the House Financial Services Committee, and the House Foreign Affairs Committee.

6 ATLANTIC COUNCIL • “the President has received reliable assurances that of sanctions. This authority is generally provided to the person will not knowingly engage in an activity comport with the constitutional separation of powers described in section 5(a) [the section of the Act that and the recognition of the primacy of the executive describes the sanctionable activity] in the future.” branch in exercising US foreign policy.

The president has used this authority to avoid penalizing The president has exercised waiver authority provided several major foreign energy companies that promised in several laws, including the Iran Sanctions Act, the to wind down their oil and gas development projects in Iran Threat Reduction Act, IFCA, and Section 1245 Iran and to seek no new business opportunities in Iran. implement the sanctions easing commitment required The Iran, North Korea, and Syria Non- byof thethe FY2012Joint Plan National of Action. Defense Authorization Act to Proliferation Act (INKSNA) INKSNA provides the president authority to exempt In cases where the administration does not have authority to terminate sanctions, or in which Congress does not repeal a sanctions law permanently, the determined,from sanctions in aforeign report firms. submitted That lawto Congress, authorizes to have administration would need to exercise its waiver transferredthe imposition to or of acquiredsanctions from on foreign Iran (or firms Syria that or Northare authority in order to implement a commitment to Iran to Korea) any goods listed by various nonproliferation ease sanctions. regimes, including the Nuclear Suppliers Group, the The following sections discuss the waiver authority Missile Technology Control Regime, the Australia Group, available for those sanctions that are to be lifted in the the Wassenaar Arrangement, and the Chemical Weapons event of a comprehensive nuclear deal with Iran. Convention. Sanctions that can be imposed on violators include a ban on US government procurement from that Crude Oil Exports A comprehensive nuclear settlement with Iran, if one is reached, will undoubtedly require a US lifting of firm; a prohibition on US arms sales or other defense sanctions on the worldwide purchases of Iranian crude articles to that firm; and a denial of licenses for dual use oil. Implementing such an agreement will require exportsSection 5to of that INKSNA firm. gives the president the authority

an indefinite suspension of the sanctions contained ofnot the to following:apply INKSNA sanctions on any firm if the authority was already exercised to implement the JPA, president determines and certifies to Congress any one butin Section would 1245need ofto thebe extended FY2012 NDAA. repeatedly This waiverin the event • of a comprehensive nuclear deal, unless Congress not “knowingly” make the transfers described; were to repeal the provision outright. The waiver that the firm that made the violating transfers did provision (Section (d)(5) of that law) gives the president • that the goods, services, or technology transferred the authority to waive penalties for 120 days—and did not “materially” contribute to the efforts of Iran, additional 120-day periods (with no stipulated limit)—– North Korea, or Syria, as the case may be, to develop nuclear, biological, or chemical weapons, or ballistic is in the national security interest of the United States.” or cruise missile systems, or weapons listed on the Theif the provision president requires certifies an to administration Congress that “such report a towaiver Congress justifying the waiver and certifying that the country receiving the waivers faced exceptional • Wassenaarthat the transfer Arrangements of goods to Munitions or from Iran List; was part of an authorized operation; and reducing oil purchases from Iran. circumstances that prevented it from significantly • Accessing Iran’s Hard Currency Abroad the transfer has “imposed meaningful penalties on that personthe parent on accountgovernment of the of transfer the firm of that the made goods, requires that any funds due to the Central Bank of services or technology which caused that person to IranThe sameor any law—Section sanctioned Iranian 1245 of bank the FY2012be “credited NDAA— to an account located in the country with primary jurisdiction Suspensionbe identified” of inSanctions the required through report of Useviolations. of the transaction with the Iranian bank. This provision, Waiver Authority whichover the became foreign effective financial February institution” 6, 2013, that haswas madeintended Most US sanctions laws, including the ones discussed to “lock up” hard currency payments for Iranian oil in in the above sections of this brief, provide the banks abroad, unable to be accessed by the Central Bank administration with the ability to waive the application of Iran directly. The same waiver provision discussed

ATLANTIC COUNCIL 7 Proliferation-Related Sanctions would apply to this provision. The president has authority in the Iran-Iraq Arms Non- above that would avoid penalizing Iran’s oil customers Proliferation Act to waive sanctions if the president Banking Sanctions and US Trade Ban Imposed by CISADA interest of the United States.” INKSNA contains language The penalties on foreign banks that conduct transactions similarcertifies to that that a ofwaiver a waiver, is “essential although to imposing the national sanctions with sanctioned Iranian banks (Section 104 of CISADA) under the Act is authorized, not required. This law can be waived thirty days after the Secretary of requires the president to provide Congress with a the Treasury: “(1) determines that such a waiver is necessary to the national interest of the United States; circumstances” explaining any decision not to impose and (2) submits to the appropriate congressional “written justification describing in detail the facts and committees a report describing the reasons for the provisions. sanctions on entities reported to have violated the law’s Conclusion determination.”US Trade Ban Provisions The waiver of CISADA extends. As indefinitely. noted above, In light of the debate over a nuclear agreement with Iran, the easiest way for the administration to implement with Iran. That same section provides the president withSection a series 103 of of CISADA “exceptions” codified which the USare ban similar on trade in effect thatsanctions sanctions easings no longernegotiated apply in after a final a nuclear nuclear deal deal is is states that the president can allow the exportation of US reached—itto exercise its is waiverless concerned authority. with Iran’s the main process demand by which is goods,to indefinite services, waiver or technology authority. Sectionto Iran “if103(b)(2)(B)(vi) the President the sanctions are no longer applied. Waiver authority is determines the exportation of such goods, services, or available for those sanctions that Iran is demanding be technologies to be in the national interest of the United eased as part of a nuclear deal, particularly those that States.” Similarly, Section 103(d)(2) gives the president have restricted its ability to export oil, to repatriate hard authority to permit imports from Iran if the president currency held abroad, and to rejoin the international “prescribes a regulation providing for such an exception banking system. The expiration of the Iran Sanctions on or after the date of enactment of this Act;” and demands for sanctions easing. Iran is not demanding, of the United States.” Act at the end of 2016 would also satisfy many of Iran’s certifies that such regulations is in the “national interest US sanctions laws actually be repealed or amended Iran Sanctions Act Provisions legislatively.as a condition Iran of amight final agreement,make such demandsthat any of over the the longer term in order to provide its trading partners with authority to the president to waive sanctions of its greater certainty. provisions,Section 9 of which the Iran were Sanctions described Act above.provides Section significant 9(b) stipulates that sanctions imposed on any foreign companies under the Act remain in effect for two years, meaning that the president can allow sanctions already imposed to lapse. Section 9(c) gives the president

have violated the energy related provisions of the Act by certifyingauthority to waiveCongress penalties that the on waiver any firm is “determinedessential to theto national security interests of the United States.” Waivers for violating the WMD related provisions of the Act can be vital to the national security interests of the United States.” Any ofexercised these waivers if the president remain in certifies effect for that one doing year, so but is can“ be renewed for additional one year periods, without limit.

Terrorism List Sanctions

sponsor triggers numerous sanctions under various laws.As noted Virtually above, all Iran’s of these designation laws provide as a terrorismthe president state with waiver authority, which could be used to suspend

nuclear deal, were there a decision to do so. the sanctions indefinitely as part of a comprehensive

8 ATLANTIC COUNCIL Table 1. US Authorities to Ease Sanctions

Termination Authorities Provision Authority Examples Executive Order 13645 Executive orders not Administration has authority to law revoke or amend sector codified by sanctioning goods for Iran’s auto Executive Order 13590 be terminated or altered before sanctioning goods to expand Lawan order codifying can be the terminated order must or amended Executive orders codified by law Iran Sanctions Act; several Administration can terminate Iran’s petrochemical sector. provisions imposed by CISADA; by certifying that termination authority to the executive branch provisions have been met Laws that provide termination “terrorism list” designation Termination is automatic upon sanctions imposed through Iran’s sunset. President could veto Iran Sanctions Act set to sunset legislation to extend or eliminate on December 31, 2016 sunset provision Laws that contain a “sunset” date All other laws (providing no No administration authority to Reduction Act, IFCA, INKSNA, administration termination terminate the sanction outright Iran-Iraq Arms Non-Proliferation authority or sunset) FY2012 NDAA, Iran Threat Act Non-Application of Sanctions Provisions Any executive order; Iran, Administration has authority to North Korea, and Syria Non- of violations determine potential violations Proliferation Act Laws requiring a determination Administration has authority Iran oil export sanctions under provisions exemption Iran Sanctions Act; INKSNA Laws providing exemptions to certifyWaiver qualifications Authority for FY2012 NDAA; “special rule” of President can waive for time Virtually any sanction imposed NDAA; Iran Threat Reduction by law IranAct; IFCA;Sanctions CISADA Act; banking FY2012 periodswaiver necessity specified by each law by sanctions, etc. making required certification of

ATLANTIC COUNCIL 9 Atlantic Council Board of Directors

CHAIRMAN Conrado Dornier Franklin C. Miller Mary C. Yates *Jon M. Huntsman, Jr. Patrick J. Durkin James N. Miller Dov S. Zakheim PRESIDENT AND CEO Thomas J. Edelman HONORARY *Frederick Kempe Thomas J. Egan, Jr. DIRECTORS *Stuart E. Eizenstat *Judith A. Miller VICE CHAIRS Thomas R. Eldridge *George*Alexander E. Moose V. Mirtchev Julie Finley GeorgetteObie L. Moore Mosbacher David C. Acheson *Richard Edelman Bruce Mosler Madeleine K. Albright *C.*Robert Boyden J. Abernethy Gray Harold Brown Thomas R. Nides FrankJames C.A. Carlucci,Baker, III III Lawrence P. Fisher, II Michèle Flournoy Franco Nuschese Robert M. Gates Alan H. Fleischmann *Ronald M. Freeman Sean O’Keefe Michael G. Mullen *Richard L. Lawson *Robert S. Gelbard Hilda Ochoa-Brillembourg *John*Virginia Studzinski A. Mulberger *Sherri W. Goodman *W. DeVier Pierson William J. Perry TREASURER *Stephen J. Hadley Leon E. Panetta Ahmet Oren *Brian C. McK. Henderson Mikael Hagström Thomas R. Pickering Condoleezza Rice Ian Hague Ana Palacio SECRETARY Colin L. Powell John D. Harris II George P. Shultz *Walter B. Slocombe *Andrew Prozes Frank Haun JohnEdward W. WarnerL. Rowny DIRECTORS Arnold L. Punaro Rita E. Hauser Joseph W. Ralston William H. Webster TeresaKirk A. M.Radke Ressel LIFETIME DIRECTORS Stephane Abrial Michael V. Hayden Charles O. Rossotti Odeh Aburdene Annette Heuser StanleyJeffrey A. O. Rosen Roth Peter Ackerman KarlMarten Hopkins H.A. van Heuven Robert Rowland DanielCarol C. J. Adelman Callahan, III Timothy D. Adams RobertJonas Hjelm Hormats Harry Sachinis BrianLucy Wilson Dailey Benson John Allen William O. Schmieder Kenneth W. Dam *Michael Ansari Robert E. Hunter John P. Schmitz Richard L. Armitage Wolfgang*Mary L. Howell Ischinger Stanley Ebner Elizabeth*Adrienne F. Arsht Bagley Reuben Jeffery, III ChasLacey W. Neuhaus Freeman Dorn SheilaDavid D.Bair Aufhauser Robert Jeffrey JohnAnne-Marie M. Spratt, Slaughter Jr. Carlton W. Fulford, Jr. JamesAlan J. StavridisSpence Edmund P. Giambastiani, Jr.

Julia*Rafic Chang Bizri Bloch Stephen*James L. R. Jones, Kappes Jr. James B. Steinberg Barbara Hackman Francis*Thomas Bouchard L. Blair MariaGeorge Pica A. Joulwan Karp *PaulaRichard Stern J.A. Steele FranklinJohn A. Gordon Myron Brilliant Francis J. Kelly, Jr. Robert J. Stevens *R. Nicholas Burns Zalmay M. Khalilzad John S. Tanner Roger Kirk *Richard R. Burt Robert M. Kimmitt Peter J. Tanous GeraldineRobert L. Hutchings S. Kunstadter Michael Calvey *Ellen O. Tauscher James P. Mccarthy Peter Kovarcik Karen Tramontano Jack N. Merritt James E. Cartwright FranklinHenry A. D.Kissinger Kramer Clyde C. Tuggle Ashton B. Carter Paul Twomey William Y. Smith Wesley K. Clark Philip A. Odeen JohnAhmed Craddock Charai Philip Lader David W. Craig Henrik Liljegren CharlesMelanne F. Verveer Wald Marjorie Scardino Tom Craren *Jan M. Lodal JayEnzo Walker Viscusi William H. Taft, IV *Ralph D. Crosby, Jr. *John*George D. MacomberLund Michael F. Walsh TogoRonald D. P.West, Verdicchio Jr. Nelson Cunningham Jane Holl Lute Mark R. Warner R.Carl James E. Vuono Woolsey Ivo H. Daalder Wendy W. Makins J. Robinson West Gregory R. Dahlberg MianIzzat MajeedM. Mansha John C. Whitehead Committee *Paula J. Dobriansky William E. Mayer Members*Members of the Executive Christopher J. Dodd Eric D.K. Melby ^ International Advisory Board David A. Wilson Maciej Witucki List as of May 21, 2014 The Atlantic Council is a nonpartisan organization that ­promotes constructive US leadership and engagement in ­international ­affairs based on the central role of the Atlantic community in ­meeting today’s© 2014 globalThe Atlantic ­challenges. Council of the United States. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Atlantic Council, except in the case of brief quotations in news articles, critical articles, or reviews. Please direct inquiries to:

1030 15th Street, NW, 12th Floor, Washington, DC 20005 (202) 778-4952, AtlanticCouncil.org