The long awaited policy statement by President Trump on Iran along with the “decertification” of the Iran nuclear deal or the Joint Comprehensive Plan of Action (JCPOA) finally happened yesterday. What does it all mean?
This blog is really focused on legal issues and is not a political blog, so I will keep the political discussion short. The plan announced yesterday strives to be a comprehensive approach that addresses U.S. policy on Iran in totality, beyond simply the nuclear program and the scope of the JCPOA. Notably, the United States and Iran did not ever reached a “grand bargain” on bilateral matters, and the JCPOA did not address longstanding U.S. grievances against Iran, which largely served as the basis for the main body of U.S. sanctions against Iran, including the Iranian Transactions and Sanctions Regulations (ITSR), which has many comprehensive restrictions on dealings by U.S. persons with Iran. In effect the nuclear deal in many respects dialed back the clock to 2005 or 2006, where Iran was under many, albeit less, sanctions (the fact that the world of business and compliance has changed markedly since then notwithstanding, which is part of the reason Iran has not been able to benefit as much from sanctions relief as it had hoped).
Decertification is not the end of the deal, at least not for now. The White House’s press release has some new information but much of this appears more of a pronouncement than really new policy. Effectively, the President has punted the issue to Congress, which can vote to modify certain legislation it passed when the JCPOA was implemented. That legislation placed certification requirements on the President, whereby confirmation had to be given every 90 days. That may be ultimately removed. Therefore, the deal is still standing.
As for the Islamic Revolutionary Guards Corps (IRGC), it was already sanctioned before, so the impact of the additional designation (under Executive Order 13224, which is focused on counterterrorism) will be arguably minimal (notably, many entities placed on any type of restriction by the United States typically face an effective “shutdown” in dealings with foreign companies, however light the actual restrictions may be). The IRGC has been under so many designation one has to wonder who was actually willing to do business with it before yesterday’s decision.
In the long run, this should have little effect on the ITSR as that body of regulations was largely unchanged by the JCPOA. This means people-to-people communications, medical exports, food exports and IT exports will most probably remain intact.
What remains to be seen is how the new policy will shape carveouts (referred to as “general licenses” or “exemptions”) in the ITSR. We may see more willingness by OFAC to approve activities in spaces like telecommunications and informational technology (IT) exports, as such technologies can expand the access of Iranians to the outside world. We may see other similar changes elsewhere. This is not comparable to what the Administration is doing on the North Korean sanctions front. That said, like other actions by the U.S. government, the ripple effects of such policy modifications, meaning the “psychological” impact, can be much farther reaching on the business and broader communities than what is actually mandated by law.