President Trump Reissues Iran Sanctions Waivers, but Warns That Concerns over JCPOA Must Be Addressed

On January 12, President Trump announced that he was reissuing statutory waivers necessary to continue certain sanctions relief pursuant to the Joint Comprehensive Plan of Action (“JCPOA” or Iran nuclear deal), but stated that this was the last time he would reissue such waivers unless his concerns over the agreement were addressed.  On the same day, the US Department of Treasury’s Office of Foreign Assets Control (“OFAC”) designated 14 individuals and entities for engaging in human rights abuses, censorship, or support to sanctioned weapons proliferators in Iran.  The president’s announcement creates uncertainty over the future of the JCPOA, as it is unclear whether Iran or any of the other JCPOA participants will agree to any new commitments not enshrined in the original accord. Reissuance of Waivers and Deadline to Address Perceived Flaws in JCPOA The statutory waivers reissued by the president are necessary for the US to implement certain sanctions relief required in accordance with the JCPOA.  (For additional background on the waivers see our previous blog post here.)  The waivers can only be issued for set periods of time and therefore must be renewed periodically to continue the sanctions relief.  The shortest of these waivers expires every 120 days. In reissuing the waivers the president stated:

Today, I am waiving the application of certain nuclear sanctions, but only in order to secure our European allies’ agreement to fix the terrible flaws of the Iran nuclear deal. This is a last chance. In the absence of such an agreement, the United States will not again waive sanctions in order to stay in the Iran nuclear deal. And if at any time I judge that such an agreement is not within reach, I will withdraw from the deal immediately.

The statement explains that the president intends to work both with the United States’ European allies and with Congress to address perceived flaws in the JCPOA.  Congressional action would likely come in the form of an amendment to the Iran Nuclear Agreement Review Act of 2015 (“INARA”) and, as outlined by President Trump, “must include four critical components”:

• First, it must demand that Iran allow immediate inspections at all sites requested by international inspectors.
• Second, it must ensure that Iran never even comes close to possessing a nuclear weapon.
• Third, unlike the nuclear deal, these provisions must have no expiration date. My policy is to deny Iran all paths to a nuclear weapon—not just for ten years, but forever.
• Fourth, the legislation must explicitly state in United States law—for the first time—that long-range missile and nuclear weapons programs are inseparable, and that Iran’s development and testing of missiles should be subject to severe sanctions.

According to the President’s statement, the legislation should also mandate that if Iran does not comply with conditions one through three, then US nuclear sanctions will automatically resume. According to a White House background briefing, the administration would also seek some kind of follow-on agreement with European allies, but such an agreement would not involve direct negotiations with the Iranians. Depending on the final details of any new legislation or follow-on agreement, Iran could view such measures as a violation of the JCPOA, potentially causing the accord to unravel.  As noted above, any such legislation or agreement must be completed within 120 days (before the next statutory waiver expires). Additional Designations of Individuals and Entities According to the Department of Treasury, the additional designations were, at least in part, motivated by the recent government crackdown on protestors in Iran.  The designations were issued pursuant to the following executive orders:

• Executive Order 13553 (Blocking Property of Certain Persons With Respect to Serious Human Rights Abuses by the Government of Iran and Taking Certain Other Actions);
• Executive Order 13606 (Blocking the Property and Suspending Entry Into the United States of Certain Persons With Respect to Grave Human Rights Abuses by the Governments of Iran and Syria via Information Technology); and
• Executive Order 13628 (Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Threat Reduction and Syria Human Rights Act of 2012 and Additional Sanctions With Respect to Iran).

Treasury Secretary Steven Mnuchin explained that the designations were targeted at elements of Iran’s government engaged in mistreatment of protestors and political censorship, as well as persons contributing to Iran’s ballistic missile program and other destabilizing activities. The designation of Sadegh Amoli Larijani, the head of Iran’s judiciary, was seen as particularly controversial within Iran and prompted an angry response from the government. European Union Response A spokesperson for the European External Action Service (“EEAS”) responded to President Trump’s announcement with a short statement saying “we will coordinate with the E3 and the other EU Member States to jointly assess the statement and its implications” and noting that the EU remains “committed to the continued full and effective implementation of the Joint Comprehensive Plan of Action.”  In remarks made on January 11, before President Trump’s announcement, the EU’s top diplomat, High Representative Federica Mogherini, stated that while the EU remains concerned about issues such as Iran’s ballistic missile program and regional tensions, those concerns should be addressed outside the scope of the JCPOA.  Additionally, back in October, during a question and answer session, High Representative Mogherini was specifically asked if the EU would be amenable to adopting a follow-on agreement if it was necessary to keep President Trump from withdrawing from the JCPOA.  She responded by noting that the JCPOA was a multilateral agreement which could not be canceled by any one country, especially considering that the accord had been adopted as a UN Security Council resolution. Given the above, there is significant uncertainty as to whether President Trump will be successful in convincing the United States’ European allies to adopt a follow-on agreement, particularly if such an agreement could be viewed as violating the JCPOA.