Overview
On October 13, 2017, President Trump announced that his administration would embark on a new strategic approach with regard to Iran and that he “cannot and will not” continue to make at least one of the periodic certifications regarding the Joint Comprehensive Plan of Action (JCPOA, or Iranian nuclear deal) called for by US law. The announcement, which was accompanied by a White House fact sheet, marked the culmination of a nine-month, comprehensive review designed to address a number of policy concerns regarding Iran, such as Iranian support for terror groups, human rights violations, and development of ballistic missiles, in addition to the country’s nuclear program. Although President Trump’s announcement and decision on JCPOA certification could have substantial ramifications in the future for the JCPOA (and US sanctions relief under the JCPOA), it has little immediate effect on the existing US sanctions framework against Iran.
Ramifications of Decision Not to Provide JCPOA Certification
The Iran Nuclear Agreement Review Act of 2015 (INARA) amended Section 135(d)(6) of the Atomic Energy Act of 1954 to require that the president or his designee make four certifications to Congress regarding the JCPOA every 90 days:
- Iran is transparently, verifiably, and fully implementing the agreement, including all related technical or additional agreements;
- Iran has not committed a material breach with respect to the agreement or, if Iran has committed a material breach, Iran has cured the material breach;
- Iran has not taken any action, including covert activities, that could significantly advance its nuclear weapons program; and
- Suspension of sanctions related to Iran pursuant to the agreement is — (1) appropriate and proportionate to the specific and verifiable measures taken by Iran with respect to terminating its illicit nuclear program; and (2) vital to the national security interests of the United States.
By declining to make at least one of these certifications, the Trump Administration triggered a process under INARA allowing Congress to utilize expedited procedures to pass legislation re-imposing sanctions against Iran that the US suspended as part of the JCPOA. However, the current US Iran sanctions regime will not change unless and until Congress chooses to act.
Specifically, President Trump’s certification decision initiated a 60-day window under INARA during which Congress may vote to re-impose Iran sanctions under a process limiting time for debate, procedural barriers, and filibuster rules. Legislation may be introduced by the majority or minority leader of either party in both houses. However, this 60-day fast-track process is optional; Congress is not required to do anything during the 60-day window. INARA does not require the re-imposition of sanctions, or even that Congress take a vote, during the 60-day period – it is for Congress to decide whether or not to utilize the expedited procedures under INARA.
Apart from new congressional action, the US secondary sanctions currently suspended under the JCPOA could be re-imposed if the president decided not to renew various "waivers" required under statutes previously passed by Congress that had imposed these secondary sanctions. These waivers must be renewed by the president or his designee periodically, typically upon a finding that waiving the relevant sanctions is “vital to the national security of the United States” or “in the national interest of the United States.” Thus far, President Trump has not indicated he will cease renewing these waivers; but the failure to issue the certification required by INARA at a minimum lays the groundwork for a subsequent decision to withhold the waivers. (Read more about the waivers on our blog.)
Push for Congressional Action to Amend INARA
In declining to provide the required certification regarding the JCPOA, the Trump Administration also announced it intends to work with Congress to amend INARA. Legislation amending INARA would likely not qualify for the expedited treatment described above, since INARA’s expedited procedures appear to be limited to legislation that would reinstate the statutory sanctions currently being waived. As described in a fact sheet published by Senator Bob Corker (R-TN), the INARA amendments would create a number of “trigger points” that would result in an automatic “snapback,” or return, to previous US sanctions on Iran. Such trigger points would include Iran moving below a one-year “breakout” period for obtaining a nuclear weapon, or Iran’s refusal to: (1) eliminate sunset provisions in the JCPOA related to its nuclear program, (2) increase the International Atomic Energy Agency’s authority to verify its compliance, and (3) curb research and development of advanced centrifuges. The Corker fact sheet states that the resulting legislation would “not conflict with the JCPOA upon passage.” However, it is likely that the Iranian government and perhaps some of the other JCPOA signatories would view such legislation as a unilateral attempt to alter the JCPOA. So far, no bill has been introduced, and the chances of passage for any such bill are not clear. Whether such legislation can garner any Democratic votes is likely to be a significant factor in determining its prospects.
President Trump indicated he supports congressional initiatives to strengthen the JCPOA and added, “in the event we are not able to reach a solution working with Congress and our allies, then the agreement will be terminated. It is under continuous review, and our participation can be cancelled by me, as President, at any time.”
Additional Sanctions Against the IRGC and Other Entities
The Trump Administration also announced the imposition of additional sanctions against the Iranian Revolutionary Guard Corps (IRGC). The Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated the IRGC under Executive Order (EO) 13224 (the terrorism sanctions executive order) for its support of the IRGC-Quds Force, which supports a number of terrorist groups, including Hezbollah, Hamas, and the Taliban. This designation sharpens the focus on the IRGC, but has limited practical impact. The IRGC was already designated as a Specially Designated National (SDN) under other sanctions programs, meaning that: IRGC assets are blocked; US persons are generally prohibited from dealing with the IRGC, its designated affiliates and agents, and any entity owned 50% or more by the IRGC; and non-US persons can be subject to secondary sanctions restrictions for engaging in transactions with the IRGC. OFAC published a set of Frequently Asked Questions, explaining that persons designated under EO 13224 “may not avail themselves of the so called ‘Berman exemptions’ under the International Emergency Economic Powers Act (IEEPA) relating to personal communication, humanitarian donations, information or informational materials, and travel.”
The Trump Administration did not designate the IRGC as a Foreign Terrorist Organization (FTO). The FTO statute purports to provide worldwide criminal jurisdiction under US law against any persons who provide “material support” to FTOs. Such a designation could have had significant implications under the JCPOA, as Iran has made clear that it is fundamentally opposed to the labeling of a branch of the Iranian government as a terrorist organization. It would be highly unusual for the United States to identify a branch of another national government as a terrorist organization, and this designation could have implications for any number of other US national security objectives, including US efforts in the fight against the Islamic State (IS). (Read more on the implications of an FTO designation on our blog.)
In addition to the IRGC sanctions, OFAC designated four other entities (three Iranian and one Chinese) pursuant to EO 13382 for their involvement in weapons of mass destruction (WMD) proliferation activity. (See OFAC’s press release and web notice.) Among the Iranian entities, Shahid Alamolhoda Industries was designated for being owned or controlled by Iran’s Naval Defense Missile Industry Group (SAIG), which is involved in “the development and production of cruise missiles and is responsible for naval missiles.” Rastafann Ertebat Engineering Company (Rastafann) was designated for providing “radar systems to SAIG and communications equipment to the IRGC.” And Fanamoj (the parent company of Rastafann) was designated for providing “components for the Iranian military’s missile systems.”
The Chinese entity, Wuhan Sanjiang Import and Export Co. LTD, was designated for selling gyrocompasses and sensors to an Iranian entity designated for proliferation activity and for providing off-road lumber transporter vehicles to North Korea, which North Korea subsequently converted into transporter-erector-launchers for use in its ballistic missile program.
The Path Ahead
While the Trump Administration’s actions on October 13 do not immediately alter the JCPOA or (with the exception of the IRGC-related designations) US sanctions on Iran, they have significant implications for US policy toward Iran moving forward. The president’s decision not to provide the certification required under INARA and the administration’s announced desire to amend US law to encourage changes to the JCPOA heightens uncertainty over the future of the JCPOA and increases the likelihood of congressional action. In addition, other sanctions legislation is pending in Congress, including the Iran Ballistic Missiles and International Sanctions Enforcement Act (HR 1698), which would impose new sanctions that target Iran’s ballistic missile supply chain. Companies doing business in or with Iran should continue to monitor developments closely, in particular over the next few months, as the situation remains fluid.
