2
Nixed
By Patrick Murphy (Partner, Dubai)
It was already clear by the time President Trump addressed the assembled White House press corps on Tuesday 8th May that the US was going to put some sort of dent in the Joint Comprehensive Plan of Action (JCPOA), the clunkily named nuclear deal reached between the P5+1 (the permanent 5 UN Security Council members plus Germany) and Iran. But any doubt as to the extent of the damage he was prepared to do to the deal was emphatically blown away as the President announced the re-introduction of what he termed the “highest level of economic sanctions”.
The Iran deal was always a creature of compromise. Aside from its utilitarian moniker, it was dependent for its survival on continued waivers of US secondary sanctions by the US President (a function of the congressional approval of the deal in the first place). It was also limited – quite deliberately – in the scope of its ambition: it did not seek to settle disputes concerning Iranian intervention in regional conflicts, Iran’s human rights record or its ballistic missile program. And, much to the chagrin of Iran hawks in the US and elsewhere, the sunset clauses place no restriction on Iran’s uranium enrichment after the first 15 years of the deal. From the Iranian side, whilst it provided relief against EU sanctions and US extraterritorial secondary sanctions, it offered Iran no access to the US economy or, crucially, the US dollar denominated financial system. But, imperfect as it was, it did result in the destruction of Iran’s stockpile of enriched uranium and afforded the International Atomic Energy Association (IAEA) access to Iran’s nuclear sites to verify continued Iranian compliance. And it has allowed Iran access to major European investment in Iran; including high profile deals struck with Airbus and French oil major Total. In any event, some of the lingering congenital defects would not have mattered as much, or at all, were it not for other extraneous events. For example, it was always intended by the Obama administration that the JCPOA would be a starting point for further discussions and deals on other areas of difference once the nuclear boil was lanced; negotiating the nuclear settlement was lengthy enough without complicating the negotiations further by involving issues such as Syria and ballistic missiles. And continued sanctions waivers
were never thought to be seriously in doubt, even as the Trump campaign gained momentum throughout 2016. The State and Treasury Department reach out sessions following Implementation Day emphasised that the political consequences of a US lead snapback would be so serious that the next President would balk at tearing it up, even if that President was a candidate who described the deal as the “worst ever”.
“The Iran deal was always a creature of compromise. ”
Fix it or nix it Even after further criticism of the deal from the newly inaugurated President Trump, that conclusion seemed to hold good. Early forays into extending sanctions against Iran with SDN designations in February 2017 were limited in scope. They did not designate Iranian financial institutions or state owned enterprises. Indeed, they were no different in character to some of the late Obama administration’s post Implementation Day Iran designations. Many concluded that moderate voices within the administration had managed to constrain the President’s more hawkish impulses. But the President has continued to be a vocal critic of the deal and has been ramping up his rhetoric in recent months, and the lack of much perceived benefit from the deal in
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