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“Iran could, in theory, refer the issue of the US breach to the JCPOA dispute settlement mechanism where the question of US compliance could be considered by the Joint Commission established under Annex IV of the JCPOA. But that process cannot prevent the reintroduction of US sanctions.” Iran could, in theory, refer the issue of the US breach to the JCPOA dispute settlement mechanism where the question of US compliance could be considered by the Joint Commission established under Annex IV of the JCPOA. But that process cannot prevent the reintroduction of US sanctions. Even if the US does not participate in the Joint Commission (and presumably it will not in circumstances where the President has positively ended participation in the JCPOA) the only possible outcome from the almost month long process is the automatic snap back of UN sanctions, which Iran has no interest in fomenting. sentences but they can be severe; they include the denial of access to the US financial system and potentially being designated as a SDN. It may be a decision that is taken out their hands, however, if banks and other financial institutions that they rely on insist that all forms of trade with Iran are ceased in light of the reintroduction of US secondary sanctions. What happens to the JCPOA? What, then, is the status of the JCPOA now that one (but so far only one) of the parties to it has abrogated its terms? The JCPOA obliges the US not only to cease the application of its secondary sanctions program but to “continue to do so”. The triggering of the re-introduction of sanctions on 6th August is, therefore, a breach by the US of the terms of the agreement. But the agreement, for what it is worth, remains in force between the other parties. President Rouhani of Iran has expressed a hope that the agreement can continue to remain in force if the EU maintains its own sanctions relief (Russia and China did not impose unilateral sanctions against Iran prior to Implementation Day and so the question of their continued relief is irrelevant). And a senior Trump administration official was quoted immediately after the President’s announcement indicating that the US will not seek to trigger the snapback of UN sanctions under the mechanism provided for in JCPOA and UN resolution 2231.
The deal could, in theory, limp on for some time with the EU and Iranians keeping to their respective sides of the agreement, and with tentative Iranian business being pursued by businesses in the EU, Asia and elsewhere outside the US. However, it is likely that such business will be more limited now, particularly given the already risk averse approach of financial institutions generally. The question is how long Iran’s own hard liners, already opposed to the deal in principle, are willing to continue with such a compromise. They may see the US move as just the opportunity Iran needs to commence uranium enrichment again, free from any guilt for abrogating the deal itself. The EU will find it difficult or impossible to continue their own support for the deal and provide continued sanctions relief in those circumstances.
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