Iran
is back in the international business community. We all know this
since last summer (July 14, 2015 – to be precise), when Iran has
signed a Joint Comprehensive Plan of Action (JCPOA) with the UN,
U.S., and EU.
But
is Iran really back? Have sanctions really been abolished? One way to
find answers is to go through the agreements and implementing U.S.
and EU legislations.
Selling
yes / Paying no
Let’s
say, you want to export to Iran. You must obviously be allowed to
ship your stuff to Iran. Let’s assume this is the case. Then, you
will only do this if you can get paid. And this is where the trouble
starts and financial sanctions kick in.
Now,
let’s further assume that you are a European bank. In theory, it is
easy to establish whether you can provide financial services to Iran:
As you are subject to the European regulator, you simply look at the
most recent version of Regulation 267-2012 concerning restrictive
measures against Iran, currently the version dated April 16, 2016.
Here,
you face a first problem: You basically want to be sure that the type
of financial service you want to provide is not prohibited by the EU.
Why is that so complicated to establish? It is simply because the EU
Regulation tells you what is forbidden but not what is allowed.
Confirming something that doesn’t exist is always as hassle in the
legal business. The reason is that your response would require the
interpretation that your financial service to Iran is allowed because
it is not forbidden under current EU legislation. Because the topic
is complex and many banks have made bad experiences with sanctions in
the recent past, I wish you good luck for getting this confirmation
from your lawyer!
A
second problem is my assumption that a European bank applies only
European sanctions. Regrettably, this is only partly true. In fact,
the U.S. regulator could see things differently and impose U.S.
sanctions on any (U.S. or foreign bank) operating in the U.S. As
every international bank works with USD and/or in the U.S., nobody
wants to risk trouble with U.S. authorities. This is why many
European banks, in practice, not only respect European, but also
self-imposed U.S. sanctions. First, this doubles your work as need to
go through U.S. sanctions legislation as well. Second, the
definitions of what is (no more) sanctioned are not the same in
Europe and the U.S.
EU
Sanctions to be lifted
Here
is what the EU has promised to lift:
-
Financial, banking, and insurance measures (transfer of funds between the EU and Iran, opening of representative offices, subsidiaries, or joint ventures in Iran/the EU by EU/Iranian banks or financial institutions, correspondent banking relationships, insurance and re-insurance for Iranian entities, financial messaging services to Iranian entities, EU member states’ commitment to provide financial support for trade with Iran (export credits, guarantees, insurance, etc.), and sale or purchase of public guaranteed bonds to and from Iran)
-
Oil, gas, and petrochemical sectors (import of Iranian crude oil and petroleum products, sale of equipment and technology, and financing to the oil and gas sector)
-
Shipping, shipbuilding, and transport sectors (sale of naval equipment and technology, access to European airports for Iranian carriers, cessation of inspection and seizure of cargoes from Iran, provision of bunkering or ship supply services)
-
Gold, other precious metals, banknotes, and coinage
-
Nuclear proliferation-related measures
-
Metals
-
Software
-
Arms
-
Asset freeze and visa ban on listed persons, entities, and bodies
To
see which sanctions still remain in place today, the consolidated
version of EU Regulation 267-2012 of April 16, 2016 is a good
starting point.
U.S.
Sanctions to be lifted
U.S.
authorities have made similar commitments:
-
Financial and banking measures (lifting of sanctions on Iranian individuals and entities, lifting of sanctions on the Iranian Rial, provision of U.S. banknotes to the Government of Iran, transfer of Iranian revenue held abroad, possibility to purchase Iranian sovereign debt, and the capacity to provide financial messaging services to Iranian financial institutions)
-
Insurance measures (insurance to Iranian entities)
-
Energy and petrochemical sectors (lifting sanctions on Iranian crude oil sales, petrochemical products, and natural gas, possibility to provide investment, technological, and technical expertise)
-
Shipping, shipbuilding, and port sectors
-
Gold and other precious metals
-
Software and metals
-
Automotive sector
-
Removal of Iranian persons and entities from U.S. sanctions listings
-
Nuclear proliferation-related measures (lifting of sanctions linked to the mining, production, or transportation of uranium)
To
U.S. Department of the Treasury has summed up the current status of
sanctions lifting in a guidance paper dated January 16, 2016,
available here.
The
Joint Comprehensive Plan of Action (JCPOA)
As
a background, the above commitments from the EU and the U.S. have
been fixed in the Joint Comprehensive Plan of Action, which the UN
Security Council has endorsed, on July 20, 2015. The goal of the
JCPOA is to promote and facilitate the development of normal economic
and trade contacts and cooperation with Iran.
On
Iran’s side, the Government
-
reaffirms that under no circumstances will Iran ever seek, develop or acquire any nuclear weapons;
-
agrees to limit its uranium enrichment and uranium enrichment related activities including R&D activities to a maximum uranium enrichment of 3.67 % for 15 years;
-
engages to implement the roadmap agreed upon with the IAEA, especially with regards to the new heavy water research reactor in Arak;
-
shall allow the IAEA to monitor its nuclear commitments.
In
return, the international community commits to lift sanctions as
outlined above.
A
look at the implementation plan of the JCPOA shows that the topic
will stay with us for some time: The IAEA is granted 8 years until it
shall reach the broader conclusion that all nuclear material in Iran
remains in peaceful activities and the UN Security Council is granted
additional two years to fully terminate the sanctions lifting
process.
Resources:
-
UN Security Council Resolution 2231 dated July 22, 2015