What if President Trump Refuses to Renew Iran Sanctions Waivers?

Last week, while reluctantly renewing waivers of statutory sanctions against Iran, President Trump issued an ultimatum: Either the United States’ European allies negotiate a “supplemental agreement” that strengthens the Joint Comprehensive Plan of Action (JCPOA) nuclear agreement and targets Iran’s ballistic missile program, or the United States will no longer waive sanctions against Iran.  The President’s statement was clear:  “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.”

The pointed rhetoric followed repeated promises by Trump during the 2016 campaign to renegotiate the JCPOA; a statement in February 2017 by the Trump Administration that it was “officially putting Iran on notice” regarding its missile program; the Trump Administration’s initiation of an official review, in April 2017, of whether sanctions relief for Iran was in the interest of the United States; and the President’s “decertification” of JCPOA sanctions relief in October 2017.

As anticipated here on the blog nearly a year ago, the Trump Administration has used the Iran Nuclear Agreement Review Act and the periodic waivers of statutory sanctions as pressure points in seeking to renegotiate the JCPOA, and now it appears we are entering a critical period in which the future of the JCPOA may be decided.

This post explores a question sometimes overlooked in all of the commentary regarding President Trump’s next moves: What would actually happen if the President refused to renew the waivers of sanctions currently in place?

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More on the Russian Oligarch Report

As indicated in recent media reports, for example from Bloomberg and The Wall Street Journal, many are closely watching developments related to the “Russian oligarch” report due from the Trump Administration next week under Section 241 of the Countering America’s Adversaries Through Sanctions Act.  Under Section 241, the Secretary of the Treasury (in consultation with the Secretary of State and the Director of National Intelligence) must submit to Congress by January 29 a “detailed report” that, among other things, identifies “the most significant senior foreign political figures and oligarchs in the Russian Federation,” as well as “Russian parastatal entities.”

One challenging and potentially problematic aspect of the Section 241 report is that CAATSA does not define “oligarch,” nor are we aware of any relevant definition elsewhere in U.S. law or regulation.  Generally speaking, the term “oligarch” has been used in the context of contemporary Russia to refer loosely to very wealthy and politically-connected businessmen, generally with close ties to President Putin, and independent of whether the relevant individuals have necessarily engaged in illicit activity.  Given the lack of a statutory definition and the imprecise use of the term “oligarch” in public circles, the Executive Branch’s own definition will be important in setting the scope for this report.  Section 241 defines the term “senior foreign political figure” by cross-reference to the very broad definition found in the regulations of Treasury’s Financial Crimes Enforcement Network (FinCEN) — this definition includes any current or former senior officials in civilian, military, or judicial positions, or in political parties; state-owned entities and senior executives of state-owned entities; and immediate family members and close associates of any such individuals.  The requirement to identify only “the most significant” senior foreign political figures and oligarchs provides the Executive Branch with additional discretion.  Continue Reading

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.

UK MPs Seek to Designate Iran’s Islamic Revolutionary Guard Corps a Terrorist Organisation

In light of the recent protests in Iran, a UK press report has recently drawn attention to a motion – known as Early Day Motion 483 – filed in October by a Conservative Party MP to designate Iran’s Islamic Revolutionary Guard Corps (“IRGC”) as a terrorist organisation.

The motion calls upon the UK Government to include the IRGC on the list of “proscribed organisations” and to impose “punitive measures” against its individuals.  Since its filing, the motion has collected 70 signatures from MPs from various parties, including the Conservative Party, the Labour Party, the Scottish National Party, Plaid Cymru, the Liberal Democrat Party and the Democratic Unionist Party.

While Early Day Motions can be debated, most are not.  Instead they are typically used to draw attention to a particular topic or to record the views of those MPs that lend their signatures.  For example, the official UK Parliament website notes that during the 2015-2016 parliamentary session a total of 1,457 Early Day Motions were filed.  With the House of Commons back in session after the Christmas break, it remains to be seen whether Early Day Motion 483 gets debated.  Continue Reading

New Guidance Points to Potentially Aggressive Application of Secondary Sanctions on Russia

The US Departments of State (State) and the Treasury (Treasury) have, in recent weeks, issued implementation guidance on the new secondary sanctions on Russia in the Countering America’s Adversaries Through Sanctions Act (CAATSA), which became law on August 2, 2017.  For a  general discussion of CAATSA, please see our previous advisory.  This advisory addresses each of CAATSA’s Russia secondary sanctions provisions covered by the State and Treasury guidance, highlighting the significant risks that non-US companies may face under CAATSA when operating in Russia or doing business with Russian individuals or entities.

For more information, please see our advisory.

Has the International Olympic Committee Risen Above Corruption?

Steptoe’s Brigida Benitez and John London authored an article in The Maryland Journal of International Law titled “Has the International Olympic Committee Risen Above Corruption?” The article reviews the International Olympic Committee’s rules and procedures to assess their adequacy in addressing potential corruption.

More information is available here.

WorldECR Publishes Article on Coping with US Secondary Sanctions

Steptoe partners Meredith Rathbone and Brian Egan authored an article on US secondary sanctions published in WorldECR’s special report, “The Global Agenda.” The article discusses how US secondary sanctions seek to target and restrict the activities of non-US persons and explains how best to deal with those sanctions.

More information is available here.

U.S. Sanctions On Russian Sovereign Debt: Coming Soon or Already Here?

There has been a lot of chatter over the past few weeks about Russian companies loading up on debt in anticipation of increased sanctions, and even the Russian government planning a bond issuance in Chinese Yuan for the first time out of concern that western investors may be shut out of the sovereign debt market as a result of sanctions.  U.S. sanctions targeting the debt of certain Russian companies are well-known and have been in place since 2014.  But what is underlying this renewed concern about Russian sovereign debt?

To put this into context, this is not the first time that sanctions concerns about Russian sovereign debt have arisen.  Last year, US and EU authorities warned banks not to participate in a Russian sovereign Eurobond offering, with the reported rationale being that the proceeds may be diverted to sanctioned state-owned enterprises.  (There were, at the time, no sanctions in place targeting Russian sovereign debt per se.)  That sovereign Eurobond offering ultimately succeeded, and was followed by additional issuances this year, after record performances by Russian bonds and a growing share of foreign participants in that market.  Continue Reading

Limited Reopening of U.S. Visa Processing at Consulates in Russia

On December 4th, the U.S. Embassy in Moscow announced that nonimmigrant temporary visa (NIV) interviews will resume on a limited basis at the three U.S. consulates in Russia. As of December 11, 2017, the U.S. consulates in St. Petersburg, Yekaterinburg, and Vladivostok will resume visa nonimmigrant visa processing at a level described as “limited.”

This is an update to our previous post “U.S. Visa Operations across Russia Temporarily Suspended” explaining the August 21, 2017 U.S. Department of State (DOS) suspension and partial, limited, resumption of NIV operations within Russia. Since that time, nonimmigrant visa interviews in Russia have been conducted exclusively at the Embassy in Moscow leading to ongoing substantial nonimmigrant visa interview backlogs.

The reopening of the U.S. consulates in Russia for NIV interviews should help to reduce the wait time for such interviews. However, operations are below full capacity, this action will not restore appointment availability and wait times to standard levels. The waiting times are likely to continue to be measured in months, not days, until these issues are resolved.  While the resumption of services is a welcomed measure, their limited nature requires ongoing monitoring.

Travel Ban Injunction Lifted by Supreme Court

The U.S. Supreme Court has cleared the way for enforcement of President Trump’s September 24, 2017 travel ban. On December 4, 2017, the U.S. Supreme Court issued two, virtually identical, orders staying preliminary injunctions issued against the travel ban by lower courts in Maryland and Hawaii. The Court’s actions allow the September 24, 2017 edition of the travel ban to proceed while the Fourth and Ninth Circuit Courts of Appeals consider legal challenges to the ban on an expedited basis.

The travel ban at issue is the third in a series of hotly contested immigration restrictions implemented by President Trump via Executive Order (EO). The September 24, 2017 presidential travel ban proclamation is grounded in a global review of information sharing and security practices and identification of countries deemed to be “inadequate” in this regard. The broad scope global information sharing and security review was mandated by the March 6, 2017 EO travel ban.

As explained in more detail, below, the September 24 proclamation contains travel restrictions applicable to nationals of eight countries: Iran, Libya, Somalia, Syria, Yemen, Chad, North Korea and Venezuela. Challenges to the ban filed in Maryland and Hawaii resulted in partial injunctions, applicable to the listed countries, other than North Korea and Venezuela. The injunctions limited the ban’s restrictions to foreign nationals without a bona fide relationship with certain persons (family) or entities in the U.S. Thus, the injunction provided a reprieve to eligible nationals of Iran, Libya, Somalia, Syria, Yemen, and Chad, if they could demonstrate a qualifying U.S. family or entity relationship. The Supreme Court’s December 4th order removes this injunction and, thereby, allows the proclamation to move forward in full force without a bona fide relationship exception.    Continue Reading