Sanctions on Iran: Long road ahead for lifting UN, EU, US embargoes

“Iran’s full compliance with its international nuclear obligations would open the door to its receiving treatment as a normal non-nuclear-weapon state,” the U.S. State Department declares on its website about Washington’s phased policy of “reversible sanctions relief.”

Many political unknowns govern how quickly the door opens. Among them are technical issues about lifting a decades-old system of sanctions that must be hammered out by June 30.

Threats of stronger sanctions have long been used to induce Iran into making concessions in negotiations with the West. Put in place to thwart Iran's development of atomic weapons, critics argue the sanctions have caused serious problems for Iran’s people and done little to halt a bomb-making scheme that may or may not exist.

Originating in the aftermath of the 1979 Islamic Revolution, damaging sanctions on Iran are controlled by world powers at the national and supranational levels. The United Nations and European Union rules may be simplest to lift, as compared with those imposed by the U.S. — especially those subject to Congressional approval.

The oldest regulations were slapped directly on Iran’s government, and in 1995, American sanctions expanded to include any firms dealing with the regime in Tehran. Iran’s long-standing nuclear program was first revealed to the public in 2002, before the supreme leader reportedly nixed weaponization efforts the following year. But the “inter-locking matrix of sanctions” that today forms a stranglehold around Iran’s economy was enacted between 2006 and 2012, as punishment for the country’s refusal to suspend uranium enrichment following a damning IAEA report on the country’s non-compliance.

Freezing assets belonging to key figures and companies tied to the nuclear program came first. In 2007, a U.N. arms embargo took effect with Resolution 1747. Then the bulk of subsequent U.S. sanctions were applied to the oil, gas and petrochemical sectors, in addition to insurance companies, shipping firms, banks and the Revolutionary Guard Corps. By 2010, the U.N. had passed travel bans, and that year Resolution 1929 sanctioned all activities related to Iran’s ballistic missile program. There’s a long list of Iranian entities with whom all external business is forbidden.

One of the major sticking points of the framework deal in Lausanne, Switzerland, was the pace at which the Security Council sanctions will be eased. “All past UN Security Council resolutions on the Iran nuclear issue will be lifted simultaneous with the completion, by Iran, of nuclear-related actions addressing all [emphasis added] key concerns,” said a State Dept. statement that addressed the general parameters.

“Security Council sanctions and resolutions don’t perform much work other than providing rhetorical cover for national-level sanctions,” said Tyler Cullis, a legal analyst at the National Iranian American Council, a Washington D.C.-based advocacy group for the Iranian-American community. “The U.N. has symbolic value that the two sides are competing over.”

However, Cullis said the speed of relieving U.N. sanctions was not the only variable for the world body, where the Russians and Chinese have been closer to the Iranian position on this issue, preferring that all sanctions be immediately thrown out when an accord is reached. The U.S., U.K., France and Germany have been arguing for sanctions to be rolled back in parallel to steps taken by Tehran in line with the deal. Western powers advocated for a mechanism by which sanctions “could be re-imposed” quickly in the event of “significant non-performance” by Iran.

But the process is in such early stages that diplomats have been hesitant to comment on possible outcomes. A spokesman for the government of Spain, which chairs the Security Council committee overseeing Iran sanctions, said that it was too early to speculate on the results of negotiations. Jordan, which holds the rotating presidency of the Security Council for April, also declined to comment.

“U.S. sanctions are the ones that the Iranians care about the most,” Cullis said. He said President Barack Obama has the power to make substantial changes to the U.S. sanctions on Iran, including suspending them for a time-limited period, licensing otherwise-prohibited activities or transactions, and taking persons or entities off the list of the “specially designated nationals.”

“It’ll be done coincident with whatever actions Iran has to take. It could take several months before the U.S. starts to formally relieve sanctions.” Official diplomatic language published Thursday appears to confirm that reality: “U.S. and E.U. nuclear-related sanctions will be suspended after the IAEA has verified that Iran has taken all of its key nuclear-related steps. If at any time Iran fails to fulfill its commitments, these sanctions will snap back into place.”

Regardless, on the domestic front, Obama faces major Congressional dissent.

Proposed Senate legislation called the Corker-Menendez bill, aimed at giving Congress more authority over the Iran deal, strives to create a two-stage process whereby Congress could review any agreement with Iran for a 60-day period, then decide whether to approve the deal. But without a supermajority, Congress won’t have the power to add new sanctions. 

Across the Atlantic, EU sanctions will be removed relatively easily, since there is more widespread agreement among the bloc’s dominant countries on the deal, Cullis said.

“The EU will terminate the implementation of all nuclear-related economic and financial sanctions,” a joint statement by EU High Representative Federica Mogherini and Iranian Foreign Minister Javad Zarif said, after Iran fulfills “its key nuclear commitments.”

This would include lifting the oil embargo, which could help double Iran’s petroleum exports within a year, providing significant economic benefit. Sanctions relief implemented by nations ranging from China and Japan to India and Canada would likely follow suit.

“Each of the sanctions has its own logic and legal ways of untangling,” said Abbas Milani, director of the Iranian Studies program at Stanford University. “But the sanctions on the sale of oil have to go first.”

“Lifting the entire sanctions regime could take longer than 12 months,” Milani said.

In 2013, Iran was granted $7 billion in sanctions relief after agreeing in an interim nuclear deal to curb uranium enrichment and allow enhanced inspections. More than $4 billion in frozen assets were also made available. However, this number pales in comparison to the approximately $100 billion mostly held in Asian banks that Iran would be able to repatriate once it can again access the international wire transfer system known as SWIFT.

Despite low world oil prices, Iran stands to gain up to $60 billion from foreign direct investment in its petroleum sector. Eased trade rules on many sectors and for foreign companies that no longer have to fear the consequences of doing business with Iran could also give a quick boost Iran's economy. Domestically, Iran hopes to lower rampant inflation, curtail consumer reliance on the black market and repair ailing airplanes, among other things. Meanwhile, U.S. exporters are said to have lost out on revenues to the tune of $175 billion over the last two decades of all but nonexistent trade with Iran.

While Iran will not be able to import nuclear-related goods for years, the prospect of sanctions relief, even at a more incremental rate than Tehran wants, will anger conservative Republicans, pro-Israel activists and regional rivals such as Saudi Arabia. However, optimists continue to see encouraging signs of detente, encouraged by the 2013 election of reformist Iranian President Hassan Rouhani.

“The U.N. sanctions get a lot of attention, but I believe it’s the secondary U.S. sanctions and the EU's listing of certain Iranian banks which have had the most significant impact on Iran,” said Erich Ferrari, a D.C.-based attorney who focuses on issues involving the Office of Foreign Assets Control.

“But there is still the issue of Iran's alleged support of groups deemed by the U.S. and others of being terror organizations, Iran's actions being perceived as underlying stability in the Middle East and Iran's human rights record at home,” Ferrari told Al Jazeera. “For those reasons, the U.S. will maintain that some level of sanctions need to remain in place.”