Iran: JCPOA

Updated: Jan 13

Date of last update: 01/13/2020



On 14 July 2015, China, France, Germany, Russia, the United Kingdom, the EU and the United States and the Islamic Republic of Iran Iran) reached an agreement on a Joint Comprehensive Plan of Action (JCPOA). Prior to that trade with Iran was subject to restrictions derived from United Nations Security Council (UNSC) sanctions between 2006 and 2010.


What is the JCPOA all about?

The JCPOA dictates limitations to Iran’s nuclear programme as well as increased monitoring and transparency in exchange for the relief of existing international sanctions, including on trade. In response to the JCPOA, the UN began lifting some sanctions in January 2016. The JCPOA and its implementation open up the possibility of a gradual but substantive reengagement with Iran at different levels, including bilateral trade.


EU Sanctions regimes with Iran

Following a confirmation by the International Agency for Atomic energy that Iran had fulfilled its nuclear obligations under JCPOA, all EU economic and financial sanctions taken in connection with the Iranian nuclear programme were lifted in January 2016.

Nonetheless, some sanctions and restrictions remain, including: the arms embargo, sanctions related to missile technology, restrictions on certain nuclear-related transfers and activities, provisions concerning certain metals and software which are subject to an authorisation regime and some other related listings.


More information on EU sanctions

INSTEX


European efforts to ensure that Iran can keep trading in spite of the sanctions have had little impact. On 17 May 2018 the European Commission announced its intention to implement the blocking statute of 1996 to declare the US sanctions against Iran null and void in Europe and ban European citizens and companies from complying with them.

“In light of the continuous European support for the agreement and the ongoing efforts to implement the economic part of it and to facilitate legitimate trade between Europe and Iran, we are now in the process of becoming shareholders of the Instrument in Support of Trade Exchanges (INSTEX) subject to completion of national procedures,” a joint statement of six EU countries said. INSTEX was created as a special purpose vehicle to help EU companies do business with Iran and facilitate non-USD transactions to avoid breaking US sanctions against the country (see below). It will function as a diplomatic shield allowing the exchange of goods without requiring direct transfers of money between Iran and EU companies.


US Sanctions regimes with Iran

President Donald Trump withdrew the US from the JCPOA in May 2018 and secondary sanctions on any company, including European ones, doing business with Iran. The country now applies more stringent economic, trade, scientific and military sanctions against Iran. U.S. economic sanctions are administered by the U.S. Office of Foreign Assets Control.


In July 2017, most Congressional Democrats and Republicans voted in favor of the Countering America's Adversaries Through Sanctions Act (CAATSA) that grouped together sanctions against Iran, Russia and North Korea.


Iranian financial institutions are barred from directly accessing the U.S. financial system, Several Iranian banks were prohibited from transferring money to or from United States banks and were placed on the OFAC Specially Designated Nationals List (SDN List). The SDN List is a directory of entities and individuals who have been prohibited from accessing the U.S. financial system.


Abandoning JCPOA obligations

After the US withdrawal, Tehran began gradually abandoning its JCPOA obligations. In May 2019, Iran warned it would gradually abandon its nuclear commitments every 60 days. Iran announced publicly in November 2019 it would resume low-grade uranium enrichment at its underground Fordow nuclear plant, a site ringed by anti-aircraft guns, and this was confirmed by findings of the latest International Atomic Energy Agency (IAEA). The UN’s nuclear watchdog said in a recent report that it had detected uranium particles at an undeclared site in Iran, revealing even more cracks in the accord.

The report further concluded that Iran had prepared a new facility for testing enrichment centrifuges – effectively violating the provisions laid down in the 2015 nuclear accord.

Latest developments in 2020

The situation became even tenser in the early days of 2020 after the US announced it killed Qassem Soleimani, the head of the Iranian Revolutionary Guard Corps-Quds Force, in an airstrike. Iran's top diplomat called the incident an act of "international terrorism."

Just days after the strike that killed Soleimani, Iran announced it would no longer comply with the JCPOA, effectively abandoning the deal altogether. 


US calls to abandon JCPOA, EU remains committed


The US called the JCPOA very defective and would "expire shortly anyway, and gives Iran a clear and quick path to nuclear breakout". The US President said: "Iran must abandon its nuclear ambitions and end its support for terrorism. The time has come for the United Kingdom, Germany, France, Russia, and China to recognize this reality. They must now break away from the remnants of the Iran deal -– or JCPOA" Read more


on 12 January 2020, France, Germany and the UK said: “We remain committed to the JCPoA and to preserving it; we urge Iran to reverse all measures inconsistent with the agreement and return to full compliance” Read more


More information on the JCPOA

JCPOA - Last updated on 23 January 2016


Sources:

1. https://www.euractiv.com/section/global-europe/news/six-european-countries-join-eu-iran-financial-trading-mechanism-instex/

2 https://www.cnbc.com/2020/01/07/irans-nuclear-deal-cant-be-saved-by-europe.html

3 https://www.dw.com/en/eu-mechanism-for-trade-with-iran-now-operational/a-49407662

4 https://en.wikipedia.org/wiki/United_States_sanctions_against_Iran

5 https://www.whitehouse.gov/briefings-statements/remarks-president-trump-iran/

6 https://www.gov.uk/government/news/e3-statement-on-the-jcpoa-12-january-2020

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