Iran deal is implemented as world drops sanctions

Implementation of the Joint Comprehensive Plan of Action marks Tehran's reentry into the global marketplace after decades cast in pariah status.

By
January 17, 2016 00:10
us iran flag

A staff member removes the Iranian flag from the stage during the Iran nuclear talks in Vienna, Austria July 14, 2015. (photo credit: REUTERS)

 
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WASHINGTON -- World powers dropped sanctions on Iran after international monitors concluded the first phase of their landmark nuclear deal complete, marking the formal commencement of the accord, or "Implementation Day," foreign ministers declared in Vienna on Saturday.

Implementation of the Joint Comprehensive Plan of Action (JCPOA) reached last summer brings with it Tehran's reentry into the global marketplace after decades of pariah status. The Islamic Republic will have full and immediate access to tens of billions of dollars in unfrozen assets, a surge in business opportunities, and be reconnected to the Society for the Worldwide Interbank Financial Telecommunications, or SWIFT, the world's largest payments network for financial institutions.

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Tehran stands to gain the most from the end of secondary US and EU sanctions imposed in 2010, which penalized non-US entities conducting business in Iran by cutting them out of the US financial sector. Tehran will particularly benefit from relief on its transportation and energy sectors, including the end of restrictions on the movement of its oil revenue and on its ability to purchase new aircraft.

Indeed, Iran's transportation minister said on Saturday that, immediately upon implementation of the JCPOA, Tehran will have a new deal signed at the ready to purchase 114 Airbus planes.

But while the country will benefit from this new windfall, the Islamic Republic– which relies heavily on its petroleum industry, roughly 20 percent of the country's gross domestic product– is still expected to suffer economically this year due to the steep and steady drop in oil prices worldwide, now below $30 a barrel. Stock indexes responded to the pending development on Friday with a major selloff in the oil and gas sector, anticipating a further slide in prices with the reintroduction of Iranian crude oil onto the market.

And US sanctions unrelated to the nuclear file– targeting Iran's human rights abuses and its facilitation of terrorism worldwide– will remain and place. A new Republican effort in Congress is under way to strengthen those sanctions, while Rouhani and Obama administration officials warn that the JCPOA does not allow for the passage of expired nuclear-related sanctions under a different name.

As a further sign of goodwill, Iran announced on Saturday it had freed four US citizens from its custody, including Washington Post reporter Jason Rezaian, in exchange for the freedom of four Iranian citizens held by the US.

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US State Department officials long said the release of its citizens from Iran– who faced dubious charges and delayed, secret trials– was a separate matter from the nuclear issue. But US efforts to win their release were in tandem with the nuclear negotiations, which marked unprecedented communication between the two countries.


The physical swap of those detained took place in Oman, according to US officials. Both Washington and Tehran thanked the government of Switzerland for its active facilitation of the talks.

"Through a diplomatic channel that was established with the focus of getting our detained US citizens home, we can confirm Iran has released from imprisonment four Americans detained in Iran," one US official said. "Iran has also committed to continue cooperating with the United States to determine the whereabouts of Robert Levinson."

In addition to Rezaian, who was taken into custody in 2014, the other three Americans released include former US Marine Amir Hekmati, accused of espionage; Saeed Abedini, a pastor, jailed in 2012; and Nosratollah Khosravi-Roodsari. The State Department's Brett McGurk, special presidential envoy for the global coalition to counter Islamic State, led the led the US diplomatic effort.

Separate from the formal negotiated swap, reached over the course of fourteen months of talks, a fifth American– a student named Matthew Trevithick– was released by Iran over the weekend.

In exchange, seven Iranian citizens were released from US custody having been held and charged for violating US sanctions law. Their names, according to the English language service IRNA, are Nader Modanlo, Bahram Mechanic, Khosrow Afghahi, Arash Ghahreman, Tooraj Faridi, Nima Golestaneh and Ali Sabouni.

Mechanic, Faridi and Afghahi received pardons from US President Barack Obama, after allegedly shipping electronics to Iran. Mechanic and Afghahi were being held without bail in Houston, while Faridi was out on bail. All three are Iranian-American dual citizens and had pleaded not guilty.

A State Department official said the US had settled to release these particular seven men after an exhaustive investigation into the backgrounds of each. The administration determined that none had links to terrorism, the official said.

The US also agreed to end "red notices" for the arrest of fourteen Iranian nationals by Interpol "for whom it was assessed that extradition requests were unlikely to be successful," a senior State Department official said.

"The timing of implementation day is not related at all to the American citizen release issue," the official added.

But the timing of their release is directly related to a delay of new US sanctions on Iran over its recent test of ballistic missiles, which violated existing international law, officials familiar with the matter confirmed on Saturday.

As the White House prepared over the winter holiday season to announce new sanctions measures, Iran's foreign minister, Javad Zarif, threatened US Secretary of State John Kerry that doing so could derail the prisoner exchange negotiations. The US acquiesced, backing down from the announcement last minute without immediately offering explanation.

"We do expect to issue designations with respect to the recent ballistic missile launches, which are in violation of Security Council resolutions," said a senior administration official, declining to specify a timeline. "The Iranians will always object to those sanctions."

In a call with reporters, the official defended the prisoner swap, adding: "The fact of the matter is, we had an opportunity to secure their release."

Implementation day was never a formal date on the calendar. But Iran's president Hassan Rouhani worked aggressively to expedite the process, faced with parliamentary elections next month.

In order to reach implementation of the deal, Iran was required to take a series of steps toward dismantling the infrastructure of its nuclear program. Among them, Tehran was required to disconnect and store its uranium-enriching centrifuges; export its enriched uranium stockpile; neuter its plutonium reactor at Arak; and introduce several new international monitoring programs to its facilities.

The UN's International Atomic Energy Agency, the organization tasked with monitoring the agreement, formally confirmed on Saturday that Tehran had complied with its first set of commitments, allowing for implementation to proceed.

Tehran "has completed the necessary preparatory steps to start the implementation," said IAEA director-general Yukiya Amano. "We have come a long way."

Obama took the technical step of revoking ​four executive orders, as prescribed by the JCPOA, and amending several others. Implementation Day, he said in the new executive order, "marks a fundamental shift in circumstances with respect to Iran's nuclear program."

Estimates of the value of sanctions relief range from $150 billion to as low as $50 billion, if one accounts for assets Iran has already obligated to creditors, primarily China, in pre-existing trade agreements.

"​We assess that Iran will be able to access roughly $50 billion" in liquid assets, one senior administration official said on Saturday night, noting that ​Iran remains "in a significant economic hole."

Back in Vienna where the deal was first struck, Zarif met with his US and EU counterparts Federica Mogherini and John Kerry. All three leaders hailed implementation day as a testament to the power of diplomacy.

In a joint statement with Zarif, Mogherini once again hailed the agreement as "both strong and fair."
 
"The EU has confirmed that the legal framework providing for the lifting of its nuclear-related economic and financial sanctions is effective," she said.

"The IAEA now has visibility and accountability of the entire supply chain that supports Iran's nuclear program," Kerry said, praising the development and announcing the lifting of US sanctions. "Iran has undertaken significant steps that many, and I mean many, doubted would ever come to pass."

The release of five Americans "unjustly detained" by Iran, Kerry added,  has reminded the world once again "of diplomacy's power to tackle significant challenges."

The JCPOA seeks to cap Iran's nuclear program for a finite period, ensuring it is peaceful in nature, in exchange for sanctions relief. While the US, Russia, China, Britain, France and Germany negotiated the agreement with Iran, regional powers, including Israel, Saudi Arabia and the Gulf states, oppose the deal, warning that it legitimizes Iran as a nuclear-threshold state.

In response to the the announcement, Prime Minister Benjamin Netanyahu's office released a statement Saturday evening warning that Iran has not given up on its ambition in attempting to obtain a nuclear weapon and works to destabilize the Middle East while spreading terrorism across the region.

"Even after the signing of the nuclear agreement, Iran has not abandoned its goal of trying to attain a nuclear weapon," the statement reads. "Iran continues to work to destabilize the Middle East and spread terrorism around the globe in violation of its international obligations," it added.

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