Iran Sanctions | Released: 02 Jun 2018

The multilateral nuclear accord (Joint Comprehensive Plan of Action, or JCPOA) provided Iran broad relief from U.S., U.N., and multilateral sanctions on Iran's civilian economic sectors, including U.S. secondary sanctions (sanctions on foreign firms that do business with Iran). On January 16, 2016, upon International Atomic Energy Agency (IAEA) certification that Iran had complied with the stipulated JCPOA nuclear commitments, U.S. Administration waivers of relevant sanctions laws took effect, relevant executive orders (E.O.s) were revoked, and corresponding U.N. and EU sanctions were lifted. Remaining in place were a general ban on U.S. trade with Iran; and U.S. secondary sanctions imposed on Iran's regional "malign activities," its human rights abuses, its efforts to acquire missile and advanced conventional weapons capabilities, and the Islamic Revolutionary Guard Corps (IRGC) and affiliates. Some additional sanctions on these entities and activities were made mandatory by the Countering America's Adversaries through Sanctions Act (CAATSA, P.L. 115-44), which also increases sanctions on Russia and North Korea. On May 8, 2018, President Trump announced that the United States would no longer participate in the JCPOA and that all U.S. secondary sanctions suspended to implement the JCPOA would be reimposed. There is to be an allowed "wind-down period" of a maximum of 180 days (November 4, 2018), at which time foreign entities that violate the applicable U.S. laws might be penalized. U.S. licenses for the sale by Airbus and Boeing of commercial aircraft to Iran Air and other Iranian airlines are being revoked. Under U.N. Security Council Resolution 2231, nonbinding U.N. restrictions on Iran's development of nuclear-capable ballistic missiles and a binding ban on its importation or exportation of arms remain in place for several years. However, Iran has continued to support regional armed factions and to develop ballistic missiles despite the U.N. restrictions, and did so even when strict international economic sanctions were in place during 2010-2015. The reimposition of U.S. secondary sanctions will likely harm Iran's economy, but the degree to which it does so will depend on the extent to which foreign governments and companies cooperate with the reimposed sanctions. During 2012-2015, Iran's economy shrank by 9% per year, crude oil exports fell from about 2.5 million barrels per day (mbd) to about 1.1 mbd, and more than $120 billion in Iranian reserves held in banks abroad were restricted. JCPOA sanctions relief has enabled Iran to increase its oil exports to nearly presanctions levels, regain access to foreign exchange reserve funds and reintegrate into the international financial system, achieve about 7% yearly economic growth, attract foreign investments in key sectors, and buy new passenger aircraft. The relief from sanctions on Iran's most vital sectors contributed to Iranian President Hassan Rouhani's reelection in the May 19, 2017, vote. Yet, perceived economic inequities and grievances constituted a key component of the widespread unrest in December 2017-January 2018. Should the reimposition of U.S. sanctions harm Iran's economy significantly, there is substantial potential for Iranian leaders to decide to cease participating in the JCPOA.