Official Washington is abuzz this morning with news that a “historic” deal had been reached with Iran over its nuclear program. I had several clients that reached out asking what does it all mean? What frozen assets are being released? Will U.S. economic sanctions continue to be fully enforced?
Frankly, it is mostly much to do about nothing. As Yleem wrote in numerous pieces recently, and one to come later today, the Iranians use these talks to manipulate public opinion at home and abroad. A sneak peak of her piece:
President says: “we have halted the progress of the Iranian nuclear program…” About as credible as: “you can keep your doctor.” — Yleem Poblete PhD (@YleemPoblete) November 24, 2013
For U.S. companies and U.S. persons that need to deal with the real-world day-to-day compliance realities, best I could tell from the preliminary materials released about the agreement, U.S. sanctions remain in full force.
However, some U.S. industries may benefit from this deal, including aerospace and several airline engine spare part manufacturers. The agreement allows for a partial easing of sanctions for:
License safety-related repairs and inspections inside Iran for certain Iranian airlines.
Then there are these clauses that may benefit some U.S. entities as well:
Suspend certain sanctions on gold and precious metals, Iran’s auto sector, and Iran’s petrochemical exports, potentially providing Iran approximately $1.5 billion in revenue.
The vast majority of Iran’s approximately $100 billion in foreign exchange holdings remain inaccessible or restricted by our sanctions.
Other significant parts of our sanctions regime remain intact …
In other words, it appears that there is going to be some minimal tinkering with U.S. sanctions. We await an update from the Treasury Department Office of Foreign Assets Control (OFAC). For companies that are allowed to engaged in transactions with Iran, lawyers will require a little more guidance than what is available right now.
If there is one sliver of good news coming from all of this is that the agreement states that new nuclear sanctions will be not imposed during the next six months “to the extent permissible within their [the P5] political systems.” These magic words may come in handy during the next few weeks, especially Washington, DC.
Judging from the response this morning from numerous Members of Congress, I strongly doubt this deal with pass the political muster test. News accounts that the Administration had been meeting with Iranians in secret for well over a year did not appear to go over very well with several key Members of Congress.
From a corporate compliance standpoint, this announcement creates a whole lot of confusion in the marketplace. It is one of many excellent reasons why these political sideshows with state sponsors of terrorism are a bad idea. Details matter in this business. A lot. For this and this alone, these quixotic exercises should never be undertaken with countries like Iran. It will also surely lead to increased regional tensions with Israel and other neighbors who will not sit idly by on the good word of the P5+1.
The Iranian regime wants a nuclear bomb and it is going to secure one sooner or later. This agreement is just a time delayer. It is a reward to numerous U.S. allies who owe Iran money for crude oil and need a lot more it. It may also allow Iran, with U.S. help, to put more planes in the air to do who knows what, maybe visit pals in Caracas or Havana or Managua. Most importantly, for the first time ever, the Iranians have the green light to keep refining uranium.
The free world loses.