With a May 12 deadline looming for sanctions waivers, US President Donald Trump is faced with an imminent decision whether to continue US implementation of the Joint Comprehensive Plan of Implementation (JCPOA) and remain part of the nuclear deal with Iran and the P5+1 governments (the five permanent members of the United Nations Security Council, plus Germany). In Iran Sanctions and the Fate of the JCPOA: What’s at Stake if President Trump Fails to Renew the Sanctions Waivers? author David Mortlock, nonresident senior fellow at the Atlantic Council’s Global Energy Center, explains that while there is still time for US diplomats to reach some kind of accord with their European counterparts before May 12, President Trump is reportedly unsatisfied with the results so far. In the absence of a sufficient agreement with Europe, the president clearly appears prepared not to renew the waivers come May 12, and to reimpose sanctions that could impact an array of activity by private companies, largely outside the United States.
Key Recommendations:
If the president fails to renew the waiver for Section 1245 of the 2012 National Defense Authorization Act (NDAA) on May 12, the administration should implement that choice carefully, to avoid disrupting global markets and to maintain the credibility of US economic sanctions. The administration should consider the following steps:
The administration should impose a reasonable timeline on the effective date for new sanctions. If the president refuses to renew the waiver for NDAA 2012, countries should be given at least 180 days to reduce their purchases of Iranian oil before sanctions are threatened against their banks for dealing with the Central Bank of Iran.
If the president refuses to renew the waivers across the board, and pulls out of the JCPOA entirely, he should issue a new executive order that provides a clear roadmap for foreign companies that describes sanctionable behavior in the energy, shipping, and insurance sectors, and outlines the potential sanctions the administration could impose.
Even if the president does not renew the waivers, he should maintain General License H and wait to reinstate the names removed from the SDN List in January 2016. If the United States walks away from the deal and develops a new strategy with respect to Iran, it will need to maintain both carrots and sticks. General License H and the SDN List provide at least some incentive for continued constructive engagement with Iran.
Finally, and most importantly, any effort to reimpose sanctions must be only one part of a coherent and comprehensive strategy with respect to Iran. President Trump has suggested that reimposing these sanctions would be a panacea for ending Iran’s support for international terrorism, assistance for President Bashar al-Assad in Syria, and meddling in Yemen. However, the effectiveness of these sanctions relies largely on the cooperation of US allies and their companies. As has been said many times by experts in this field, sanctions are a tool. Whatever steps the president takes, or refuses to take, in May, he should explain how he intends the deployment of this tool to successfully achieve those goals.