Halfway through a six-month nuclear deal between Iran and major world powers that was meant to allow time to reach a comprehensive agreement, the Iranians have seen little in the way of a boost from the sanctions relief they had been expecting, trade lawyers and diplomatic analysts say.
Whether Iran’s disappointment means that it will be more or less motivated to negotiate a permanent deal on its disputed nuclear program by the July 20 deadline remains unclear.
“Iran has become kryptonite for banks and shippers and insurance companies,” said Farhad R. Alavi, a sanctions law specialist at Akrivis, a Washington-based international law firm that has fielded numerous inquiries about doing business with Iran since the temporary accord took effect. Though the accord may have served as a “teaser” to Iran, he said in a telephone interview, foreign business interest has remained extremely limited.
“Is a bank in Germany going to revamp its compliance policies when the law could be changed and reverted in six months?” he said. “I think what we’ve seen is that it’s not created that breakthrough. Nobody is making that substantial step for increased economic ties between Iran and the rest of the world.”
He said they fear running afoul of the complicated rules established by the Treasury Department’s Office of Foreign Assets Control, the government’s primary enforcer of economic sanctions against Iran. Violators run the risk of severe penalties, including exclusion from the U.S. market.
What the Iranians and others are learning, Flicker said, is that “at the end of the day, the real hammer is the U.S. financial system.”
“There’s nobody who wants to touch an Iranian financial transaction unless they have a foursquare OK” from the assets control office.
The temporary accord, which took effect Jan. 20, froze much of Iran’s nuclear energy activities and obliged the country to reduce its stockpile of enriched uranium fuel that, with further enrichment, could be used to make atomic bombs, even though Iran insists that its nuclear work is for purely civilian purposes.
In return, the West, which has never trusted Iran’s claims of peaceful nuclear intent, eased some of the onerous sanctions imposed in recent years, including granting access, in staggered amounts, to $4.2 billion of the approximately $100 billion of Iranian money impounded in foreign banks.