New Sanctions Could Hinder European Efforts to Save JCPOA

EghtesadOnline: The new American sanctions on the Central Bank of Iran will most likely have a negative impact on European initiatives to salvage the fraying 2015 nuclear deal, an analyst said.

News ID: ۷۸۴۸۸۷

23 September 2019

The United States has been imposing economic restrictions on Iran since it withdrew last year from the nuclear agreement, known as the Joint Comprehensive Plan of Action, arguing that it is incomprehensive and should be renegotiated.

In its latest move, Washington sanctioned CBI and the National Development Fund of Iran on Friday, following last week's attacks on oil facilities in Saudi Arabia that Riyadh and US officials have blamed on Iran. The latter has denied any involvement.

European parties to the deal, on the other hand, have been trying to defuse tensions and keep JCPOA alive through mechanisms to keep Iran's international trade afloat, Financial Tribune reported.

"Following these new restrictions, European plans such as INSTEX [Instrument in Support of Trade Exchanges] and a $15 billion credit line would have no chance of becoming operational," Amir Ali Abolfath, an expert on American affairs, said in an interview with ISNA.

The central bank had already been sanctioned by the US for funding Iran's nuclear program, but in the new designation, CBI is sanctioned on charges of funding terrorist groups, which according to the US Treasury Department's statement include the Islamic Revolution Guards Corps, the Quds Force, Lebanon's Hezbollah and the Yemeni Houthis.

Consequently, individuals and entities having relations with CBI would not only be liable to charges of helping Iran's nuclear program, but also accused of contributing to terrorism.

Another Risk

That would be an impediment to the efforts of European financial institutions trying to offset the impacts of US sanctions on Iranian economy.

"In case of transaction with the Central Bank of Iran, European banks will be accused of cooperation with and support of terrorist groups," Abolfath said.

INSTEX is a financial mechanism designed and launched by Europe to facilitate trade with Iran on a non-dollar basis, but it has not been able to meet Iran's concerns yet.

The $15 billion credit line is also part of a European proposal to compensate for Iran's loss of oil revenue due to American sanctions.

The analyst pointed out that the new restriction will also negatively affect the import of essential goods such as food and medicine.

Abolfath also noted that with the new designation, CBI could remain on the list of sanctions "until an indefinite time" because it is enforced under the counterterrorism authority and the US president is not authorized to suspend or revoke them.

"Decisions in this regard are made by the US Congress," he said.

The analyst noted that these sanctions will remain in place even after the likely departure of the current US president and the arrival of a new president who would possibly rejoin JCPOA.

“The president can only request a 30-day suspension of the sanctions for specific reasons outlined in a letter to the US Congress,” he said.

Abolfath said it is highly unlikely that the US Congress could agree to the lifting of sanctions, given the predominant anti-Iran attitude of its members.