The Iran Nuclear Arms Deal is a landmark, but this deal has been heavily criticized due to the United States economic penalties toward Iran. The circumstances in Iran has put the United States in a difficult situation as they have had to rely on sanctions to deter Iranian actions, but Iran has complied with the deal and expects more of an economic boom. This has led other countries in Europe and Asia uncertain whether to deal in legal business with Iran due to United States laws in sanctions and financial regulations.
The Iran Nuclear Deal stated that Iran would sacrifice two-thirds of its ability to enrich uranium, which is used to make the core of a nuclear bomb, and to be monitored by the International Atomic Energy Agency (IAEA).[1] Iran would agree to IAEA inspectors monitoring its nuclear plants and other facilities. Once the IAEA has confirmed that Iran has taken these steps, America would lift nuclear-related economic sanctions.[2] These sanctions include oil embargos and financial restrictions.[3] By lifting these economic sanctions, it was estimated $100 billion of frozen Iranian assets would be released. Iran would remain subject to a United Nations arms embargo for five years.[4]
The United States government has engaged in foreign trade with Iran even though it has forbidden most American commerce with Iran.[5] The United States implements sanctions through the Treasury Department Office of Foreign Assets Control (OFAC).[6] These sanctions apply to United States companies, and anyone in the United States.[7] If companies in the Untied States were to trade with Iran they could be fined and prosecuted for civil violations that do not require a showing of intent or knowledge, and are punishable by heavy penalties.[8]
These sanctions and regulations have caused uncertainty for Asian and European government and companies doing legal business due to the fear of being prosecuted by the United States.[9] Since United States banks can not do business in Iran, there is a prohibition of transactions in dollars.[10] This is a large issue as it is a main business currency through the United States financial system.[11] This causes international banks hesitant in processing Iranian transactions, due to fear that the United States prosecuting these banks because of sanctions they have implemented in Iran.
Even though some sanctions have been lifted it is not clear what type of trading is still allowed with Iran.[12] Furthermore, Iran’s action in the area is seen as hostile. They continue to test ballistic missals.[13] The United States fears that these ballistic missals could be used one day to deliver a nuclear payload.[14] Even though these tests are not covered by the nuclear deal the United States has responded by placing sanctions on Iranian business and individuals but not on the nation.
United States sanctions upon Iran have caused fear of prosecution to business and banks that deal with Iran. This in some ways has caused Iran not to see the large economic boom they expected. Due to Iran’s continued ballistic testing in the area, and fear that these missals could one day carry a nuclear payload, the United States has sanctioned Iran even more. This causes the United States to be in a precarious situation as one of the reasons to the nuclear deal was to help Iran get its economy back on track, but at the same time the United States must implement sanctions on hostilities, and walking away from the deal would cause further destabilization in the area.
[1] David Blair, A Summary of the Iran Nuclear Deal, (Jul. 14, 2015), http://www.telegraph.co.uk/news/worldnews/middleeast/iran/11739214/A-summary-of-the-Iran-nuclear-deal.html
[2] Id.
[3] Id.
[4] Id.
[5] U.S. Census Bureau, Trade in Goods with Iran, (Dec. 12, 2015), https://www.census.gov/foreign-trade/balance/c5070.html
[6] Alacra Compliance Primer, Enforcement Actions for U.S. Sanctions Violations Offer Lessons for Compliance, (Sept. 14, 2014), https://www.alacra.com/alacra/help/alacracomplianceprimer3.pdf
[7] Id.
[8] Id.
[9] Matthew Lee, Analysis: Iran Nuclear Deal Puts U.S. in Bind Amid Criticism, (Apr. 11, 2016), http://abcnews.go.com/Politics/wireStory/analysis-iran-nuclear-deal-puts-us-bind-amid-38301740
[10] PRESSTV, Banks still afraid of US fines to process Iran deals, (Mar. 23, 2016), http://www.presstv.com/Detail/2016/03/23/457187/Banks-still-afraid-of-US-fines-to-process-Iran-deals/
[11] Id.
[12] Tom Arnold and Jonathan Saul, Iranians Exasperated as U.S. sanctions frustrate deal making, (Mar. 22, 2016), http://www.reuters.com/article/us-iran-trade-finance-idUSKCN0WO1Y3
[13] Fox News, Iran to US: Missile Program “not open to negotiation,” (Apr. 10, 2016), http://www.foxnews.com/us/2016/04/10/iran-says-missile-program-is-not-negotiable.html
[14] Id.