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Iran Sanctions - September 2016

Kenneth Katzman

Congressional Research Service Report RS20871

Congressional Research Service, revised edition Sept. 21, 2016.

The comprehensive nuclear accord, i.e. the Joint Comprehensive Plan of Action, or JCPOA, finalized on July 14, 2015, provides Iran broad relief from U.S., U.N., and multilateral sanctions on Iran’s energy, financial, shipping, automotive, and other sectors. Sanctions were suspended or lifted upon the International Atomic Energy Agency IAEA certification on January 16, 2016, that Iran had complied with the stipulated nuclear dismantlement commitments under the agreement (Implementation Day). Remaining in place are  secondary sanctions on foreign firms that have been imposed because of Iran’s support for terrorism, its human rights abuses, its interference in specified countries in the region, and its missile and advanced conventional weapons programs. Most sanctions that apply to U.S. companies, including regulations barring transactions between U.S. and Iranian banks, remain in place. U.N. restrictions on Iran’s development of nuclear capable ballistic missiles and its importation or exportation of arms remain in place for several years.
During 2010 to 2013, sanctions significantly harmed Iran’s economy and contributed to Iran’s decision to accept the JCPOA. Sanctions and sanctions relief have contributed to the electoral success of Iran’s President, Hassan Rouhani. Sanctions relief gives Iran the option of resurrecting its civilian economy as well as expanding its regional influence. Iran is able to freely export crude oil and to be paid directly for it and for other goods with hard currency. Iran’s banks are being reintegrated into the international financial system and Iran has full access to its hard currency reserves held abroad. The JCPOA contains no restrictions on how Iran can utilize its funds. Iran’s ability to procure equipment for its nuclear and missile programs and to import advanced conventional weaponry remains constricted by sanctions, but Iran has been able to develop its nuclear and missile programs and to assist pro Iranian movements and governments in the region even when sanctions had maximum effect.
Some in Congress have proposed legislation to sanction Iran’s continued missile development and Iran’s Islamic Revolutionary Guard Corps (IRGC), which supports pro-Iranian movements and governments as well as helps secure the regime, as well as to extend the Iran Sanctions Act, which expires on December 31, 2016. Other legislation seeks to prevent finalization of a major U.S. sale of passenger aircraft to Iran Air. However, some sanctions legislation that might affect Iran’s behavior might also be inconsistent with the JCPOA.