Iran deal Implementation Day: How it works

Read also Ellie Geranmayeh's commentary “Iran Implementation Day: What it means for Europe?“

On 16 January, the IAEA confirmed that Iran has fully undertaken its nuclear related commitments necessary to begin Implementation Day, including:

• Reduced the numbers of its centrifuges at the Natanz and Fordow facilities. Capped its uranium enrichment to lower levels. Significantly reduced its low enriched uranium stockpile through shipping the majority to Russia. These measures combined extend the time it takes for Iran to obtain enough bomb grade material for one nuclear weapon (from roughly three months to over a year).
• Redesigned and rebuilt the Arak heavy water reactor and by doing so blocked a pathway for plutonium weaponisation.
• Provided the IAEA with enhanced access to inspect and verify that Iran’s nuclear programme is peaceful, thereby increasing the chances of detecting covert activities.
• Cooperated with the IAEA on completing the possible military dimensions (PMD) roadmap. The IAEA issued its assessment in December and its board of governors voted to close the file.

The E3+3, (that is, France, Germany, the UK, Russia, China and the US) will now ease sanctions related to Iran’s nuclear programme. The following JCPOA provisions will be pertinent for European entities seeking to do business with Iran:

In advance of Implementation Day:

• The UN, EU and US coordinated necessary paperwork for removing sanctions pursuant to the JCPOA. These were held in escrow but are now enforced. The easing of sanctions is subject to snap-back provisions (see more below).

UN sanctions:

• Under UN Security Council Resolution 2231, endorsing the JCPOA, all previous UN resolutions targeting Iran’s nuclear programme have terminated. This means that the only international frameworks now applicable to Iran’s nuclear programme are the Non Proliferation Treaty and Resolution 2231.
• Sanctions on conventional weapons that were linked to Iran’s nuclear activities will remain for 5 years while UN sanctions on Iran’s missile programme related to nuclear activities terminate in 8 years.

EU sanctions:

• Under Council Regulation (EU) 2015/1861 sanctions related to Iran’s nuclear programme have terminated (i.e. the oil and gas embargo imposed by Council Regulation No 267/2012 no longer applies).
• EU restrictions on financial and banking transactions with Iran have lifted. Iran expects that its banks will be reconnected to SWIFT within weeks.
• The EU has removed certain (but not all) individuals and entities designated under its nuclear related sanctions.
• The EU’s arms embargo and restrictions on transfer of ballistic missiles remain intact for 8 years.
• On 16 January, the EU published its guidance on how EU sanctions are to be lifted under the JCPOA.

US sanctions:

• The application of sanctions related to Iran’s nuclear programme have been suspended (rather than terminated) through executive orders, waivers and Office of Foreign Assets Control (OFAC) actions.
• Nuclear related secondary sanctions are lifted on non-US persons. It is therefore no longer sanctionable for European companies to purchase oil and petroleum goods from Iran or transact with a specified list of persons previously designated under US nuclear related sanctions.
• The US will issue licenses to non-US persons that are owned or controlled by a US person to engage in activities with Iran permitted under JCPOA.
• The US will remove designation of certain (but not all) entities and individuals from sanctions targeting Iran’s nuclear programme.
• Iran can now access its previously restricted/frozen funds abroad. Iran is expected to actually only access roughly $50 billion out of a total $100 billion.
• The US will allow Iranian banks and companies to reconnect with international systems like SWIFT.
• US companies are now permitted to receive licenses to sell commercial passenger aircraft to Iran.
• US sanctions on Iran related to human rights, terrorism and conventional weapons and missile capabilities remain intact.
• On 16 January, OFAC published its long-awaited guidance on the lifting of US sanctions pursuant to the JCPOA. The EU, member states and Europe’s business sector have contributed to these guidelines through a substantial consultation process.