House Hearing: Nuclear Deal Implementation

 

 

 

January 16th – so called “Implementation Day” – marked an historic turning point in the Middle East. In a snap, Iran’s record was cleared, and its pariah status dropped -- reconnecting Iran to the international trade and financial system. Now, with access to $100 billion in unfrozen assets and sanctions wiped away, Iran has instantly become the dominate country in the region. Tehran achieved this all without having to end its aggression against its neighbors or swear-off its support for terrorism.

 

The Iranian economy was hemorrhaging before the deal. Now Iranian leaders are predicting swift growth. They’re probably right, as European countries, seeing the sanctions dam broken, sprint into the Iranian market to cut billions in deals – making a mockery of the Administration’s claim that sanctions could “snapback” if Iran cheats. You tell me if these companies are going to turn back when Iran stiffs international inspectors.

 

The Revolutionary Guards – already Iran’s “most powerful economic actor” in the words of the Treasury Department – will only grow more powerful with international investment. Just hours after the agreement’s implementation, the regime disqualified 2,967 of roughly 3,000 moderate candidates from running in parliamentary elections later this month. And after the Administration finally responded to Iran’s missile tests with minor sanctions, Iran’s “moderate” president ordered the military to accelerate its intercontinental ballistic missile program. That’s aimed here -- at the United States -- and designed to carry a nuclear warhead.

 

Worse, the administration continues to go out of its way to appease the Iranian regime, and even thanked Iran after it recently seized 10 U.S. sailors in a highly provocative act. It appears the Administration is determined to protect this deal at all costs. Just look at how the Obama administration backed away from a new bipartisan U.S. law ending visa waiver travel for those who have visited Iran. After an outcry from Tehran, the Administration has now decided to basically ignore the law – and Iran’s ongoing sponsorship of terrorism – by stretching a narrow national security waiver far beyond reason. President Obama signed this bill into law, but has essentially allowed Iran’s Supreme Leader to veto it.

 

And in an unusual move, the State Department settled a decades-old financial settlement the day after ‘implementation day,’ sending Tehran a check for $1.7 billion. As you know Mr. Ambassador, the Committee eagerly awaits answers from the State Department to the many questions surrounding that surprise payment. The Administration had countless opportunities to seek Committee input on this matter in advance – but purposefully did not, I must conclude.

 

Iran has never complied with any of its past nuclear-related agreements. We’re watching this to see if this time will be different. But even if Iran meets all the Administration’s expectations, in a few short years the accord will leave it the dominate power in the Middle East, and only steps away from the capability to produce nuclear weapons on an industrial scale. All the while, Iran’s leaders chant “Death to America.” Many of us are struggling to see how this tilt toward Iran makes us safer.

 

Click here for the full statement

 

 

To reach Implementation Day, Iran had to verifiably complete key nuclear steps that substantially rolled back its nuclear program, placed its nuclear program under a comprehensive IAEA monitoring and verification regime, cut off all of its pathways to weapons-grade nuclear material, and lengthened its “breakout time” for enough fissile material for a single nuclear weapon from 2 to 3 months before the JCPOA to at least a year at present – if Iran were to change course, abandon the JCPOA and spring toward a bomb.. Let me highlight some examples.

 

In keeping with its commitments under the JCPOA, Iran has dismantled two-thirds of its installed centrifuge capacity including all of its most advanced centrifuge machines. Before the JCPOA, Iran had over 19,000 centrifuges. Today, it has just 6,104 of only its most primitive, first-generation centrifuges. And of those 6,104 machines, only 5,060 of them can be used to enrich uranium for the next decade.

 

Iran shipped out almost all of its enriched uranium stockpile. Pre-JCPOA, Iran had approximately 12,000 kilograms of enriched uranium. Now, Iran can have no more than 300 kilograms of up to 3.67% enriched uranium for the next 15 years. This, combined with Iran’s dismantlement of two-thirds of its centrifuges, has effectively cut off Iran’s uranium pathway to a nuclear weapon.

 

Iran removed the core of its Arak reactor and rendered it inoperable by filling it with concrete. This cut off the path by which Iran could have produced significant amounts of weapons grade plutonium. Now, the Arak reactor will be redesigned, in cooperation with a working group established under the JCPOA, ensuring that the reactor is used solely for peaceful purposes going forward.

 

Iran placed its nuclear program under an unprecedented IAEA verification and monitoring regime. Its key declared nuclear facilities are now under continuous monitoring using modern technologies like electronic seals and online enrichment monitors that can detect and report cheating. The IAEA also has oversight of Iran’s entire nuclear fuel cycle, from uranium mills to enrichment facilities and centrifuge production plants, ensuring that Iran cannot divert nuclear materials to a potential covert program without detection.

 

Furthermore, any goods and technology potentially usable for nuclear purposes must now go through a procurement channel administered by the United Nations Security Council, creating yet another layer of transparency and monitoring into Iran’s nuclear program.

 

Iran is now also provisionally applying the Additional Protocol to its Comprehensive Safeguards Agreement with the IAEA. This, along with the JCPOA’s special provision to address disputes regarding IAEA access to an undeclared location within a short period of time, ensures that the IAEA will have the access it needs to verify Iran’s commitments.

 

And finally, Iran has committed not to engage in activities, including at the research and development level, which could potentially contribute to the development of a nuclear explosive device.

 

These are just some of many steps Iran had to take to substantially roll back its nuclear program and reassure the world of the exclusively peaceful nature of the program before reaching Implementation Day. And just as Iran had commitments to meet, so too did the United States and our P5+1 and European Union partners.

 

On January 16, the United States and EU lifted nuclear-related sanctions against Iran. As a result of these actions, there are now more opportunities for legitimate business in Iran that is consistent with the JCPOA, and international banks and companies are beginning to explore those opportunities. As they proceed, it will be important that they have a clear understanding of the changed regulatory and sanctions environment with respect to Iran, and we are working closely with our colleagues at the Department of the Treasury to engage the international business community to answer their questions about the sanctions that have been lifted as well as those that remain in place.

 

But I want to emphasize, however, that this relief of nuclear-related sanctions is predicated on Iran’s continued compliance with its commitments under the JCPOA. If Iran cheats or fails to meet its end of the bargain, the United States has an array of means to respond, including the ability to re-impose sanctions unilaterally, in part or in full, at any time.

 

As you know, our government both engages with Iran on its nuclear program and works with partners around the world to oppose Iran’s actions on a host of issues unrelated to this nuclear deal. For example, we continue to have concerns and take actions to counter Iran’s support for terrorism, its human rights abuses, and threats from its ballistic missile program. All U.S. sanctions on Iran that are not nuclear-related remain in effect. As evidenced just a few weeks ago when we designated for sanctions a number of individuals and entities for supporting Iran’s ballistic missile program, the JCPOA in no way limits our ability or will to use these tools to respond to Iran’s other destabilizing activities.

 

This is precisely why our allies and nations around the world support this deal – it eliminates the threat of a nuclear-armed Iran, gives the international community unprecedented tools to ensure Iran’s nuclear program remains exclusively peaceful moving forward, and does not limit our ability to respond to Iran’s destabilizing policies and actions. In short, it makes the world safer.

 

The JCPOA has received broad international support, including from our allies in the Gulf Cooperation Council (GCC) and over 100 countries around the world. It has been endorsed by the United Nations Security Council and multinational organizations such as the North Atlantic Treaty Organization.

 

And we have recently seen signs that Israel, our close partner and friend with whom we have had extensive consultations and more than a few disagreements over the JCPOA, is now publicly acknowledging the positive benefits of the JCPOA.

 

Speaking at an annual security conference in Tel Aviv a few weeks ago, Israel Defense Forces Chief of Staff Lieutenant General Gadi Eisenkot acknowledged that the JCPOA reduces the immediate Iranian threat to Israel because it “rolls back Iran’s nuclear capability and deepens the monitoring capabilities” of the international community into Tehran’s activities. In those same remarks, Eisenkot also said that he believes that, “Iran will make great efforts to fulfill their side of the bargain.”

 

Of course, we will remain vigilant regarding Iran’s compliance with the JCPOA. The JCPOA was not built on a prediction of what the future will bring. It was built on verification instead of trust, and my team and I will continue working every day to confirm that Iran is living up to its JCPOA commitments.

 

Click here to read the full statement

 

 

On Implementation Day, the United States took actions with respect to sanctions in two key areas. The first, and most significant, was to effectuate the lifting of nuclear-related secondary sanctions, which are sanctions that are directed toward non-U.S. persons for activity wholly outside of U.S. jurisdiction. The sanctions that were lifted applied to Iran’s banking, financial, insurance, energy, petrochemical, and automotive sectors; shipping and shipbuilding sectors and port operators; trade in gold and precious metals; trade in certain materials and software; and associated services for each of these categories. In addition, OFAC removed more than 400 individuals and entities from the Specially Designated Nationals and Blocked Persons List (the “SDN List”), meaning that secondary sanctions no longer attach to significant transactions with, or the provision of material support to, those individuals and entities.

 

The second area concerns three relatively narrow exceptions to our primary embargo on Iran. On Implementation Day, OFAC issued: (1) a Statement of Licensing Policy establishing a favorable licensing policy with respect to exports or re-exports to Iran of commercial passenger aircraft and related parts and services to be used exclusively for commercial passenger aviation; (2) a general license authorizing the importation into the United States of Iranian-origin carpets and foodstuffs, including pistachios and caviar; and (3) a general license authorizing U.S.-owned or -controlled foreign entities to engage in activities involving Iran that are consistent with the JCPOA and applicable U.S. laws and regulations.

 

To give effect to U.S. commitments with respect to sanctions on Implementation Day, the President issued an Executive Order that revoked four Iran sanctions-related Executive orders and sections of a fifth, a series of waiver determinations and findings with respect to relevant statutory sanctions issued by the State Department came into effect; and OFAC took the actions that I just outlined.

 

To assist the public in understanding all the sanctions modifications effective on Implementation Day, OFAC published on its website a summary of the actions taken, as well as hyperlinks to documents that explain in detail the contours of the sanctions lifting. These documents are: (1) a guidance document that describes in detail the lifting of nuclear-related sanctions under the JCPOA and the sanctions that remain; (2) a set of more than 85 frequently asked questions; (3) the texts of the Statement of Licensing Policy and two general licenses; and (4) information on the changes we made to the various sanctions lists administered by OFAC.

 

While we have fulfilled our Implementation Day commitments to lift the sanctions specified in the JCPOA, OFAC continues to administer a robust sanctions regime targeting Iran outside of the nuclear arena, and its troubling activities. Broadly, the U.S. primary embargo on Iran is still in place. This means that U.S. persons generally remain prohibited from engaging in transactions or dealings with Iran or Iranian entities, unless such activities are exempt from regulation or authorized by OFAC. Limited exceptions include longstanding general licenses that authorize U.S. persons to engage in certain activities involving Iran, such as the export of agricultural products, medicine, and medical supplies to Iran, as well as certain items to facilitate Iranian persons’ access to communications and the Internet. U.S. persons must also continue to block the assets of the Government of Iran and Iranian financial institutions. Furthermore, we have retained sanctions authorities targeting Iran’s support for terrorism, its human rights abuses, its ballistic missile program, and its destabilizing activities in the region. And, we will continue to exercise these authorities to counter Iran’s behavior, as we did on January 17, when OFAC designated eleven individuals and entities in connection with their support to Iran’s ballistic missile program.

 

In addition, secondary sanctions continue to attach to the more than 200 Iran-related individuals and entities that remain on the SDN List, as well as any such persons we add to the SDN List in the future. This means that non-U.S. persons who conduct significant transactions with, or provide material support to, designated parties may face being cut off from the U.S. financial system. Further even after Implementation Day, secondary sanctions continue to attach to significant financial transactions, including those by foreign financial institutions with Iran’s Islamic Revolutionary Guards Corps, or any individual or entity sanctioned in connection with Iran’s support for international terrorism or its ballistic missile program. Finally, of the more than 400 individuals and entities that were taken off the SDN List on Implementation Day, roughly 200 of those were placed on a new OFAC list – the E.O. 13599 list – to indicate that they remain blocked persons under U.S. law. These individuals and entities are those OFAC has previously identified as the Government of Iran or Iranian financial institutions. While secondary sanctions no longer apply to most transactions involving individuals and entities on the E.O. 13599 list, U.S. persons continue to have an obligation to block property in which such persons have an interest and are prohibited generally from dealing with them.

 

In addition to the sanctions that we have in place to counter Iran’s destabilizing activities, we also have avenues to swiftly respond if Iran stops complying with its commitments under the JCPOA. The JCPOA contains a dispute resolution mechanism whereby any JCPOA participant can refer any instances of alleged non-compliance to the Joint Commission, which provides a multilateral forum for addressing issues that arise. If we are unable to address these issues, the United States has the ability to quickly re-impose all of the national and multilateral sanctions that are lifted. At the UN, we have established a snapback mechanism that provides the unilateral ability to re-impose UN sanctions that were in place on Iran prior to Implementation Day without the worry of a veto by any member of the P-5. Finally, the United States has a range of options short of full snapback to respond to smaller breaches of the JCPOA, should we so choose.

 

Click here for the full statement