JCPOA: US rejects EU appeal for Iran sanctions exemptions; may extend current waivers

The US has rejected an EU appeal for exemptions from its Iran sanctions, according to US officials. Following the US pull-out on 8 May from the Joint Comprehensive Plan of Action (‘JCPOA’) – which provides sanctions relief to Iran in exchange for a reduction in its nuclear capacity – EU foreign and finance ministers from the UK, France and Germany sent a letter on 4 June to the US requesting exemptions from secondary sanctions for critical business sectors, including pharmaceuticals, healthcare, energy, automotive, banking, infrastructure and civil aviation.

The letter also requested exemptions so that banking and finance channels with Iran could be maintained, including with the Central Bank of Iran. According to media reports, Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin have now rejected the EU proposal of broad carve-outs for industry sectors, limiting sanctions relief to strict humanitarian and national security grounds. The (undisclosed) letter from the US government states that the US is exerting ‘unprecedented financial pressure’ on Iran to induce a ‘tangible, demonstrable, and sustained shift’ in its policies.

The news is a blow to the European businesses which have signed billion-dollar contracts in Iran, including oil company Total and aircraft manufacturer Airbus.

The Department of the Treasury’s Office of Foreign Assets Control (‘OFAC’) has issued certain wind-down periods for companies transacting with Iran, with sanctions snap-backs in August and November. On 16 July, Mnuchin told reporters that the US would, in certain cases, consider waivers for countries that import crude oil from Iran to minimise disruption in the global oil markets.

For the 4 June letter from the EU to the US administration see:
https://static01.nyt.com/files/2018/world/Letter_to_U.S._Mnuchin_and_Pompeo_on_Iran_EU.pdf