Iran - EP 6

On 18 October 2015, ninety days after UNSCR 2231 (which incorporated and endorsed the JCPOA), the agreement came into effect and established a timeline for the resolution of the Iranian nuclear issue. On 16 January 2016 the IAEA confirmed in a report to the Council that Iran was in compliance with nuclear-related commitments outlined in the agreement, terminating the provisions of previous sanctions resolutions and substituting them with restrictions outlined in Annex B of the JCPOA.

The entry into force of Annex B of the JCPOA on 16 January 2016 placed the Iran sanctions regime in a state of calculated ambiguity, in which a set of euphemisms are used to replace sanctions-related terminology. While sanctions under Chapter VII were lifted, “restrictions” with equal effect on a list of individuals and entities were established under “Article 41” (under Chapter VII of the Charter). The Sanctions Committee was dismantled and replaced by a UNSCR 2231 “Facilitator” and the role of the PoE was taken over by the Secretariat which hired additional personnel to cover the monitoring of the Iran agreement.

This ambiguity, a response to Iran’s demands for diplomatic normalization, contributed to creating an atmosphere conducive to the implementation of the JCPOA, but also complicated the actual enforcement of the measures. The lack of clarity affects private sector implementation and maintains uncertainty about investing in Iran – diminishing returns for Iran and complicating the implementation of the JCPOA.

Between January 2016 and May 2019, the IAEA reported to the Security Council 15 times that Iran had been in compliance with its nuclear-related obligations under the JCPOA. It repeatedly verified the absence of non-declared nuclear material, the non-diversion of the materials declared, and the provisional application of the Non-Proliferation Treaty Additional Protocol, as well as other transparency measures agreed upon. Despite its compliance, Iran reiterated its view that it “has not been able to fully benefit from lifting of Sanctions due to a series of deficiencies and/or non-performance on the part of either U.S. or the EU.”

As the Secretary-General stated, however, the JCPOA is only one part of UNSCR 2231 (2015), and there have been concerns over Iran’s alleged violation of the restrictive measures described in the resolution’s annex B. First, Iran has conducted medium-range ballistic missile tests. While there is a controversy within the UNSC as to whether this violates the JCPOA (Iran argues the missile was not designed to carry a nuclear warhead, others say it could be easily adapted), the resolution (and subsequent SG reports) called upon Iran to avoid ballistic missile launches. Second, weapons of Iranian origin and/or shipped from Iran were seized in or on their way to Syria and Yemen, in a clear violation of the arms export embargo.

From a technical standpoint, the implementation of the UNSCR 2231 and the JCPOA, with its Joint Commission and procurement channel for nuclear materials, has been adequate. Between Implementation Day (16 January 2016) and June 2020, 48 proposals were submitted to the special procurement channel, with 33 being approved, 5 disapproved, 9 withdrawn, and 1 remaining under review.

The greatest challenge to the implementation of the JCPOA and UNSCR 2231 has been political. With the election of Donald Trump as President of the United States in 2016, the prospects for a smooth implementation of the agreement were severely compromised. On 8 May 2018, the United States announced its withdrawal from the JCPOA citing Iran’s involvement in armed conflicts in the region, a decision the Secretary General “deeply regret[ted].” However, the United States chose not to initiate the dispute resolution mechanism or the so-called sanctions “snapback” mechanism in the JCPOA, preferring to withdraw from the agreement unilaterally. This was possibly motivated by a choice to avoid the lengthy dispute-settlement mechanism necessary for the re-imposition of UN sanctions. In response to the US unilateral withdrawal, the other parties pledged to continue to abide by the agreement.

Since the May 2018 withdrawal announcement, the JCPOA has deteriorated, without yet leading to its full collapse. On the one hand, the United States re-imposed and significantly expanded unilateral sanctions on Iran as a part of a self-declared "maximum pressure" campaign. These included the restoration of sanctions against Iran's oil exports (November 2018), the labelling of the Islamic Revolutionary Guard Corps as a Foreign Terrorist Organization (April 2019), sectoral sanctions against metal and petrochemical industries (May-June 2019), the imposition of sanctions targeting political leaders, including Supreme Leader Khamenei and Foreign Minister Zarif (June and July 2019), and the listing of Iran's Central Bank and national development fund (September 2019). The US has also claimed extra-territorial jurisdiction for its unilateral measures, threatening secondary sanctions on potential violators of the US measures. These actions have had a significant impact on the Iranian economy and, in practice, undermined the deal's promise of financial normalization for Iran – a critical motivation for Iranian compliance with the terms of the agreement.

The other parties to the JCPOA vowed to keep the agreement alive despite the US withdrawal, and the EU created a special-purpose vehicle for trade with Iran to bypass US sanctions (INSTEX or the Instrument in Support of Trade Exchanges). On 31 March 2020, the first transaction using the mechanism was processed (EUR 500,000 for blood treatment medication supplies), but INSTEX has not become operational at the scale anticipated by Iran. In response to the US unilateral measures and INSTEX's inability to ensure the expected trade inflows, and after continuing to comply with JCPOA obligations for almost a year after the US withdrawal (as verified by the IAEA), Iran initiated a policy of deliberate incremental breaches of its JCPOA commitments, presumably in an effort to sustain its bargaining position. Notably, it proceeded to no longer comply with restrictions on its enriched uranium and heavy water stockpiles (July 2019), lifted the cap on enrichment level (July 2019) and restrictions on research and development (September 2019), in the use of its most advanced centrifuges, including the symbolic Fordow plant (November 2019). In both 2019 and 2020, Iran conducted space vehicle launches, which may be a violation of its ballistic missile testing restrictions. Yet, Iran has kept its options open by maintaining some critical commitments in the JCPOA, such as the IAEA inspection regime and restoring heavy-water reactors in Arak to their pre-JCPOA design.

The gradual degradation of the JCPOA agreement has taken place in the context of increased military friction between the United States and Iran in the region. Following a series of incidents centered in, but not limited to, the Gulf (attacks on vessels, oil pipelines and facilities), the tension further increased between the two countries through their operations in Iraq. Most significantly, after a mob attacked the US embassy compound in Baghdad on 31 December 2019, the US killed Iranian military leader Quasem Soleimani and Abu Mahdii al-Muhandis, the Kataib Hizbollah's militia leader, in a drone strike on the Baghdad airport. Iran retaliated with an attack on US military bases in Iraq, although there were no fatalities.

Within the Security Council, there has been an impasse about potential next steps with regards to the Iran sanctions regime, and the future of the JCPOA itself remains uncertain. The United States pursued a renewal of the arms embargo slated to end in October 2020 (per the JCPOA), but its resolution garnered only two votes (the US and the Dominican Republic). The US next declared it was invoking the dispute settlement mechanism in pursuit of a snapback of the suspended UN sanctions as an alternative strategy. In June 2020, with the November US elections in the backdrop, France, Germany, and the UK positioned themselves against the triggering of the snapback mechanism, while Russia and China challenged the legality of the use of that mechanism by the United States, given its withdrawal from the JCPOA in May 2018. The US argued it still had that authority because it is described as a participant to the agreement in UNSCR 2231. The US declared the UN sanctions re-imposed at the end of September 2020, but no other member of the Security Council recognized the action as legitimate. In 2020, both the EU (on 14 January) and Iran (4 July) triggered the dispute resolution mechanism to signal the imperfect implementation of the agreement on the other side, while keeping these negotiations within the JCPOA.

Mandatory

Adjustments to ongoing sanctions:

• Re-imposed individual / entity asset freeze, travel ban, and arms exports embargo from Iran.
• Restrictions on proliferation sensitive goods and technology imports and exports ban (specific items and the related transfer, training, assistance, investment, brokering, and other services, including nuclear weapon delivery systems restrictions), investment and acquisition of interest in foreign commercial activity involving uranium mining or nuclear material and technology, and arms imports to Iran (specific weapons and related training, services, advice, and assistance) made subject to prior case-by-case Security Council approval (exemptions and the related procedures specified).

Termination of existing sanctions:

• All provisions of UNSCR 1696, 1737, 1747, 1803, 1835, 1929, and 2224 terminated;
• A “snapback” mechanism for their reintroduction specified.

Conditional

Previously imposed conditional restrictions (bunkering ban) were terminated.

Travel ban:

https://www.un.org/securitycouncil/content/2231/travel-ban-exemptions

Travel ban exemptions in effect:

https://www.un.org/securitycouncil/content/2231/travel-exemptions-effect

Asset freeze:

https://www.un.org/securitycouncil/content/2231/assets-freeze-exemptions

Carve out provisions for humanitarian actors apply, as specified in UNSCR 2664 (2022).

Maximum number of designees during the episode: 23 individuals and 62 entities; currently remaining on 23 individuals and 61 entities.

Current list of sanctions designees:

https://www.un.org/securitycouncil/content/2231/list

Sanctions were imposed for a limited time period. Proliferation sensitive goods and technology and investment ban restrictions were imposed for 10 years from JCPOA Adoption Day (18.10.2015), restrictions related to development of nuclear weapon delivery systems and asset freeze were imposed for 8 years, and restrictions on arms and travel were imposed for 5 years.

All UNSCR 2231 restrictions will be terminated earlier if IAEA report confirms the Broader Conclusion of JCPOA or terminated and replaced with provisions of UNSCR 1696, 1737, 1747, 1803, 1835, and 1929 as a result of significant non-performance of commitments by Iran under the JCPOA and UNSCR 2231 “snapback” mechanism.

Sanctions Committee and Panel of Experts were dissolved (their functions taken over by other actors – Security Council, UN Secretariat, and the Secretary General).

Designation criteria were specified and targets designated. Enforcement authorities specified.

Restrictions specifications:

• Nuclear related transfers and activities
• Ballistic missile-related transfers and activities
• Arms-related transfers
• Asset freeze
• Travel ban
• Other required actions

Security Council Facilitator reports:

https://www.un.org/securitycouncil/content/2231/reports-and-briefings-facilitator