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How EU would lift Iran sanctions after nuclear deal

If a nuclear deal is reached between Iran and the P5+1, the EU will take a series of established steps to lift its autonomous sanctions currently in place against Iran.
European Union Foreign Policy Chief Catherine Ashton (L) and Iranian Foreign Minister Mohammad Javad Zarif wait to begin talks in Vienna July 3, 2014. Iran and six world powers are aiming for a deal this month in marathon talks to end their long-running dispute over Tehran's nuclear program and dispel fears of a new Middle East war. REUTERS/Heinz-Peter Bader  (AUSTRIA - Tags: POLITICS) - RTR3WX57

One week into the marathon talks underway in Vienna between the the five permanent members of the UN Security Council plus Germany (P5+1) and Iran, speculation has started to emerge as to what a comprehensive agreement on the long-outstanding nuclear issue would entail in terms of obligations and concessions for Tehran, with the issue of sanctions being one of the sticking points in the negotiations.

In the past days, the two sides seem to have agreed that, in exchange for verifiable curbs on the Iranian nuclear program, phased, comprehensive sanctions relief would be part of a long-term agreement. The deal would progressively unwind the complex and multilayered legislation imposed against Tehran, comprising UN Security Council resolutions as well as US and EU sanctions. While details on the order and nature of the sanctions relief measures are still unknown and subject to technical discussions, the Iranian authorities would like to see the sanctions lifted sooner rather than later, considering the tremendous impact they had on the Iranian economy.

The EU imposed its first series of sanctions — defined as “restrictive measures” in EU jargon — against Tehran in 2007, and up until 2010 limited its efforts to simply implementing the Security Council resolutions within the EU territory via travel bans and asset freezes on individuals and entities linked to Iran’s nuclear program.

Since 2010, the EU has imposed a heavier type of sanctions against Iran that was not based on and went beyond the scope of the Security Council resolutions, so are referred to as autonomous or unilateral measures. These sanctions targeted the country’s energy and financial sector to an unprecedented degree, especially given the extent of economic exchanges taking place up until then between Iran and most European countries.

The EU legislation introduced between 2010 and 2012 targeted trade with Iran and key sectors in its oil and gas industry, finance and transport, with the most notable restrictions being the ban on the importation of Iranian crude oil and the prohibition of networks such as SWIFT from providing specialized financial messaging services to EU-sanctioned Iranian banks. Under the Joint Plan of Action signed back in November, the EU granted some “limited, targeted and reversible” sanctions relief, amending parts of its autonomous measures in place against Tehran, while the bulk of the legislation remained unchanged. Should a comprehensive deal be reached, however, the EU will need to take the appropriate steps to lift its autonomous sanctions currently in place against Iran.

The legal procedure for repealing EU sanctions is similar to the steps necessary to their implementation.

  1. The EU high representative for foreign affairs and security policy — currently Lady Catherine Ashton, who is also the chair of the P5+1 — presents a joint proposal with the member states or (more frequently) the European Commission to suspend or lift country-specific autonomous sanctions.
  2. The proposal is then discussed at a Foreign Affairs Council meeting, a specific configuration of the council in which the foreign ministers of the 28 EU countries are presided over by the high representative to deliberate on the EU's external action.
  3. In line with what is outlined in Chapter 2 of Title V of the Treaty on European Union to suspend or lift sanctions, a council decision will then need to be adopted unanimously.
  4. Because of the nature of the autonomous sanctions in force against Iran, which significantly reduced trade and economic relations with Tehran, a council regulation will also be required for the legislation to take full effect, directly binding EU citizens and businesses. Such a regulation will detail the precise scope of the suspensions or lifting decided upon and, as specified in Article 215 of the Treaty on European Union, could be adopted by the council in a qualified majority vote, although unanimity generally remains the praxis for all foreign policy issues.
  5. The regulation will finally enter into force on the day following its publication in the EU Official Journal.

This is the process the EU will use to reverse its autonomous sanctions imposed against Iran between 2010 and 2012, prioritizing those measures that most affected Iran’s financial and energy sector, such as the oil embargo and the ban on transactions between European and Iranian banks. Repealing the legislation that implements the Securiy Council resolutions within the EU territory regarding the travel ban and arms embargo would be even easier, given that this type of restriction is directly binding on all member states following an EU Council decision, therefore not requiring any additional regulation.

Revisions of this legislation, which deals specifically with Iran’s nuclear program, are likely to come at a later stage and will depend on steps and timing to be decided by the Security Council, although the list of those the EU subjected to travel bans and asset freezes could be amended in the meantime. Other elements of the EU sanctions against Iran that are likely to remain in place for an initial phase are the ban on supplying Iran with dual-use goods and technology and restrictions on businesses relating to the Iranian Revolutionary Guard Corps.

While on a technical level, the termination or suspension of EU sanctions is easy and straight forward, its success still strongly depends on the political will of the actors involved in the negotiations. The EU's autonomous sanctions against Iran are the most recent measures introduced, as well as the ones that most severely crippled the Iranian economy. The P5+1 might consequently decide to leave them in place as the ultimate tool of pressure to ensure Tehran's compliance with its obligations under a final nuclear agreement. Furthermore, should the EU agree to lift its autonomous sanctions against Tehran, as the Joint Plan of Action clearly demonstrated, any EU reversal would still need equivalent steps in Washington to neutralize the chilling effect of secondary sanctions on foreign entities that characterizes the US sanctions legislation against Iran. No European company would otherwise be willing to invest in Iran or sign new deals regardless of a long-term agreement, while banks would continue to refrain from dealing with Iranian financial institutions, mindful of the risk of heavy fines.