The U.S. Treasury Department is cautiously preparing for the lifting of economic sanctions on Iran, but is insistent that foreign companies don’t jump the gun.
Treasury, under the nuclear agreement signed with Tehran last month, is preparing to roll back layers of U.S., European Union and United Nations sanctions imposed on Iran over the past decade. But U.S. officials are emphatic that foreign governments and firms not start investing in Iran until it follows through on the commitments it made in Vienna to roll back its nuclear program.
Iran’s commitments include mothballing thousands of centrifuge machines, reducing its stockpile of nuclear fuel and reconfiguring a heavy-water reactor capable of producing weapons-usable plutonium.
“We need to keep everyone onside,” said a senior Treasury official working on Iran. “We want to make sure they’re not tripping over themselves to get in before Iran has actually taken the steps it agreed to under the deal.”
U.S. officials estimate that it will take Iran until around mid-2016 to implement the steps it agreed to as part of the nuclear deal. At that stage, the international sanctions on the country will begin to be rolled back.
Congress also needs to approve the deal, and is scheduled to vote in mid-September.
Treasury officials have said unwinding the sanctions, and explaining the process, will be extremely complicated and require extensive engagement with foreign firms and governments.
Washington and its diplomatic partners—Russia, China, Germany, France and the U.K.—signed an interim nuclear agreement with Iran in late 2013. But many foreign banks refused to conduct financial transactions with Iran—even ones that have been approved by Treasury—because of fears they could be hit with financial penalties in the future.
U.S. officials said they envision that Treasury and State Department officials will need to make extensive trips to Asia, Europe and the Middle East in order to explain what can and can’t be invested in, in the future.
“We’re still in phase one of the process,” said the Treasury official.
Despite the deal, the U.S. is maintaining unilateral sanctions on some Iranian banks, transportation companies and construction firms.
The Obama administration has stressed that it will maintain all of its sanctions on companies controlled by Iran’s elite military unit, the Islamic Revolution Guard Corps. The IRGC is widely seen as the single most dominant entity in the Iranian economy.
Treasury officials have stressed that foreign companies still won’t be able to do business with the IRGC’s holding company, Khatam al-Anbia, which has massive holdings in real estate, construction and telecommunications.
The agreement “has no effect whatsoever on U.S. secondary sanctions related to the IRGC, meaning that foreign banks and companies could be exposed to sanctions,” said the Treasury official in regard to Khatam al-Anbia. “So it’s still a landmine for foreign companies doing business in Iran.”