Guest Post: Cullis on Iran Sanctions

by Tyler Cullis

[Tyler Cullis is a Policy Associate at National Iranian American Council.]

Introduction

We’ll soon find out whether the decade-old nuclear dispute with Iran can be resolved diplomatically, as the parties return to Vienna next month to hammer out a comprehensive agreement. So far, negotiations have been deftly handled by both US and Iranian negotiators – the positive atmosphere, so critical to staving off domestic opposition, having been maintained over several months. But still, the most difficult issues remain on the table, including the number (and type) of centrifuges Iran will be permitted, the duration of a final agreement, and the timing of sanctions relief. Successfully concluding a nuclear deal will require compromise from both parties on each of these issues.

While much attention has zeroed in on Iran’s obligations under a final deal, few have discussed the specific modes by which the US will comply with its own commitments. This is troubling, especially insofar as the White House’s ability to provide Iran measurable sanctions relief, absent an affirmative act of Congress, is not assured. In fact, relieving the sanctions will involve difficult questions of law and policy that deserve far more extensive discussion than received at present. Below, I discuss a few of these issues, posing as they do hurdles perhaps as sizeable as Iran’s own centrifuges.

Treaty or Not to Treaty?

Soon after the Joint Plan of Action was inked in Geneva last November, questions arose as to the legal nature of the preliminary agreement: Was it binding as a matter of international law? If so, would it need to be submitted to the Senate (or, in Iran’s case, to the Majles) for approval?

Consensus, here and elsewhere, said no: the interim deal was left unsigned by the parties and had couched its commitments as “voluntary measures,” not mandatory ones. This, it was argued, signified that the P5+1 and Iran did not intend for the document to be either binding on the parties nor governed by international law. Drawbacks to this approach were obvious, but the upside was that each of the parties avoided the need for legislative approval at home (Iran, too, has constitutionally-mandated procedures to follow before an international agreement can be entered into and take domestic effect). Now that we are more than halfway through the interim period and both parties remain in full compliance with their “voluntary” obligations, the choice of informal agreement looks to have been the correct one.

Going forward, however, the central question will be whether the parties replicate this model in a final deal or instead cement a binding international agreement (i.e., a treaty). While the White House remains keen on insulating Congress as much as possible from playing spoiler and is thus unlikely to submit a final deal to the Senate for approval, there are several factors that ward against replicating the “soft law” nature of the Joint Plan of Action.

First, because the US will be required to offer more lasting sanctions relief than that provided under the Joint Plan of Action and, as of now, the President is limited in the kind of sanctions relief he can provide, Congress will be called upon to lift the sanctions at some point in this process. Whether to include Congress at the front- or back-end of a final deal remains a strategic question for the White House, but avoiding Congress altogether is no longer a plausible scenario. (Nor is more aggressive action from the White House likely. It is improbable that the White House will attempt to conclude a sole executive agreement with Iran that overrides contrary federal law and gives the President the authorities he needs to provide Iran the requisite sanctions relief. Such a step would prove a legal leap beyond that of Dames & Moore — the President not acting pursuant to Congressional authorization or acquiescence but rather in ways contrary to Congress’s clear direction.)

Second, unlike the interim deal, which was intended as both a confidence-building measure and a place-holder to allow the parties time to negotiate a final deal, the final agreement will be one where the obligations actually matter. It will matter that Iran take the action it promises, exacting strict limits to its nuclear program in return for US sanctions relief. Formalizing those obligations into an international agreement ups the reputational stakes for both parties and better induces their sustained compliance. Leaving them as “voluntary measures,” per the JPOA, provides an escape valve for the parties, who will feel more comfortable waving aside political commitments than legal ones.

Third, treaties provide a (more or less) clear standard by which to assess non-compliance and to tailor lawful responsive action. This is not the case in an informal agreement like the Joint Plan of Action, even despite the fact that the interim deal contemplates an oversight committee to adjudicate contested issues between the parties. If either of the parties perceives the other to have violated its commitments and an oversight committee (on which both parties sit) fails to reconcile the breach, then the parties risk escalating the dispute by mutual retaliation ad infinitum. This is not conducive to the parties re-establishing trust and confidence in each other over the duration of a final deal.

‘Lifting’ Sanctions

Under the Joint Plan of Action, the United States committed itself to lifting all nuclear-related sanctions on Iran over the duration of the final agreement. If the parties do not agree to formalize their agreement into a treaty, then President Obama will be forced to utilize his limited statutory discretion to provide Iran sanctions relief. This will involve the President exploiting sanctions waivers (time-limited but open to successive periods of renewal), as well as his position as the sanctions’ chief administrator, to relax the sanctions on Iran and ensure measurable relief. However, the President does not have the power to terminate the sanctions altogether, as termination (where it is permitted) would require the President to make certifications as to Iran’s conduct that go well beyond the province of the nuclear file (i.e., Iran’s state sponsorship of terrorism; its ballistic missile arsenal; etc.). This limitation creates several problems for the Obama Administration, as sanctions waivers will need to be repurposed for an end they were never meant to serve and might well prove ill-suited for the task of providing Iran significant sanctions relief.

Moreover, the specific mode of sanctions relief itself remains a contested issue in the negotiations, as Iran demands that the sanctions be repealed and that the US provide assurances that it will not re-impose them on an altogether different pretext. This is significant, insofar as US and Iran negotiators are bargaining at the table and the White House’s inability to provide Iran the kind of relief it is seeking might well mean that the US is likewise forced to dial back its own demands as to Iran’s nuclear program. If that is the case, then the fact that the President does not have the power to terminate the sanctions altogether works to undermine the US’s negotiating position in the talks. In this case, the US runs the risk of getting a worse deal than would otherwise be possible were the President empowered to lift sanctions himself.

Solutions present themselves, including a delegation to the President of the authorities to terminate or suspend the sanctions, on the timeline outlined in the final agreement and subject to certification as to Iran’s full compliance. But Congress remains the gate-keeper here, and whether it can overcome its antagonism to all-things-Iran remains unseen. Nevertheless, centralizing authorities in the President’s hands is the ideal solution to a sticky issue, especially insofar as the President is in prime position to rebuild the political solidarity required to re-impose US and international sanctions should Iran renege on its commitments down the line.

State and Local Divestment Laws

Under CISADA – the 2010 sanctions legislation targeting Iran’s financial and energy sector — Congress provided its imprimatur to state and local governments to enact provisions requiring divestment from companies that did business in Iran’s energy sector. Specifically, CISADA ruled out federal preemption of state and local divestment laws, which proved critical for the survival of such laws in the aftermath of Crosby. (Many states, including California, New York, New Jersey, Illinois, and Florida, have either divestment or contracting legislation, or both, on the books.)

But as we approach a final agreement with Iran, this provision of CISADA complicates the President’s ability to provide Iran the requisite sanctions relief, especially so long as Congress remains unmotivated to act in support of the deal. While state and local divestment and selective purchasing laws perform little to no substantive work right now – overshadowed as they are by the host of federal laws restricting foreign business’s relations with Iran and its energy sector – once the White House starts to remove those sanctions via the President’s statutory powers, they threaten to play an outsized role in limiting the extent of Iran’s expected relief and causing trouble for US allies.

Unlike recent cases, too, where the conflict between federal and state law was transparent, there will be no clear conflict in the Iran sanctions case. In fact, so long as Congress sits on its hands and refuses to lend its support for a deal, the White House will be forced to make broad assertions of federal and executive power (federal policy preemption; dormant foreign affairs power) in order to override state and local laws that frustrate its outreach to Iran. This could bring to the fore a question that the Court has long refused to answer: the precise bounds of its preemption doctrine.

Conclusion

While US and Iran negotiators remain hard at work engineering a solution to the nuclear Rubik’s Cube and experts continue to explore creative ways to structure a final agreement, it is important to consider how the ultimate shape of a final deal will affect the ability of the United States to meet its commitments and provide Iran with measurable sanctions relief. So far, this area is an unexplored one, but it must not remain so – especially when the fate of an Iran nuclear deal hangs in the balance.

http://opiniojuris.org/2014/05/21/guest-post-cullis-iran-sanctions/

5 Responses

  1. This is such an important subject, Tyler, you’re absolutely right about that. I think it is the chief impediment to a successfully implemented comprehensive deal between the P5+1 and Iran. You have reviewed the legal issues well and they are very sticky on the US side. And the problem is that Iranian officials are not stupid – they know that there is alot of uncertainty about the commitments that US negotiators are making regarding sanctions relief. I honestly don’t know how it will play out. My guess is that Congress will not approve significant sanctions relief, and while I would like to think a comprehensive deal with Iran could be adopted in treaty form, I’m doubtful that there would be 2/3 support in the Senate for such a move.

    I think the best hope for an at least partially successful implementation of a comprehensive deal with Iran will primarily involve the dropping of UN Security Council sanctions, and on that basis EU unilateral sanctions, which would have a significantly positive impact on Iran’s economy – hopefully enough that Iranian negotiators will see the benefits outweighing the costs of such a deal. I know that the continued imposition of US financial/banking sanctions in particular would dull that positive effect substantially. But with the polarized political climate in the US, and the pro-Israel lobbying machine in DC having this issue squarely in their crosshairs, I have little hope for really substantial US sanctions relief on Iran in the near term.

  2. But they better not demonstrate “happiness” in any way or they could be arrested in Iran!

  3. ReEconomic sanctions are Washington’s preferred instrument of coercive statecraft for confronting challenges to the international order, including from Iran’s revolutionary regime. While there is an understandable focus on the legal architecture of sanctions, their psychological impact should never be underestimated. Too rapid a shift from fear to greed in the international business community, and from despair to hope in the Iranian market, can blunt the effectiveness of sanctions

  4. Economic sanctions are Washington’s preferred instrument of coercive statecraft for confronting challenges to the international order, including from Iran’s revolutionary regime. While there is an understandable focus on the legal architecture of sanctions, their psychological impact should never be underestimated. Too rapid a shift from fear to greed in the international business community, and from despair to hope in the Iranian market, can blunt the effectiveness of sanctions.

  5. While any analysis of the legal ramifications of a sanctions deal is noteworthy, a strictly legal view leaves out the two most important elements of any deal which have little to do with legal issues, but everything to do with politics and trust. International agreements rely on one simple truism: Do the parties trust each other. In that arena, Iran has demonstrated itself to be lacking which is why negotiations have stalled and will continue to stall. Western democracies view liberalization of human rights as a key indicator of any totalitarian regime’s willingness to adhere to an agreement. The Cold War demonstrated that principal in SALT and later START talks. Deals with North Korea and Cuba fell apart because of the lack of it.

    Iran’s brazen shift into even more aggressive punishment of its dissidents with over 700 executions since Rouhani’s ascension and arrest for things as silly as kids doing a mash up of a video from Pharrell Williams “Happy” song leave most in the West with the impression that Iran is simply a crazy nation. That generally eats away at any political support for a deal that could have the potential to allow Iran to still build a nuclear weapon.

    The practical political realities of Iran’s governmental structure also are ignored in this editorial. Iran’s constitution vests power, especially all foreign policy decisions within the Supreme Leader and ruling religious council. Consequently little happens in Iran without the tacit or explicit agreement of them. Which is why when Western negotiators view the rise of human rights abuses, it is hard to reconcile those acts with their Iranian counterparts across the table paying lip service to adhering to treaty agreements that rely on trust and verification processes.

    While Tyler raises good points, like most legal types, he operates in a vacuum locked away from the cold hard realities of what is going on in Iran. Such a push to approve a treaty, irrespective of the legal issues, stands little hope so long as Iran continues to operate in a mode contrary to internationally accepted standards of a civilized pluralistic society.

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