The Obama administration’s apparent determination to sign an agreement that will not stop Iran from developing nuclear weapons has encouraged European businesses to jump-start trade talks with Tehran. Over the last two months chief executives of the Dutch Shell company, Total of France, Italy’s Eni and Lukoil of Russia have held meetings with the Iranian oil minister. Other agreements for trading with Iran have also been signed with other nations. Of course, all publicly claim that the agreements shall only come into effect upon the signing of the P5+1 agreement with Iran.  

However, considering that the U.S. has already relaxed several sanctions and Secretary of State John Kerry has stated the sanctions will be lifted even before verifying Iranian compliance with whatever postering Obama would request, Sen. Robert Menendez (D-N.J.)  has introduced legislation to extend the soon-expiring sanctions on Iran for another 10 years.

On June 25, 2015, Sen. Menendez together with Sen. Mark Kirk (R-Ill) introduced the Iran Sanctions Relief Oversight Act of 2015 (S. 1682) to extend the Iran Sanctions Act of 1996 (Public Law 104-172) for ten more years.  Sen. Kirk noted: “Congress passed the Iran Sanctions Act of 1996 to drain Iran’s financial support for Hezbollah, Hamas, and terrorist  threats to the United States and Israel, and to block funds for building nuclear weapons and ballistic missiles. “Director of National Intelligence James R. Clapper recently told Senators that ‘Iran remains the foremost state sponsor of terrorism,’ so if the White House is serious about maintaining terrorism sanctions against Iran no matter what, it must support our bipartisan effort to renew this expiring law.”

Sen. Menendez went on to explain, “Absent renewal we would be unilaterally lifting sanctions on Iran and hence unilaterally disarming. It stands to reason that if negotiators are serious about snapback, then they should support the immediate extension of the Iran Sanctions Act to ensure there is no question for Iran about the consequences of non-compliance,” he reasoned.

The current law regarding sanctions on Iran, as the one about to expire, also requires the administration to report to Congress “on whether any sanctions relief supported terrorism, human rights violation, or nuclear or missile proliferation, or went into the pockets of any senior Iranian official.” But according to the Government Accountability Office report on June 17, the State Department reports to Congress are “three years out of date“.  So, even if the law extension pass Congress and Obama does not veto it, there is little guarantee the Administration will abide by it. 

In “The Dead End of Snapback Sanctions: How the P5+1 Proposal Blocks Meaningful Re-imposition of Sanctions on Iran” (INSS, June 25, 2015*), Owen Alterman explains, “Faced with an Iranian breach of the agreement, the P5+1 face three challenges: adjudication, enforcement, and the lag time between sanctions re-imposition and impact. Of the three problems, the central one is the adjudication issue. While details of the agreement still await, at this stage, the mechanism the sides have chosen seems to favor Iran. If the parties truly wanted snapback sanctions, they would have chosen a set of tools that would actually implement them.”…

“Talks, though, do not seem to be moving in that direction. Instead, according to the Reuters and AP reports, representatives from each of the P5+1 states and Iran would themselves be the adjudicating panel. In other words, the parties themselves would be involved in the adjudication directly, not one step removed from what should be an independent panel of arbitrators. Moreover, if this P5+1-plus-Iran group would need to decide by consensus (as reported), then the system could truly be paralyzed. Reuters also reported that the decision by the panel would be non-binding, giving a legal basis for states to ignore the ruling completely. According to the AP, a final decision would come after a majority vote among the five permanent UN Security Council members. Still, that vote might – though this is unclear – only happen if the dispute resolution panel first finds, by consensus, that Iran is in breach, a finding that could well be blocked by a single holdout state among the P5+1.

“The second weakness of the process is in enforcement. Even were a hypothetical arbitration panel to find Iran in breach in a hypothetically binding ruling, key countries might not actually snap the sanctions back. To date, the Iran sanctions regime has held together remarkably well, with leading economies adhering to UN Security Council decisions. That pattern might not hold in the future. At a later date, holdout states – perhaps Russia, perhaps China, perhaps non-P5+1 states such as India – might prove less willing to implement the sanctions regime.

“The third weakness of the snapback sanctions mechanism is in the lag time before the sanctions economic have any impact. Economic sanctions do not bite from the day they are imposed. It takes time for businesses to step back from contracts, and then for the impact to seep into the economy and be translated into political pressure. As the Washington-based Iran Task Force has noted, much of the impact of sanctions is a psychological impact on business decisions, difficult to reinstate once the sanctions are lifted following the signing of the comprehensive agreement. These dynamics give Iran a built-in advantage; once sanctions are lifted, the default position is that they are not in place.

“Of the three problems, the central one is the adjudication issue which, if resolved, could enable at least the United States and European Union to re-impose a sanctions regime under cover of the agreement’s terms. The details of the agreement still await. At this stage, though, the mechanism the sides have chosen seems to favor Iran, with the Iranian government directly in the decision making chamber. Each of the P5+1 states would be individually part of the adjudication process – again, not represented by a single arbitrator one step removed from the parties’ official representatives. Depending on how the mechanism operates, this might enable Iran to seek out a single P5+1 state as a weak link to torpedo a sanctions snapback, and depending on the agreement’s terms, potentially without the issue reaching the majority vote of the five Security Council permanent members at all. In her testimony, Ambassador Power promised Congress that the US “will retain the ability to snap back multilateral sanctions architecture back in place, without Russian or Chinese support.” Time will tell whether the result is that straightforward.

“This choice of conflict resolution mechanism is telling. In the negotiations with Iran, the P5+1 states have deployed their all-star diplomats and lawyers, who surely know that they could choose an arbitration mechanism. Instead, they chose a political mechanism, which thereby keeps the decision in the hands of governments rather than outsources it to independent arbitrators.

“Some will argue that Iran would not have agreed to an arbitration process. Others will argue that the P5+1 states are to blame, in that at least some of them want to retain control over re-imposing sanctions. Either way, the decision to use a political and not a legal body to decide on sanctions is an early indication that sanctions will not snap back. If the parties truly wanted snapback sanctions, they would have chosen a set of tools that would actually implement them.

“This does not, in itself, mean that the emerging deal is a bad one. Other rewards could, in principle, outweigh this risk. It does mean, though, that those seeking to keep Iran to the deal will need leverage other than the sanctions. This leverage could include carrots or sticks. Israel should hope the leverage does not include carrots, since those carrots could well include global powers acquiescing to Iranian interests in the region. Instead, Israeli policymakers should start thinking about sticks. Beyond the military option, these sticks could include unilateral sanctions imposed by the United States or European governments in the event that the P5+1 decision making mechanism runs aground. Israel should think, even now, how such a mechanism could be created, and when and how to encourage it.

* The Dead End of Snapback Sanctions was originally published by INSS on June 25, 2015.