Due to the lack of significant reduction exemptions (“SREs”) by the U.S. Government, Iran has seen the benefits of staying in the JCPOA (“Joint Comprehensive Plan of Action”) deteriorate. It has determined certain countermeasures need to be taken to indicate that unilateral sanctions by the United States will not be tolerated.

The President of Iran, Hassan Rouhani, will be announcing countermeasures that could include changes in the conduct of Iran with regard to its nuclear program and uranium enrichment. These changes may partly violate the JCPOA’s requirements for Iran’s nuclear program.

Particularly alarmed are the Europeans who have attempted to alleviate the consequences of the U.S. withdrawal by creating alternative payment systems for legitimate trade with Iran. The Europeans’ policy has been that so long as Iran is abiding by the terms of the JCPOA, then they would respect the agreement. However, European governments do not necessarily have control over all of the European companies’ conduct, many of which abide by U.S. sanctions.

For any international businesses engaging in legitimate trade with Iran, it is critical to take note of the developments regarding Iran’s compliance with the JCPOA. If the United Nations, the United States, or Europe take any countermeasures, this may affect ongoing business.

Potential Future Sanctions on Iran

It is possible that more sanctions may arise as a result of Iran’s change in behavior. Firms should seek updates from their compliance counsel and keep up with the latest developments in the Iran sanctions program administered by the Office of Foreign Assets Control (“OFAC”).