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First Sanctions to Be Lifted After Inspectors Confirm Iran Kept Its Nuclear Promises

The International Atomic Energy Agency signaled to the world that Iran has earned relief from crippling economic sanctions by rolling back its nuclear capabilities.

by Avi Asher-Schapiro
Jan 16 2016, 8:45pm

US Secretary of State John Kerry meets with Iranian Foreign Minister Mohammad Javad Zarif on "Implementation Day" in Vienna on January 16. (Photo by Kevin Lamarque/Reuters)

Six months after world powers struck an deal to ease crippling economic sanctions over Iran's nuclear program, inspectors have now certified that Iran is indeed rolling back its nuclear capabilities. It is now officially "Implementation Day" — the moment the International Atomic Energy Agency (IAEA) signals to the world that Iran has earned relief from sanctions.

"It's a watershed moment for Iran," said Elizabeth Rosenberg, a former US Treasury official in President Barack Obama's administration. She's now Director of the Energy, Economics and Security Program at the Center for a New American Security, where she keeps a close eye on the vast constellations of international sanctions arrayed against Iran.

But despite the hype, the US will continue to hold Iran at arms length, at least economically. "There's still a chain link fence across this divide," Rosenberg said, explaining that while Iran will be freed up to sell its oil and build economic ties with Europe, the US "will have no new business in Iran."

Last July, after years of jockeying behind the scenes, Iran, the US, Britain, France, Germany, Russia, and China all signed a deal that's known as the Joint Comprehensive Plan of Action (JCPA). The agreement set out a roadmap for Iran to to cut down the "breakout' time it would take to produce enough fissile material for an atomic bomb.

Related: This Was the Year That Iran Finally Started to Come in From the Cold

After the deal was inked, Iran began to dismantle its centrifuges. By November, the IAEA certified that Iran was well on it's way to reducing the centrifuge stock by two-thirds, as required by the deal. In December, Iran shipped the bulk of its uranium stockpile to Russia — and just last week, it filled its major plutonium reactor in Arak with cement.

The Iranians have been in a hurry to get sanctions lifted before scheduled elections in February. Iran's President Hassan Rouhani has staked his political reputation on negotiating his way out of economic sanctions. He appears to have instructed his nuclear team to implement the deal at a breakneck pace.

"The speed of implementation indicates Iran's intentions to fulfill its commitments and abide by the deal," said Kelsey Davenport, Director for Nonproliferation Policy at the Arms Control Association, and a vocal advocate for the deal.

That eagerness has been matched on the US side by Obama, for whom the Iran deal may well be a crowning foreign policy achievement. "We built a global coalition, with sanctions and principled diplomacy, to prevent a nuclear-armed Iran," the president boasted in his recent State of the Union address. For the past six months, US Secretary of State John Kerry has been in close touch with his Iranian counterpart Javad Zarif to coordinate the nuclear drawdown. The two reportedly talk on the phone frequently.

On Saturday, Iran released four American prisoners — including Washington Post reporter Jason Rezaian — in exchange for the US pardoning or dropping charges against seven Iranians. Iran was also reportedly set to release a fifth detained American unrelated to prisoner swap.

Related: Washington Post Reporter Jason Rezaian Freed by Iran After 18 Months in Prison

There have been some diplomatic setbacks, however. Tensions were heightened after an Iranian missile test in December — which the UN Security Council said violated a UN resolution — and the capture of US Navy personnel off the Iranian coast on Tuesday. Still, Iran quickly released the sailors, and the missile test was not technically a violation of the nuclear deal.

After Implementation Day, there's still a long road of inspections, verifications, and oversight that could prove to a diplomatic minefield. Davenport explained that nearly 150 IAEA inspectors will rotate in and out of Iran, inspecting its nuclear supply chain, and making sure it's keeping uranium enriched below the required 3.67 percent.

"Moving forward I think Iran could test the boundaries of the agreement," Davenport admits. "And I think it's important for the community to respond proportionally."

The framework makes room for "snap-back" sanctions; economic punishments that go into effect of the IAEA finds out Iran is cheating.

'The US is shooting itself in the foot by keeping the embargo.'

The US, EU, and UN have all been doing the legal legwork to to roll back nuclear-specific sanctions against Iran. Rosenberg stressed that the peeling-back of sanctions is complex, and will vary widely from jurisdiction to jurisdiction. "The mechanisms in the US and the EU are very very different," she said. "It's complicated."

The EU plans to lift all nuclear-related economic and financial sanctions, which will allow European companies to renew financial transfers with Iranian institutions. It will also repeal sanctions that prevented the free trade in oil, gas, petroleum, petrochemical products, and related technology. European naval equipment and technology will also now be available to Iran, including information on the design and construction of cargo vessels and oil tankers. The deal will also free up Iranian access to EU airports, along with the trade in gold, diamonds, and precious metals.

Related: Iran Is Not Happy About Proposed US Sanctions Over Its Ballistic Missile Program

The US is acting much more conservatively. Basically, it will allow non-US entities to do business with Iran and the US, freeing up international corporations to reenter the Iranian market. Aside from a few choice industries — including pistachios, airplane parts, and carpets — US-Iranian trade will still be restricted.

The arrangement has given pause to would-be investors. "The big unknown is how the wider sanctions scenario will be played out," the American financial services corporation Morgan Stanley said in a recent report on the Iranian economy. "Iran needs foreign banks and investment to step up energy infrastructure investment. However, foreign companies are mindful that the majority of the US sanctions will not be removed. There is also considerable uncertainty about the kind of scenarios that could trigger 'snap back' of the removed/suspended nuclear sanctions."

Still, Implementation Day does bring one immediate boon for Iran: It unfreezes more than $100 billion in Iranian assets — including oil revenues — that have been marooned during the sanctions regime.

Trita Parsi, the president of the National Iranian-American Council, hopes the nuclear deal will give way to a broader warming of relations. Iranian-American businesspeople, he said, are eager to do business across the divide, but will still be hampered by the blanket ban on US-Iranian business. The US, he said, is missing out a opportunity.

"Iran has natural resources and a highly educated population — that's why the Europeans are opening up their markets," he said. "I think the US is shooting itself in the foot by keeping the embargo."

Related: The Speaker of Iran's Parliament Just Toured an Underground Bunker Filled With Missiles

Follow Avi Asher-Schapiro on Twitter: @AASchapiro

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