A major political headache has suddenly stricken Washington after senior US officials revealed a huge problem with regards to the implementation of the Iran nuclear deal.
Although the deal is all set for implementation following the US Congress failure to pass a resolution rejecting the accord, US officials are now saying that a key sanctions relief provision—the US concession to Iran that will allow Tehran to get back tens of billions of dollars in frozen US-backed commerce—conflicts with existing federal laws and cannot be implemented without violating those laws, Fox News reported.
The problematic provision is in Section 5.1.2 of Annex II of the Joint Comprehensive Plan of Action (JCPOA), as the Iran nuclear deal is formally called, according to Fox News.
The section provides that in exchange for Iranian compliance with the terms of the deal, the US "shall...license non-US entities that are owned or controlled by a US person to engage in activities with Iran that are consistent with this JCPOA."
This is supposed to give the green light for foreign subsidiaries of US parent companies to do business with Iran under certain conditions.
However, what the framers of JCPOA probably missed is the law signed by President Barack Obama in August 2012 called the Iran Threat Reduction and Syria Human Rights Act (ITRA), which explicitly closes the so-called "foreign subsidiary" loophole.
A provision in ITRA stipulated that in doing business with Iran, foreign subsidiaries of US parent companies shall in all cases be treated exactly the same as the US firms. This means that what is prohibited for US parent firms has to be prohibited for foreign subsidiaries as well.
Another ITRA provision then states that before US parent firms and their foreign subsidiaries could do business with the Iranian regime, the president of the United States will have to certify two things to Congress: first, that Iran has been removed from the State Department's list of nations that sponsor terrorism, and second, that Iran has ceased the pursuit, acquisition, and development of weapons of mass destruction, Fox News said.
Since Washington has not indicated any intention to remove Iran from the list of nations sponsoring terrorism, the foreign subsidiaries are thus left with no choice but to keep its doors closed on Iran commerce.
Fox News analysts said the Obama administration may decide to violate ITRA and open a loophole for foreign subsidiaries to enable them to do business with Iran and thus unfreeze its assets.
Chris Backemeyer, who served as Iran director for the National Security Council from 2012 to 2014 and is now the State Department's deputy coordinator for sanctions policy, said he sees no real lifting of sanctions "of our primary embargo."
"We are still going to have sanctions on Iran that prevent most Americans from...engaging in most commercial activities," he told POLITICO last month.
Moreover, Adam Szubin, the acting under secretary of Treasury for terrorism and financial crimes, labelled Iran as "the world's foremost sponsor of terrorism" and said existing US sanctions on the regime "will continue to be enforced....US investment in Iran will be prohibited across the board."
There is also the problem of the Iran deal not being a treaty but simply an "executive agreement" which received no vote of ratification from Congress. Legal analysts said because of this fact, the nuclear deal with Iran could be challenged in the courts, which have always upheld the superiority of US laws over mere executive agreements.
