EU efforts and calm heads in Congress may yet prevent a crisis.

Iranian flagsBy Paulina Izewicz, Research Associate, Non-Proliferation and Nuclear Policy

Recent reports suggest President Trump is poised to decertify the Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA). It was negotiated not as a treaty but as an executive agreement, leaving it outside the scope of Congressional control. In a bid to exercise a measure of influence, Congress passed legislation known as the Iran Nuclear Agreement Review Act of 2015 (INARA). The bill requires the president to certify every 90 days that Iran remains in compliance with its commitments, and that the continued suspension of sanctions – a key part of the deal – is vital to the national security interests of the United States. If this certification is not issued, Congress can consider legislation reinstating sanctions on an expedited basis.

The Trump administration issued two reluctant certifications in April and July but reports suggest it will not do so at the next deadline of 15 October. Without any apparent violation by Tehran, this decertification will be based on the broader criterion of ‘vital US national interest’. The issue will then move to Congress, which can – but does not have to – re-impose sanctions. This puts GOP lawmakers in a particularly difficult position. Having uniformly opposed the JCPOA from the very beginning, they face a political risk in not taking action. At the same time, however, there appears to be a recognition that INARA was designed for a different situation – an Iranian violation – and Congress is not quite sure how to proceed.

Even die-hard Iran hawks such as Senator Tom Cotton appear reluctant to re-impose sanctions right away. Instead, in recent comments at an event hosted by the Council on Foreign Relations, he laid out a different strategy: for the US to coerce its European partners to try to ‘fix’ the agreement, and if Iran does not cooperate, to re-impose sanctions. There is little appetite for re-opening the file in Europe, however, and the ever-present threat of sanctions, particularly those of an extraterritorial character, is not well received in European capitals. In that vein, European diplomats have in recent weeks floated the idea of protecting EU companies now legally doing business in Iran through the use of so-called ‘blocking legislation’, in direct defiance of the United States.

EU blocking legislation: what it can and cannot do

In 1996, in response to US secondary sanctions on Cuba (and, to a lesser extent, Iran), the EU adopted Council Regulation 2271/96. The legislation, also known as a blocking statute, has lain largely dormant for the past two decades. It is, however, officially still on the books and would require only limited amendments to offer protection to EU companies currently engaged in Iran, mainly in the form of listing relevant US legislation in its annex. The statute comprises four elements:

First, a prohibition on EU individuals and organisations complying with US secondary sanctions, directly or indirectly. (It is worth noting that this prohibition is not absolute: if non-compliance could result in ‘serious damage’, compliance can be authorised.)

Second, it stipulates that judgments and administrative measures giving effect to covered sanctions will not be recognised or enforced on EU territory.

Third, it establishes a reporting requirement, mandating that any person affected by the covered laws report it to the Commission within 30 days.

Fourth, perhaps more crucially, it supplements these restrictions with a clawback clause, which allows for the recovery of any damages suffered as a result of secondary sanctions in EU courts.

Despite this fairly comprehensive scope, however, the statute is no panacea. First and foremost, it requires implementation by individual European nations, something which thus far has been very uneven. The only guidance the regulation offers is that adopted measures be ‘effective, proportional and dissuasive’. As a result, some member states construe violations as a criminal offence, some as an administrative one, and some have not adopted implementing legislation at all. Enforcement, similarly, has been virtually non-existent: only limited actions have been taken on the basis of the legislation, well short of actual enforcement. The clawback clause, too, would likely present practical challenges, most acutely felt should it come up against the issue of US sovereign immunity.

Other available options

In foreign policy, legal measures are of limited use unless coupled with diplomacy. In 1996, in addition to adopting its blocking statue, the EU launched a dispute settlement procedure against the US under the auspices of the World Trade Organization (WTO). A year later, Washington and Brussels began negotiations outside of this framework. Ultimately, those negotiations resulted in an agreement that the US would ensure that certain provisions of its Cuba legislation, the so-called Helms-Burton Act, would not affect third-country nationals, and the WTO mandate was allowed to lapse. These negotiated waivers have been issued every six months by successive US administrations for the past 20 years, most recently by the Trump administration in July.

Having given up on engaging the Trump administration on the issue, EU diplomats have reportedly focused their efforts on Congress. In all likelihood, these efforts are aimed at convincing Congress not to take action at all. Barring that, however, it would not be unreasonable for the EU to try to exclude secondary measures from the package of sanctions reinstated by Congress, if it chooses to go ahead. On the face of it, the limited requirements for the qualifying legislation laid out in INARA should allow for a reasonably flexible approach in this regard.

The role of Congress

At its core, INARA is more about politics than it is about law. Because statutory sanctions under the JCPOA were suspended based on a presidential waiver, there is nothing preventing the president from reinstating them as he pleases. There is also nothing barring Congress from passing sanctions legislation at any point in time. Under the Obama administration, such attempts would have met with the threat of a presidential veto, providing Congress with a failsafe of sorts in its game of political brinksmanship. This failsafe is gone and it is now Congress that provides a check on a reckless president; if recent remarks by Corker are any indication, this realisation is slowly sinking in.

Paradoxically, this somewhat artificial showdown set up by INARA may in a way give Congress a chance to defuse the situation. At present, the certification requirement creates a ‘will-he-won’t-he’ cliffhanger every 90 days. If the Trump administration decertifies the agreement but Congress acts with restraint, the house could help to prevent these periodic crises from recurring. For years, Congress has demanded a bigger role in US foreign policy. Now it has the chance to play this role responsibly.

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