Agreement Reached to Largely Eliminate Iranian Sanctions
23 July 2015
After nearly two years of negotiations with Iran, the P5 +1 group (the five permanent members of the UN Security Council, China, France, Russia, the United Kingdom, and the United States, along with Germany) reached an agreement to lift sanctions on Iran in exchange for Iran taking concrete steps to prove its nuclear program is solely for peaceful purposes.
The agreement requires approval by the U.S. Congress in Washington. Despite substantial opposition from Israel and some Republicans, President Barack Obama has expressed his determination to see its passage.
Under the agreement, the European Union and United States will lift all energy, economic, and financial sanctions as soon as Iran has proven compliance with its obligations under the agreement to reduce the number of centrifuges and size of its uranium stockpiles. The United Nations will also eliminate most of its sanctions at this time. This milestone is not likely to occur for six to nine months. Restrictions on the trade of nuclear-related items with Iran will not be fully removed for ten years.
Until that time, businesses around the world must remain vigilant and ensure that they have the necessary policies and procedures in place to avoid violating sanctions through business dealings with Iran. Relief provided under the Joint Plan of Action (a November 2013 agreement between the P5+1 and Iran for limited short-term economic sanctions relief worth roughly $7 billion and a promise of no new sanctions while negotiations towards the current agreement were ongoing) was extended by the Office of Foreign Asset Control (OFAC) until the new agreement goes into effect. But OFAC was equally clear in its statement that the Joint Plan of Action relief will be the only Iran-related sanctions relief in effect until then.
The uncertain timeline has not, however, stopped investors from around the world from taking initial steps to scope out attractive investments so as not to fall behind the competition when sanctions are lifted. Iran’s long isolation has left it with a repressed economy and aging infrastructure, but this also makes Iran an attractive investment opportunity for many.