The Cable

World Powers Lift Sanctions on Iran

The United States and other world powers lifted a raft of crushing sanctions against Iran on Saturday as a landmark nuclear deal with Tehran took effect. Hours earlier, Iran released five Americans it had detained, including Washington Post reporter Jason Rezaian.

US Secretary of State John Kerry gestures during a press conference at the E3/EU+3 and Iran talks at the International Atomic Energy Agency headquarters in Vienna on January 16, 2016.
The historic nuclear accord between Iran and major powers entered into force as the UN confirmed that Tehran has shrunk its atomic programme and as painful sanctions were lifted on the Islamic republic. / AFP / JOE KLAMAR        (Photo credit should read JOE KLAMAR/AFP/Getty Images)
US Secretary of State John Kerry gestures during a press conference at the E3/EU+3 and Iran talks at the International Atomic Energy Agency headquarters in Vienna on January 16, 2016. The historic nuclear accord between Iran and major powers entered into force as the UN confirmed that Tehran has shrunk its atomic programme and as painful sanctions were lifted on the Islamic republic. / AFP / JOE KLAMAR (Photo credit should read JOE KLAMAR/AFP/Getty Images)

The United States and other world powers lifted a raft of crushing sanctions against Iran on Saturday as a landmark nuclear deal with Tehran took effect. Hours earlier, Iran released five Americans it had detained, including Washington Post reporter Jason Rezaian.

The sanctions relief move hastens Tehran’s return to the global economy and gives the Islamic Republic access to more than $50 billion in assets frozen in accounts around the world.

The move was triggered by a report from the International Atomic Energy Agency verifying that Tehran has placed curbs on its nuclear program as agreed to in the deal in July between the United States, Britain, France, Germany, Russia, China, and Iran.

We welcome that Iran has followed through on the promises it has made,” Secretary of State John Kerry said during a press conference in Vienna. “It kept its word, and we will continue to do the same.”

The IAEA report certifies that Tehran shipped stockpiles of its enriched uranium out of the country, reduced the number of its centrifuges by two-thirds and disabled its Arak nuclear reactor, among other steps.

The measures extend Iran’s “breakout time,” or how long it would take for Tehran to develop enough fuel for a nuclear bomb, to one year.

The Islamic Republic will also be under invasive monitoring by the IAEA for years to come, and face restrictions on imports of technologies used for the development of a nuclear weapon.

The deal, which overcame intense political pressure from pro-Israel lawmakers in the U.S. Congress, required over two years of close collaboration between Kerry and Iranian Foreign Minister Javad Zarif. That engagement has led the two governments to use the diplomatic channel to address issues outside the nuclear realm.

Since Jan. 1, the two diplomats have phoned each other at least 11 times on issues ranging from the nuclear deal to tensions between Iran and Saudi Arabia to peace efforts in Syria. Last week, the open channel proved crucial in quickly resolving a tense flashpoint after Tehran detained 10 U.S. sailors who entered Iranian waters. Tehran returned them within 24 hours.

But given the unique and personal nature of the Kerry-Zarif partnership, it’s unclear who will steward the bilateral relationship into the next administration — especially if a Republican wins the White House in the 2016 elections. In Washington, GOP leaders immediately decried the lifting of economic sanctions in a flurry of statements.

“Today, the Obama administration will begin lifting economic sanctions on the world’s leading state sponsor of terrorism,” said House Speaker Paul Ryan in a statement. “Iran is likely to use this cash infusion … to finance terrorists.”

On Saturday, Democratic frontrunner Hillary Clinton “welcomed” the implementation of the nuclear agreement, but noted her opposition to Iran’s recent test of a ballistic missile. Her campaign has subtly conveyed that Clinton would be tougher on Tehran if she becomes president.

For international observers, the fast pace with which Iran complied with the deal surprised analysts who expected the process to drag on for months.

“Most experts believed implementation day would not come until the spring or summer of 2016, but instead it is in mid-January,” Ilan Goldenberg, a senior fellow at the Center for a New American Security and former Obama administration official, told FP.

A main driver of Iran’s breakneck compliance is a calculation by Iranian President Hassan Rouhani that he needs to produce tangible relief from sanctions for his constituents before parliamentary elections on Feb. 26.

The election, which comes two years after he assumed power, is widely viewed as a referendum on the moderate leader who was elected in part by promising an end to the punishing international sanctions. Western leaders prefer Rouhani over his right-wing predecessor, Mahmoud Ahmadinejad, and made plain that if sanctions relief helps the current president’s electoral prospects, it’s just another benefit of the landmark nuclear deal.

“We hope that [Rouhani] will garner some support because of the sanctions relief,” German ambassador to the U.S. Peter Wittig told reporters Friday.

Implementation clears the way for Iranian citizens to feel benefits of the agreement. It will allow Iranian banks to restore ties with the European banking system, and open new business opportunities in the country to multinational corporations.

But the economic relief for Iran won’t be immediate.

Iran owns more than $100 billion in assets around the world, in banks in Japan, South Korea, China and other countries. Now that the funds have been unfrozen, about half will service Iran’s pre-existing debts. It will also take time for the available funds to be released to Iran.

“To defreeze these frozen assets is a time-consuming process. This will be a long haul,” Wittig said.

Experts also said that despite the lifting of nuclear-related sanctions on Iran, foreign businesses will be wary to invest right away. “The hangover from businesses and banks being resistant to doing business with Iran is going to be fierce,” Richard Nephew, the former sanctions chief for the U.S. negotiating team, told FP. “I think Iran will only really start to feel strong positive economic impact in 2017.”

Shortly before the IAEA report was finalized, Iran released Rezaian and three other U.S citizens imprisoned in Iran. In exchange, the U.S. granted clemency to seven Iranians. In a separate agreement, Iran released a fifth American, a recently detained student.

Rezaian, who was convicted of espionage in a closed-door trial that sparked widespread condemnation from free speech advocates, had been held by Iranian authorities since July 2014.

Besides Rezaian, Iran released Amir Hekmat, a former U.S. Marine, Saeed Abedni, a pastor, Matthew Trevithick, a student, and Nosratollah Khosravi. A U.S. official said Iran has also “committed to continue cooperating with the United States to determine the whereabouts of Robert Levinson,” a former FBI agent who disappeared in Iran several years ago.

The seven Iranian individuals who were granted clemency reportedly ran afoul of U.S. sanctions laws prohibiting trade with Iran.

“The United States also removed any Interpol red notices and dismissed any charges against 14 Iranians for whom it was assessed that extradition requests were unlikely to be successful,” said the official, who released details of the agreement on condition of anonymity.

This post has been updated.

Getty Images

John Hudson is a senior reporter at Foreign Policy, where he covers diplomacy and national security issues in Washington. He has reported from several geopolitical hotspots, including Ukraine, Pakistan, Malaysia, China, and Georgia. Prior to joining FP, John covered politics and global affairs for the Atlantic magazine’s news blog, the Atlantic Wire. In 2008, he covered the August war between Russia and Georgia from Tbilisi and the breakaway region of Abkhazia. He has appeared on CNN, MSNBC, BBC, C-SPAN, Fox News radio, Al Jazeera, and other broadcast outlets. He has been with the magazine since 2013. @john_hudson

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