US finds pulling back Iran sanctions is no easy task

US finds pulling back Iran sanctions is no easy task

Administration may have to backtrack on promise to suspend only nuclear-related economic sanctions as part of emerging nuclear deal

US President Barack Obama speaks during a news conference at the G-7 summit in the Schloss Elmau Hotel near Garmisch-Partenkirchen, southern Germany, June 8, 2015. (AP/Carolyn Kaster)
US President Barack Obama speaks during a news conference at the G-7 summit in the Schloss Elmau Hotel near Garmisch-Partenkirchen, southern Germany, June 8, 2015. (AP/Carolyn Kaster)

WASHINGTON (AP) — The Obama administration may have to backtrack on its promise that it will suspend only nuclear-related economic sanctions on Iran as part of an emerging nuclear agreement, officials and others involved in the process tell The Associated Press.

The problem derives from what was once a strong point of the broad US sanctions effort that many credit with bringing Iran to the negotiating table in the first place.

Administration officials vehemently reject that any backtracking is taking place, but they are lumping sanctions together differently from the way members of Congress and critics of the negotiations separate them.

Under the sanctions developed over decades, hundreds of companies and individuals have been penalized not only for their role in the country’s nuclear program but also for ballistic missile research, terrorism, human rights violations and money laundering.

Now the administration is wending its way through that briar patch of interwoven economic sanctions.

The penalties are significant. Sanctioned foreign governments, companies or individuals are generally barred from doing business with US citizens and businesses, or with foreign entities operating in the American financial system. The restrictions are usually accompanied by asset and property freezes as well as visa bans.

Negotiators hope to conclude a final nuclear deal by June 30. According to a framework reached in April, the US will be required to lift sanctions that are related to Iran’s nuclear program but could leave others in place. President Barack Obama can suspend almost all U.S. measures against Iran, though only Congress can revoke them permanently.

“Iran knows that our array of sanctions focused on its efforts to support terrorism and destabilize the region will continue after any nuclear agreement,” Treasury Secretary Jack Lew told a gathering of American Jews in a weekend speech. US officials will “aggressively target the finances of Iranian-backed terrorist groups and the Iranian entities that support them,” he said, including the Lebanese militant group Hezbollah and Iran’s Quds Force.

But that’s easier said than done.

The Treasury Department’s sanctions point man, Adam Szubin, has been tasked with sorting out the mess, according to US officials, though no clear plan has yet been finalized.

Officials say the administration can meet its obligations because of how it interprets nuclear sanctions.

For example, they say measures designed to stop Iran from acquiring ballistic missiles are nuclear-related because they were imposed to push Iran into the negotiations. Also, they say sanctions that may appear non-nuclear are often undergirded by previous actions conceived as efforts to stop Iran’s nuclear program.

The officials who provided information for this story spoke only on condition of anonymity because they weren’t authorized to speak publicly on the private discussions.

After years of negotiations, US officials believe a deal is within reach that for a decade would keep Iran at least a year from being able to build a nuclear weapon.

In return the US would grant billions of dollars in relief from sanctions that have crippled Iran’s economy. But the whole package risks unraveling if the US cannot provide the relief without scrapping sanctions unrelated to Iran’s nuclear program.

Administration officials say they’re examining a range of options that include suspending both nuclear and some non-nuclear sanctions, a step that would face substantial opposition in Congress and elsewhere. Under one scenario, the US could end non-nuclear restrictions on some entities, then slap them back on for another reason. But Iran could then plausibly accuse the US of cheating on its commitments.

Obama has spoken about Iran potentially recouping up to $150 billion in assets trapped overseas. The process for how that would take place is still being worked through, said officials.

The Iranian Central Bank may prove the most glaring example of the administration’s dilemma, and officials acknowledge there is no way to give Iran the sanctions relief justified by its compliance without significantly easing restrictions on the institution.

The bank underpins Iran’s entire economy, and for years the US avoided hitting it with sanctions, fearing such action would spread financial instability and spike oil prices. By late 2011, with Iran’s nuclear program advancing rapidly, Obama and Congress did order penalties, declaring the bank a “primary money laundering concern” and linking its activity to ballistic missile research, terror financing and support for Syrian President Bashar Assad.

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