The United States and other world powers welcomed Iran back in to the global economy on January 16, 2016, lifting burdensome economic sanctions as the historic Joint Comprehensive Plan of Action (JCPOA) took effect. The IAEA, the United Nations nuclear watchdog organization, released a report on January 16 confirming that Iran had complied with all aspects of the nuclear agreement. IAEA Director General Yukiya Amano penned a statement that read, “Iran has completed the necessary preparatory steps to start the implementation of the Joint Comprehensive Plan of Action... Relations between Iran and the IAEA now enter a new phase. It is an important day for the international community. In line with its commitments, Iran will start to provisionally implement the Additional Protocol to its Safeguards Agreement with the IAEA. Together with other nuclear-related measures under the JCPOA, this increases the Agency’s ability to monitor nuclear activities in Iran and to verify that they are peaceful.” (IAEA, January 16, 2016) To read this final IAEA report confirming that Iran is in compliance with all aspects of the nuclear agreement, please click here.
The United Nations Security Council received the IAEA report detailing Iran's compliance with the JCPOA on January 16, 2016, triggering an automatic end to most United Nations Sanctions on Iran under UNSCR 2231 adopted on July 20, 2015. UNSCR 2231 states that when Iran completes all of the necessary steps to implement the agreement and the IAEA approves, seven Security Council resolutions against Iran will be lifted. The resolution includes an automatic snap-back provision to re-impose sanctions, should Iran be found in violation of the JCPOA. The Iranians are encouraged not to engage in research and development of ballistic missiles capable of delivering a nuclear warhead for eight years under UNSCR 2231, but the language is vague. This resolution also includes an arms embargo preventing Iran from selling or purchasing any weapons for five years.
In order to reach this historic date, Iran had to comply with all aspects of the nuclear agreement including dismantling approximately 13,000 centrifuges, removing the core of the Arak nuclear reactor and filling it with cement, and shipping the vast majority of it's enriched uranium stockpile to Russia. Speaking at a press conference in Vienna, Austria, U.S. Secretary of State John Kerry pointed out that Iran's stockpile of enriched uranium was just two percent of what it was prior to the JCPOA.
Although U.S. and International economic sanctions were lifted, the U.S. embargo on Iran remained in place, preventing U.S. companies from engaging in direct business with their Iranian counterparts with a few minor exceptions. These exceptions include passenger aircraft, rugs, and pistachio nuts. In addition to the embargo, sanctions relating to Iran's human rights abuses and support for terrorism remained in place. New sanctions pertaining to Iran's recent ballistic missile tests were simultaneously put in place by the Obama administration along with the lifting of economic sanctions. These sanctions targetted eleven individuals and small companies suspected of shipping critical technologies to Iran, such as carbon-fiber and parts to various missiles. Most Iranians will not be affected by these new sanctions. Iranian officials referred to these new sanctions in the subsequent days as “illegitimate,” and “propagandastic.” Iranian Foreign Ministry Spokesman Hossein Jaberi Ansari claimed that the sanctions “have no legal or moral legitimacy.” (Yahoo, January 18, 2016) Other Iranian officials asserted that they would continue to test their ballistic missiles, regardless of these new sanctions.
With the lifting of these sanctions, Iran will be able to export as much crude oil as it can find demand for.
Following the implementation of the nuclear agreement and just hours before the lifting of economic sanctions was to be announced, Iran released four Americans that had been held hostage for various periods of time, in a prisoner-swap. Included in the group was Washington Post reported Jason Rezaian, who was arrested on July 22, 2014, and found guilty of espionage in a closed trial in October 2015. Rezaian's wife was arrested with him, but was released in October 2014. The American prisoners released in the prisoner-swap with Iran were Rezaian, Marine veteran Amir Hekmati, Christian pastor Saeed Abedini, and Nosratollah Khosravi-Roodsari. Khosravi-Roodsari opted to stay in Iran after his release, and the other three were brought to Germany where they underwent medical evaluations. All four of these individuals held dual Iranian-U.S. citizenship. The United States released seven prisoners who had been involved in exporting products to Iran in violation of trade sanctions, in exchange for the four Iranian prisoners. Iranian officials and their American peers had engaged in secret negotiations planning this prisoner exchange for more than a year beforehand. Jewish Former FBI Agent and suspected Iranian prisoner Robert Levinson was not released with the group. Separately, Iran released recently detained student Matthew Trevithick. It was revealed in the following months that the United States paid Iran a sum of $400 million that night to secure the safe release of the prisoners. Although the payment was part of a $1.7 billion I.O.U. to Iran for equipment purchased from the United States but never delivered, State Department officials confirmed in mid-August 2016 that the payment was used as leverage, and the timing was no coincidence. The remaining $1.3 billion was delivered to Iran following the release of the prisoners.
Iran's Ayatollah Khamenei published a letter to President Hassan Rouhani on January 19, 2016, which was later posted on Khamenei's website. In the letter he calls American actions during the previous weeks deeply suspicious, refers to America as arrogant, and states that Iran has been bullied by sanctions levied by the international community. He instructs Rouhani to watch for American “deceptions and breaches of promises.” (Khamenei.ir, January 20, 2016)
Valiollah Seif, the head of Iran's Central bank, said that Tehran successfully transfered funds from banks in Japan and South Korea to banks in Germany and the United Arab Emirates on January 19, 2016. It was not revealed how much money was transfered during this transaction, but Seif revealed that the lifting of sanctions with the implementation of the JCPOA would free up $32 billion in frozen overseas assets. U.S. based credit card companies like Mastercard and Visa, and payment processing applications such as Paypal are still forbidden from doing business in Iran. Most Iranians choose to use cash, because their credit and banking is not tied to the global system.
New security arrangements to monitor the arms embargo against Iran as well as restrictions on Iran's ballistic missile program and all other programs still active after the implementation of the JCPOA were established by the United Nations Security Council on January 21, 2016. These arrangements and procedures replaced the Security Council committee charged with monitoring Iranian violations of sanctions that were removed with the implementation of the deal. The resolution including these arrangements also provides for an automatic reimposition of sanctions on Iran should the Security Council find it to be in violation of the JCPOA.
A bipartisan group of lawmakers, diplomats, policymakers, and experts published a statement on U.S. policy towards Iran in the weeks following the implementation of the deal. This statement explains that although the deal has been implemented there is still much work to be done, and encourages the Obama administration to reject Iran as an ally in the fight against ISIS as well as continue to closely monitor Iran to be sure it is not cheating the deal. The group statement recommends being completely willing to snap back sanctions, and bolstering ties to regional allies as ways to keep Iran contained. To read the full statement released by the group, please click here.
French diplomats asked the European Union on January 27, 2016, to consider new sanctions on Iran over their recent ballistic missile tests. It is unlikely that new sanctions will be imposed by the EU, as other member states view the move as counterproductive to efforts to revive political and economic ties with the Islamic Republic.
Iranian Army commander Major General Ataollah Salehi told reporters in Tehran on February 4, 2015, that their missile tests were not a breach of the JCPOA, and the Iranian missile program will continue to develop. Speaking about the new sanctions placed against the Islamic Republic in response to their ballistic missile tests, Salehi stated, “We are neither paying any attention to the resolutions against Iran, nor implementing them. We are doing our job and our missile program for the future will be stronger and more precise.” (PressTV, February 4, 2016)
Iran test-fired two Qadr H missiles with the phrase “Israel must be wiped out,” emblazoned on the sides on March 8, 2016. The missile test coincided with U.S. Vice President Joe Biden's visit to Israel to discuss upcoming aid packages. The head of Iran’s Revolutionary Guard’s aerospace division, Amir Ali Hajizadeh, made it clear that the missile test was intended to intimidate Israel, stating “The 2,000-kilometer (1,240-mile) range of our missiles is to confront the Zionist regime. Israel is surrounded by Islamic countries and it will not last long in a war. It will collapse even before being hit by these missiles.” (Time Magazine, March 8, 2016) The United States has Iran under “close watch,” after the missile tests, according to Vice President Joe Biden. The United States pressured the United Nations to condemn the missile tests as a violation of resolution 2231 during the subsequent week. Russian officials sided with Iran, claiming that 2231 only “suggests” Iran stop test-firing missiles. Therefore, Russian Ambassador to the United Nations Vitaly Churkin asserted the Iranian missile test did not violate 2231, stating to reporters that, “A call is different from a ban so legally you cannot violate a call, you can comply with a call or you can ignore the call, but you cannot violate a call.” (Free Beacon, March 15, 2016)
In response to these ballistic missile tests, the United States imposed new sanctions on Iranian defense firms, units of the Iranian Revolutionary Gaurds, Iran's Mahan Air, and two firms in the United Arab Emirates. These sanctions targetted entities that aided Mahan Air in smuggling various supplies into Syria, and played a supportive role in the country's latest missile tests.
U.S., German, British, and French officials expressed their opinions that the missile test was “in defiance” of resolution 2231 in a letter to UN Secretary General Ban Ki-moon on March 29, 2016. The letter stated that the missiles launched were “inherently capable” of delivering nuclear weapons, and encouraged the Security Council to respond appropriately to the Iranian aggression. Following the launch, Iranian Supreme Leader Ayatollah Khamenei offered support to the IRGC, bluntly stating, “Those who say the future is in negotiations, not in missiles, are either ignorant or traitors.” (Reuters, March 30, 2016)
Iranian officials announced that they had tested a significantly more accurate ballistic missile with a 2,000-kilometer range on May 9, 2016. The missile tested in early May can be remote-guided to an accuracy of within 8 meters of it's target, according to Deputy Chief of Staff of the Iranian Armed Forces Brigadier General Ali Abdollahi.
Although global terror attacks experienced a 13% decline from 2014 to 2015, and global deaths from terror attacks experienced a 14% decline over the same period, a U.S. State Department report released in June 2016 asserted that Iran was still the top global sponsor of terrorism. Syria and Sudan were also named as significant state sponsors of terrorism in the State Department documents. During 2015 Iran sowed instability in the Middle East by arming and funding Hezbollah and the Assad regime, and using the Quds Force of its Islamic Revolutionary Guard Corps to influence and drive foreign policy. Iran also provided financial and material support to many other groups, most notably the Hamas terror organization, various militant groups in Bahrain, and Houthi rebels in Yemen.
While speaking at the Aspen Ideas Festival in mid-June 2016, U.S. Secretary of State John Kerry stated that in his opinion Iranian involvement in Iraq was helping the United States in the fight against ISIS. Kerry stated, using a different name for the terrorist group, that “I can tell you that Iran in Iraq has been in certain ways helpful, and they clearly are focused on ISIL-Daesh.” The Secretary of State went on to say that Iran and the United States seem to have common goals in Iraq of defeating the Islamic State. (CNN, June 28, 2016)
Iran test-fired a North Korean BM-25 Musudan ballistic missile on July 11, 2016, which exploded shortly after launch.
The only text linked to the JCPOA not released to the public was declassified shortly following the one-year anniversary of the agreement. The document, obtained and verified by anonymous sources, states that as of January 2027 Iran can and likely will begin to replace it's old centrifuges with thousands of modern machines.
Addressing the annual Iranian military parade in September 2016, Chief of Staff of the Armed Forces Major General Mohammad Hossein Baqeri contested that, “all military tests and war games will continue to be held according to the schedule and will not be suspended or delayed under any circumstances.” (Tasnim, September 22, 2016)
Seventy-six national security experts signed a report issued by the National Iranian American Council in November 2016, urgung President-elect Donald Trump to honor the nuclear deal and not “scrap” it, after making clear during the campaign he intended to do just that. The report, titled “Maximizing the Opening With Iran: How President Trump can Secure American Interests in the Middle East,” argues that the agreement with Iran has significantly reduced the threat of war in the Middle East. President of the National Iranian American Council, Trita Parsi, issued a statement along with the report, arguing that “Trump may have been critical of the Iran deal during the campaign, but he will need the deal to remain intact to achieve his other stated goals.”
The International Atomic Energy Agency (IAEA) concluded in their periodic report published in September 2016 that Iran had slightly exceeded the soft 130-tonne limit on it's stock of heavy water for the second time since the JCPOA was put in place in January. The other six signatories to the JCPOA, including the United States, issued statements encouraging the IAEA to make the limit more firm. To read the IAEA Board of Governors Report released in September 2016, please click here. It was confirmed by the IAEA in early December 2016 that Iran had shipped 11 tonnes of heavy water abroad, bringing their stockpile back under the limit set forth in the JCPOA.
Iran Opens For Business
The implementation of the nuclear deal and subsequent lifting of harsh economic sanctions opened the Iranian economy up for investment and trade with most of the world.
Chinese government and business leaders held meetings with Iranian officials in early 2016 following the implementation of the JCPOA. On January 23, 2016, both countries pledged to increase bilateral trade to $600 billion in the coming decade. China's President Xi Jinping was the first foreign leader to visit Iran after international sanctions were lifted.
Iranian President Hassan Rouhani visited Italy in the week following implementation day, for, as Italian Foreign Minister Paolo Gentiloni put it, “a comprehensive relaunch of a strategic alliance.” (Washington Post, February 2, 2016) Deals signed between the Iranian and Italian government on January 25, 2015, amounted to approximately 17 billion Euros, according to the Italian Industry Minister. President Rouhani spent three days in Italy, before travelling to France for the second part of his January 2016 European trip. French automaker Peugeot signed a deal with Iranian automaker Iran Khodro, pledging to produce 200,000 cars per year at a plant neat Tehran which they will also upgrade. When the car manufacturer was forced to close business with Iran in 2012 it suffered major losses, as Iran was Peugot's second largest market. As an apology for leaving the Iranian market abruptly due to sanctions, Peugot waived $89 million in outstanding Iranian debts, pledged to provide $28 million in free car parts, and also confirmed they will be providing a free production line for the Peugot 207 model, worth $12 million. Peugot was the first Western auto manufacturer to jump back into business with Iran, and the first vehicles are expected to roll off the production line in 2017. Airbus announced a deal with Iran Airlines during Rouhani's trip, agreeing to sell 118 aircrafts to the state-run airline. The total value of the deals signed by French and Iranian entities amounted to an estimated $16 billion.
Iranian Vice President Mohammad Bagher Nobakht said on state-run television that $100 billion in global Iranian frozen assets had been released, on February 2, 2016. The majority of these funds were released from banks operating in China, India, and Turkey. Nobakht also claimed that Iran was taking steps to rejoin the Belgium-based SWIFT international banking network. Later that week, on February 9, 2016, Nobakht stated that the money will not come to Iran and instead will still be kept in the foreign bank accounts, to avoid domestic inflation. This money will be handled the same as Iranian oil revenues in foreign institutions, according to the Vice President. Less than 10% of this money, $7 billion, belongs to the Iranian government, which they will receive and invest in infrastructure and development projects. The remaining money is owned by the National Development Fund of Iran ($50 billion), state-controlled oil companies and banks ($6 billion), and the Iranian Central Bank ($38 billion). The Iranian government's goal is to achieve a GDP growth rate of 8% annually by 2020, according to Nobakht.
Although specifics such as the timing and quantity of the purchase were not immediately announced, Iranian Defense Minister Hossein Dehghan published comments on the Defense Ministry website on February 10, 2016, confirming that Iran will sign contracts with Russia to purchase Sukhoi-30 fighter jets. Iran would also be involved in the production of the aircraft, according to Dehghan. The Sukhoi-30 fighter jet is equivalent to the American made F-15E fighter bomber jet. Dehghan also claimed that Iran would begin taking delivery of the Russian S-300 missile system within the coming months. During a visit to Russia on February 17, 2016, Dehghan claimed that the S-300 missile system would be delivered to Iran later that week. The U.S. State Department contended however, that the sale of this missile system without Security Council approval would be a direct violation of a UN arms embargo still in place for the next five years against Iran. While negotiating the JCPOA, agreed to in July 2015, the P5+1 kept in place a ban on conventional arms sales to Iran without prior UN Security Council approval. Iran originally announced that Russia had delivered the first components of the S-300 missile system during the weekend of April 9, 2016, but Iranian officialls recalled their statements in the following days. The missile system was shown off around Tehran on April 17, 2016, during the annual Iranian Army Day Parade. The missile portion of the system was delivered in mid-July 2016, according to Russian news agencies. The Iranian military deployed this missile system to central Iran to protect it's Fordow nuclear facility in August 2016.
Iranian citizens marked the anniversary of the 1979 Islamic Revolution on February 11, 2016, with chants of “death to America,” and “death to Israel.” President Rouhani spoke at a massive rally drawing thousands of participants, and pledged that Iran would never bow to the influence of the West.
On February 29, 2016, the Financial Action Task Force (FATF) released their first public statement on Iran since sanctions relief went into effect. The FATF sets international standards for countering money laundering and terror finance activities, and has issued statements pertaining to Iran in February, June, and October of each year since 2008. Despite the lifting of sanctions by the international community and the implementation of the JCPOA, the FATF did not revise their February 2016 statement. The statement by the task force, which includes 37 member states, called on Iran to address it's discrepancies with the organization, and urged it's members to warn their banks about the risks of doing business with Iran. Iran is still considered a high-risk jurisdiction to do business in by the FATF.
U.S.-based jet manufacturer Boeing inked a $17.6 billion deal to sell airliners to Iran in mid-June 2016, but the deal was scrapped in early July after U.S. House members rejected it in a vote of 239-185.
Iran announced in August 2016 that it was moving forward with plans to build two new nuclear power plants under the parameters of the JCPOA, which will cost approximately $10 million. State Department officials clarified that this type of construction does not violate the agreement, stating, “the [nuclear deal] does not prevent Iran from pursuing new light-water reactors... Any new nuclear reactors in Iran will be subject to its safeguards obligations.” (Free Beacon, August 12, 2016)
A dual British-Iranian citizen who was involved in the banking-related aspects of the nuclear negotiations was arrested in Iran under charges of espionage in late August 2016. The charges against the alleged “spy,” identified as Abdolrasoul Dorri Esfahani, contend that he bypassed official channels and divulged sensitive information directly to the U.S. negotiators.
The National Iranian Oil Company reported in September 2016 that their exports of crude oil to India in August more than tripled from the previous year's numbers, to 576,000 bpd. Iranian crude oil exports to China grew 48%, to 749,000 bpd during the same month, and crude oil exports to China for the year were up 7%. Japanese imports of Iranian crude oil in 2016 rose 45% compared to 2015, and South Korean imports more than doubled.
The United States Treasury Department published a new set of guidelines for doing business with Iran on October 7, 2016, that eased financial sanctions and loosened monetary restrictions on the nation. Sanctions on the Iranian military's IRGC remained in place, as did restrictions pertaining to Iranian access to the U.S. financial system and banking institutions.
Total, an enegry company based in France, became the first Western energy company to sign a major deal with the Iranian government following the implementation of the JCPOA. The deal, signed on November 8, 2016, provides for “Phase 11,” development of the South Pars gas condensate field, the largest gas field in the world. France's Total already had a hand in developing the South Pars, spearheading phases 1 and 2 of the field's development in the early 2000's. The field, whichcovers 3,700 square miles, is shared between Iran and Qatar.
Lawmakers in the United States House of Representatives passed a 10-year reauthorization of the Iran Sanctions Act (ISA) on November 15, 2016, first passed in 1996. The members also voted to impose sanctions on the Syrian government and it's supporters, including Russia and Iran, for war crimes and crimes against humanity committed against it's citizens. The legislation passed the Senate unanimously in a 99-0 vote, and passed the House with a vote of 419-1.
In response to the reauthorization of the ISA, Iranian President Hassan Rouhani ordered the development of a nuclear-propulsion system for Iranian ships on December 14, 2016. Iran had expressed interest in building nuclear-powered vessels before, most notably in 2012.
In case diplomatic measures to curb Iran's nuclear program failed and led to a military conflict, according to Obama administration and intelligence officials the United States had a secret plan to carry out a cyber-attack against Iran code-named Nitro Zeus. The plan, developed as an alternative option to the P5+1 negotiations, would have largely disabled Iranian air defenses and communications systems, as well as crucial parts of the Iranian power grid. According to security and intelligence officials, at one point the preparations for Nitro Zeus included investments of millions of dollars and thousands of employees implanting code and programs within Iranian computer networks. A separate plan was developed by U.S. intelligence agencies to disable the Fordow nuclear facility by planting a destructive “worm” in the computer system, in a covert operation that would have needed the sole authorization of the President to carry out. This operation would have been a follow-up to Operation Olympic Games, in which the United States and Israel mounted a cyber-attack on the Iranian Natanz facility that destroyed 1,000 centrifuges.
The existence of the Nitro Zeus plan was revealed while director Alex Gibney was researching for his documentary “Zero Days,” which explores the conflict between Iran and West in the years leading up to the nuclear agreement. Gibney's findings were confirmed by separate New York Times interviews. The Nitro Zeus contingency plan was shelved after Iranian and P5+1 negotiators reached an agreement in July 2015.