Iran deal may survive an initial blow from Trump

 In Politics

President Donald Trump is pictured. | AP Photo

If President Donald Trump restores any sanctions, the U.S. will technically be in violation of the nuclear deal, analysts say. | Susan Walsh/AP Photo

Amid talk of May 12 as a do-or-die date for Trump to restore sanctions, experts say a far more impactful decision point doesn’t come until mid-summer.

The Iran nuclear deal may have more time than you think.

French President Emmanuel Macron and German Chancellor Angela Merkel are both visiting Washington this week in part to convince President Donald Trump not to withdraw from the agreement next month.

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Most discussions about the deal have focused on May 12 as a make-or-break deadline when Trump must decide whether to continue suspending economic sanctions on Iran that were lifted under the July 2015 deal but come up for periodic review. As the date has crept closer, Iranian officials as well as Trump have ramped up their rhetoric, with Iran threatening to restart its nuclear activity if Trump scuttles the deal and Trump warning Iran Tuesday that it will face “big problems” if it takes that path.

But some experts say the deal can survive even if Trump sits back and allows the sanctions that must be reviewed by May 12 to take effect once more. The potentially more important deadline, they say, arrives around July 11, when Trump must decide whether to re-impose a substantially larger batch of sanctions.

Even then, the deal may hobble forward in a diminished format. But the sanctions that expire this summer are more likely to provoke an extreme reaction from Tehran — including a possible resumption of nuclear activities — than those coming up next month, some analysts said.

The deal is “unlikely to completely blow up [May 12] since neither side wants that or to be blamed,” said Philip Gordon, who helped the Obama White House broker the agreement. “But still it can only take so many blows before it will die a death by a thousand cuts.”

The 2015 nuclear deal is a political arrangement among Iran, the U.S., Germany, China, Russia, Britain and France, which removed nuclear-related U.S. and international sanctions on Iran in exchange for the Islamic Republic’s dismantling of its nuclear program. It’s not a treaty or binding legal document. That means the various parties have leeway to define whether they’re abiding by the agreement or what will push them to leave it.

Some critics of the deal say Trump should re-impose the May 12 batch of sanctions to ramp up pressure on Iran and America’s European allies to find ways to address the U.S. president’s concerns about the agreement before mid-July’s sanctions decision. That would amount to a kind of punch in the nose of the deal rather than a lethal blow.

Few U.S. companies currently do business in Iran, thanks to continuing U.S. sanctions related to human rights abuses, ballistic missiles and terrorism. But the U.S. can make it much harder for foreign companies to do so. Washington can impose so-called secondary sanctions on foreign companies that do business with Iran’s Central Bank, effectively barring them from making transactions in U.S. dollars.

Those sanctions, some of which are up for review in May, are especially likely to scare off banks and other financial entities in countries that purchase Iranian oil, because Iran requires such transactions to go through its Central Bank. Limiting exports from Iran’s oil-dependent economy, especially to Europe, was a key goal of the original sanctions imposed several years ago, as the U.S pressured Iran to make nuclear concessions.

But the secondary sanctions whose waivers expire in July would punish Iran’s economy more broadly because they hit an array of sectors—including shipping, commercial aviation, precious metals, and more oil exports.

“The May 12 waiver deadline may come and go without any immediate impact on sanctions or the deal, but the July deadline may matter an awful lot more,” said David Mortlock, a sanctions lawyer who worked on Iran-related issues under Obama. “In July, we could see broad sanctions come roaring back effective immediately, with significant impact on global trade with Iran.”

Trump officials have accused Iran of several minor technical violations of the agreement and also say it has breached the “spirit” of the deal, giving them license to walk away from U.S. commitments. But international inspectors say that Iran has adhered to its obligations under the agreement.

If Trump restores any sanctions, the U.S. will technically be in violation of the nuclear deal, analysts say.

That doesn’t mean, however, that Trump will necessarily quit the deal completely. If anything, some of his aides have suggested that the U.S. will still press forward with attempts to “fix” the deal regardless of Trump’s May 12 decision.

CIA Director Mike Pompeo hinted at this prospect during his confirmation hearing for secretary of state earlier this month.

“If there’s no chance that we can fix it,” Pompeo said, “I will recommend to the president that we do our level best to work with our allies to achieve a better outcome and a better deal – even after May 12, senator. Even after May 12, there’s still much diplomatic work to be done.”

Iran can always choose to ignore any U.S. reimposition of sanctions and stick to its side of the bargain anyway, keeping its nuclear program in check and doing what business it can with the non-American outside world.

European countries impacted by the May 12 sanctions may continue doing business with Iran on other fronts, if not necessarily oil, that don’t require dealing with the Central Bank of Iran or other sanctioned Iranian entities. They might also take advantage of nuances in the U.S. sanctions statute that allow for exemptions, even on oil transactions.

Iran’s leaders, of course, are warning Trump not to test them, casting his decision as much more black and white than it has to be.

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