The UK and EU have reimposed sanctions on Iran after a last-minute vote to extend sanctions relief to Iran under a previously agreed nuclear deal was rejected.
Businesses and assets with links to Iran have been advised to consider how their operations might now be impacted.
UN sanctions on Iran were lifted in 2016 after the country signed a ‘joint comprehensive plan of action’ (JCPoA) in 2015 in tandem with the US, China, Russia, UK, France, Germany and the EU, under which it committed to a series of actions limiting its nuclear and weapons programs. However, since then, Iran has been accused of reneging on the agreement and of ramping up its uranium enrichment activities. The US withdrew from the JCPoA in 2018 and revoked the relief from exposure to US risk that had had been in place for non-US related activities.
While the other parties to the agreement did not withdraw from the agreement, Iran was subject to growing international pressure to bring itself back within full compliance of the JCPoA. That pressure culminated with France, Germany and the UK, collectively known as the E3, triggering a so-called ‘snapback’ process earlier this month. The snapback was provided for in the 2015 UN Resolution 2231 that formalised and endorsed the JCPoA and is a mechanism that could be triggered by any party to the JCPoA if it was considered that Iran was significantly violating the terms of the deal. The process provided for the swift reimposition of UN sanctions on Iran in those circumstances and, once triggered, the usual veto powers of permanent UN Security Council members – including Russia and China – were to be bypassed.
Russia and China opposed the triggering of the snapback mechanism by the E3 and last weekend proposed that the sanctions relief provided to Iran under the JCPoA be extended for a further six months. However, that proposal was voted down by the UN Security Council.
UK regulations provide for the imposition of financial sanctions on individuals and organisations linked to Iran’s nuclear programme. Since the weekend, the UK government has designated 62 entities and a further nine individuals as subject to financial sanctions (25-page / 1.7MB PDF) under those regulations. Those entities and individuals, which include financial institutions and those operating in the energy sector, are considered to be or have been involved in the proliferation or development of nuclear weapons in, or for use in, Iran, or an activity that could lead to the development of nuclear weapons in, or for use in, Iran; or the development of a nuclear weapon delivery system in, or for use in, Iran.
Sanctions expert Stacy Keen of Pinsent Masons said: “It is not just those entities and individuals that are caught within the scope of the UK’s financial sanctions restrictions. The restrictions extend to entities that are owned or controlled by those directly designated.”
The UK has issued four general licences that provide for some exceptions to sanctions violations, but they are limited in terms of the scope and period of authorisation.
Rachel Trease, also of Pinsent Masons, said: “The measures, at present, go beyond the new UK sanctions, and include financial sanctions, travel bans, and trade sanctions, for example, restricting the sale, supply, transfer or export of key equipment used in the energy sector to any Iranian person or for use in Iran and dealings with Iranian origin / exported / located petrochemical products.”
“The UK has issued a statement that further sanctions are anticipated over the coming days, including measures needed to comply with UN Iran sanctions obligations. Alignment with the EU position is anticipated,” she added.
The reimposition of UN sanctions on Iran was welcomed by the US government.
US secretary of state Marco Rubio said: “President Trump has been clear that diplomacy is still an option – a deal remains the best outcome for the Iranian people and the world. For that to happen, Iran must accept direct talks, held in good faith, without stalling or obfuscation. Absent such a deal, it is incumbent on partners to implement snapback sanctions immediately in order to pressure Iran’s leaders to do what is right for their nation, and best for the safety of the world.”
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