Unresolved Dollar Exchange Issues Will Undermine the JCPOA

Valiollah Seif, the Governor of the Central Bank of Iran, who is currently in Washington, stated on Friday, April 27, during a speech that Iran has not been able to utilize its freed assets since the implementation of the nuclear agreement. Mr. Seif had an unusual meeting with the U.S. Treasury Secretary a day earlier. This meeting occurred at a time when various statements had been made regarding the U.S. government's actions to ease some sanctions for non-American companies willing to trade with Iran. Some American lawmakers, including Paul Ryan, the Speaker of the House of Representatives, have also expressed their opposition to these potential actions. To explore the dimensions of Iran's challenges in returning to the international community, I spoke with Sam Barahani, a sanctions lawyer and analyst of Iran-U.S. relations, who lives in Los Angeles. Your area of work is economic law, specifically sanctions. Since the implementation of the nuclear agreement, have you encountered examples of problems with the lifting of sanctions against Iran and concerns regarding investment or contracts with Iran? Among our clients, there is a kind of confusion and concern regarding the U.S. sanctions that remain in place. Particularly among European companies, there are many questions regarding these sanctions and their impact on them. With the lifting of U.S. secondary sanctions, a kind of optimism emerged among European companies that Iran's doors were open. Currently, the general understanding of the situation is that this process is much slower than initially thought, due to the primary U.S. sanctions that the nuclear agreement did not lead to lifting. As a result, our clients are somewhat hesitant in their transactions with Iran. The Governor of the Central Bank of Iran spoke on Friday at the Council on Foreign Relations about serious problems regarding Iran's use of its blocked assets, while stating that American officials need to talk to international institutions and assure them that they will not face problems in trading with Iran. In your opinion, is the current problem a legal one, or can it be resolved through negotiation and guarantees? The problem is somewhat a combination of these two issues. It is important for the U.S. that Iran gains the benefits it should receive in return for the JCPOA. However, the truth is that the U.S. has prohibited the dollar exchanges that are vital for Iran in this regard. We saw signs of this duality even before the agreement was reached, and it seems these issues were not resolved in the JCPOA. Now, with some financial transactions or attempts to conduct them, we are witnessing these problems. The issue here is that the international financial system is based on dollar transactions, and U.S. law in the primary sanctions prohibited the use of the dollar for Iran, which remains in place. Is there a legal way to resolve this issue, or must the parties negotiate again about what they agreed upon in the JCPOA? In my opinion, there is a window for finding a solution or compromise in this regard between Iran and the U.S. We see signs of this compromise, including the meeting of the Iranian Central Bank governor with the U.S. Treasury Secretary, the outcome of which is not yet clear, and the parties have not commented on it. Mr. Lew previously stated that the U.S. would not allow Iran access to the U.S. financial system, and Mr. Seif reiterated today that the U.S. must allow limited access to its financial system. As a result, it seems both sides are inclined to find a solution. I believe there are a few months left before this issue becomes highly political, or a hot topic in the U.S. electoral competition, or conservatives in Iran claim that Iran has not benefited from the JCPOA. Will this issue threaten the nuclear agreement? Iran has previously been able to circumvent these dollar exchange restrictions and can do so today, but it will come at a cost. Given the lifting of secondary sanctions, Iran does not want to incur these costs again. I believe if Iran is forced to, it will pay the cost to maintain the agreement, but it is clear that the unresolved dollar exchange issue will damage the JCPOA and the trust-building process between Iran and the U.S., and it will certainly not put the JCPOA on the right path it should follow.