Many of these sanctions, including so-called "secondary sanctions" that primarily target non-US companies engaging in business in or with Iran entirely outside US jurisdiction, were waived as part the US Government's commitments under the JCPOA. The President's announcement revokes any sanctions waivers issued to implement JCPOA sanctions relief, and has replaced them with temporary waivers to provide for the wind-down of previously-authorized activities in Iran.
Consequences for Norwegian companies doing business in Iran
Norwegian companies have shown great interest in the Iranian market following the nuclear deal, including in sectors such as fish, farming, oil and gas, renewable energy and shipping. Exports from Norway to Iran increased by over 140 percent the first year after the nuclear agreement were concluded.
When the US Government once more introduces secondary sanctions on Iran this will have a major impact on Norwegian companies doing business in Iran. The reason is that so-called secondary sanctions have extraterritorial effect, which means that they apply to all non-US companies for activities occurring entirely outside of the US, even if no US persons are involved. US authorities can retaliate against non US companies that violate secondary sanctions against Iran by blocking their access to the US market and financial system.
When the US secondary sanctions are imposed, the scope of the secondary sanctions applicable to Norwegian companies will expand vastly, returning to the level seen before implementation of the JCPOA and covering a wide range of oil, energy, and shipping transactions with Iran. Norwegian companies engaging in these transactions would then risk being frozen out of the US market and financial system. Perhaps more problematic, the re-imposition of these sanctions would likely deter banks in Norway and elsewhere from dealing with Norwegian companies operating in Iran for fear that the banks would lose access to the US financial systems critical for their business.
As a direct consequence Norwegian companies may lose important markets within Iran. It is crucial for Norwegian companies who are engaged in business in Iran (and are currently authorized or not currently sanctionable) to assess sanctions compliance risks and assess the potential need for a wind down of these activities, in order to minimize the risk of sanctions after the end of the so-called wind-down periods.
Sanctions Wind-Down Periods
Should it appear probably that Norwegian companies active in the Iranian market could be caught by the US' secondary sanctions, it is important to take active measures within the wind-down period.
There will be 90 and 180 days wind-down periods for activities involving Iran. During the wind-down periods companies will have the possibility to wind down previously-authorized operations or business in Iran and to receive payments under agreements entered into before May 8th 2018 until the end of the applicable wind-down period.
90-Day Wind-Down Period
Under the 90-day wind-down period, on 6 August 2018, the U.S. government will re-introduce sanctions related to:
- the purchase or acquisition of U.S. dollar banknotes by the Government of Iran;
- Iran's trade in gold or precious metals;
- graphite, raw, or semi-finished metals such as aluminium and steel, coal, and software for integrating industrial processes;
- purchase or sale of funds in Iranian rials;
- Iranian sovereign debt; and
- Iran's automotive sector.
The U.S. government will also revoke on 6 August 2018 JCPOA-related authorizations involving:
- import of Iranian-origin carpets and foodstuffs and related financial transactions;
- specific licenses for the export of commercial passenger aircraft and related parts and services ("JCPOA SLP"); and
- activities undertaken pursuant to the General License regarding contingent contracts related to the JCPOA SLP.
180-Day Wind-Down Period
Under the 180-day wind-down period, on 4 November 2018, the U.S. government will re-impose sanctions related to:
- Iran's port operators, and shipping and shipbuilding sectors;
- petroleum-related transactions;
- transactions by foreign financial institutions with the Central Bank of Iran and providing specialized financial messaging services to the Central Bank of Iran;
- providing underwriting services, insurance, or reinsurance; and
- Iran's energy sector.
In short, it appears that all parties who were designated on the Specially Designated National and Blocked Persons List ("SDN List") under the Iran sanctions program prior to the implementation of the JCPOA will be re-designated as SDNs after 5 November 2018. The SDN list includes among others Iranian oil firms such as National Iranian Oil Company, Naftiran Intertrade Company and National Iranian Tanker Company.
As was the case prior to the JCPOA non-US companies engaging in transactions with these parties could be exposed to US secondary sanctions.
The Norwegian government's commitment to the JCPOA
Norway has followed up all the Security Council resolutions on Iran's nuclear programme, and has aligned itself with all the EU's restrictive measures against Iran for a number of years. Following the nuclear deal, Norway lifted most of its sanctions and restrictive measures against Iran in line with the nuclear agreement. This includes in particular trade sanctions within the maritime sector, oil and gas, and banking and finance.
The Norwegian Government has announced that there will be made no changes to the Norwegian sanctions against Iran. However, as mentioned above, Norwegian companies engaged in business on the Iranian market or with Iranian counterparts will face a high risk of being exposed to the US' secondary sanctions regime, with potential consequences even on European and Norwegian markets.