US ‘wind down’ periods give companies up to half a year to cut ties with Iran

Trump’s memorandum means US companies are banned from entering into new business relations with Iranian partners.
Sunday 13/05/2018
A money changer displays US and Iranian banknotes at the Grand Bazaar in central Tehran. (Reuters)
A money changer displays US and Iranian banknotes at the Grand Bazaar in central Tehran. (Reuters)

WASHINGTON - With a stroke of a pen, US President Donald Trump reintroduced economic sanctions against Iran that had been lifted under the Iran nuclear deal of 2015.

Trump’s memorandum, signed May 8, means US companies are banned from entering into new business relations with Iranian partners. “The fact of the sanctions coming back in is effective right now,” Trump’s national security adviser John Bolton said following the signing of the memorandum.

The US punitive measures target the Iranian Central Bank, Iran’s financial sector as well as the oil industry, shipping and other economic areas. Crucially, European companies, some of which have investments worth billions of dollars in Iran, will also be hit.

The sanctions decision comes with so-called wind-down periods of 90 or 180 days meant to make sure that companies that started business ties with Iranian partners in recent years can withdraw in an orderly fashion. In a first deadline, companies involved in the gold trade, car sales or caviar imports in connection with Iran must end operations by August 6. Activities after that date will be punished.

The second wind-down phase ends November 4 and marks the start of punitive measures against financial institutions doing business with Iran’s Central Bank. US sanctions on Iran’s energy sector also kick in in November.

As the US measures are designed to isolate Iran, the threat of sanctions also applies to non-American companies in Iran. They could face consequences in the United States, in an effect called “secondary sanctions.”

US officials said in a background briefing that talks between Washington and its European allies were designed to find solutions for European companies whose business interests were threatened by the Iran decision. Because of the towering position of the United States in international trade, European firms are expected to try and avoid being hit.

One US official said experience showed that the administration was confident the American call would be heeded. Leverage gained by secondary sanctions had previously been used “to get countries to partner with us to build the economic isolation of Iran,” the official said.