Do U.S. businesses stand to gain from the lifting of sanctions against Iran? What will the nuclear deal mean for American investors and U.S. subsidiary companies?
To get the answers Al Arabiya sat down with William McGlone a DC-based lawyer who specializes in sanctions law at the firm of Latham and Watkins.
Al-Arabiya: What does the easing of sanctions on Iran mean for US investors?
William McGlone: U.S. businesses and U.S. persons, for the foreseeable future, will continue to be under significant restrictions that will essentially prevent them from doing most business in Iran, investing in Iran or partnering with companies in Iran. There is limited relief under the terms of the agreement where certain sectors of the US economy will benefit-the civil aviation sector in an example. It will allow for the export of civil aircraft to Iran, for example.
But I thought the sanctions were being lifted, what happened?
It's important to remember that the nuclear agreement tackles only the nuclear issue. Only recent sanctions that have been imposed by the US and the European Union for nuclear related reasons are subject to easing in the short term. The US embargo goes back to 1995 and has been in place for anti-terrorism and human rights and other reasons. There seems to be very strong bipartisan support in the US for maintaining that embargo, so it's unlikely that it's going to be significantly loosed, at least in the near term.
What about European sanctions? Will Europeans get a leg up over American investors? That doesn't sound very fair.
There is no doubt that EU companies will benefit more immediately than US companies because the EU sanctions, for the most part, will be lifted upon implementation day, ie, probably six months or so from now. That said, what the agreement is essentially doing is it's putting the US back to where it was in 2010 before the EU and US started imposing the nuclear related sanctions. It puts us where we were between 1995-2010 when US companies and US persons were subject to these broad prohibitions. So in a sense it will an uneven playing field, but it's going back to where to were for a period of time.
Will U.S. subsidiaries stand to gain from the easing of sanctions?
Since 2012 the US has essentially subjected overseas subsidiaries of US companies to the US embargo, which means they have been prevented from doing any business with Iran directly or indirectly. Under the terms of the agreement, those restrictions on overseas subsidiaries look like they’ll be loosened, but the details of are yet to be determined. However, non-US companies and non-US persons, including banks or financial institutions operating in the Middle East or the Gulf have to understand that there are a number of ways US sanctions can still apply even to their business activities, certainly if there is any US person involved or dollar clearing transactions that touch on the US banking systems. The enforcement climate right now in the US has been very aggressive and there have been a number of very significant cases and settlements with non-US banks and financial institution in other countries, even though their operations in the US are very limited.
The U.S.’s relationship with Iran is very similar to its relationship with Cuba, where the US also enforces a trade embargo. The Administration seems to be interested in opening up to them. What are the chances that both embargoes are lifted?
It’s fair to say there is very deep political support for maintaining the US sanctions against Iran for its support of terrorism and other reasons. However, I think the political climate in the US for maintaining the embargo on Cuba has waned over time. It's a very difficult political question, but I think it's fair to say there's probably broader, deeper support for keeping the core sanctions against Iran than against Cuba.