Yesterday's election has significant implications for international sanctions, particularly with respect to Iran, Cuba, and Russia. Although we do not want to be unduly alarmist, President-elect Trump's statements on the campaign trail, should they be carried through to policy in his Administration, certainly suggest a U-turn in US policy. With respect to Iran and Cuba, the possibility of such a change in direction will need to be taken into account by persons and companies who have begun to enter into commercial arrangements with those countries in the expectation that the recent easing of sanctions would continue. With respect to Russia, we do not advise that any company make any assumptions as to the shape of future sanctions. Although any potential shifts in US policy would not officially occur before President-elect Trump takes office, it is likely that some of the potential changes will be telegraphed before the Inauguration in January 2017.
Iran
Last year, the US, together with the EU and other countries,
entered into the Joint Comprehensive Plan of Action
("JCPOA") with Iran that entailed, among other things,
that the US would lift the so-called "secondary
sanctions" intended to chill non-US companies from doing
business with Iranian banks and sanctions on certain sectors, such
as oil and gas. The US did so on Implementation Day in January of
this year, while also removing a number of Iranian entities from
the SDN list. In addition, although the primary sanctions
prohibiting US persons from doing business with Iran largely
remained in place, the US announced a favorable licensing policy
with respect to certain industries, notably civilian
aircraft.
The JCPOA, however, contained a provision allowing any party to
unilaterally "snap back" sanctions if it determines that
Iran has violated the terms of the agreement. Although there is no
public information indicating that to be the case, the JCPOA is
only an executive agreement, and Mr. Trump has stated that one of
his first tasks as president will be to withdraw from the agreement
and reimpose the full panoply of sanctions on Iran. The election
results also make it that much more likely that the Congress will
renew and even broaden the scope of the Iran Sanctions Act before
the end of the year.
For US persons, with the exception perhaps of Boeing, which
recently received a license to sell aircraft to Iranian airlines,
and of pistachio and carpet importers, this will not have a huge
impact given that the primary sanctions were never lifted. For
European and other non-US companies, however, who have cautiously
reopened commercial ties with Iran, it raises the risk
considerably. Although presumably the EU will not immediately
follow the US lead (unless Iran abrogates the entire agreement and
openly restarts its nuclear weapons development program),
those companies who are in the financial and oil and gas
sectors face the historical choice of pursuing Iranian business or
risk being sanctioned under the secondary sanctions.
Cuba
Over the past several years, the Obama Administration has
steadily loosened the Cuba sanctions and last year moved to
normalize relations with Cuba, including removing it from the State
Sponsors of Terrorism list. Earlier in the campaign Mr. Trump
stated that he supported this approach although he "would have
negotiated a better deal." However, in the days
immediately before the election, Mr. Trump announced that he was
opposed to the policy and would reverse President Obama's
executive orders on Cuba.
If President-elect Trump carries through on this late-election
position, then current and anticipated commercial deals involving
airline routes, cruise lines, resort development, and tourism may
all have to be revisited.
Russia
Following the annexation of Crimea by Russia two years ago, the
US, the EU and other countries imposed a series of sanctions on
Russia targeting individuals, entities, and industry sectors.
During the campaign Mr. Trump suggested that he would consider
whether to continue these sanctions or to recognize the fait
accompli of Russia's occupation.
Again, translating campaign statement into policy is an iffy thing.
We doubt anyone at this time can know what will happen in this
area, and prudent companies will continue to proceed as if the
current sanctions regime will continue.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.