Kerry Justifies Opponents’ Fears about Viability of Sanctions Snapback

Secretary of State John Kerry said in a speech on Wednesday, “It’s an illusion for members of Congress to think that they can vote this plan down and then turn around and still persuade countries like China, Japan, South Korea, Turkey, India – Iran’s major oil customers – they ought to continue supporting the sanctions that are costing them billions of dollars every year.”

The administration’s arguments in favor of the agreement have hinged in part upon the notion that “snapback” provisions allow for the newly alleviated economic pressure on Iran to go back to normal if the regime is found to be in violation of its responsibilities under the agreement. That is, economic sanctions will immediately go back into effect if evidence is uncovered that Iran is cheating.

But a number of critics have responded to this narrative by suggesting that snapback cannot really work because the existing sanctions regime is one that was put into place over the course of many years with the cooperation of many countries around the globe. Once those sanctions are dismantled through the implementation of the agreement, critics allege, it will be extremely difficult to convince the relevant countries to return to full cooperation with the scheme.

Kerry’s statement arguably says exactly this, but it does so to make the point that since the United Nations already voted to remove sanctions shortly after the conclusion of the nuclear agreement, it is now too late to avoid the collapse of the global sanctions regime.

Some opponents and skeptics of the agreement believe that US sanctions alone would be sufficient to exert pressure on the Islamic Republic. Kerry’s remarks do not directly address this notion, but his speech did dismiss overestimation of US power in this area, pointing out that much of the money that is set to be released to Iran under the agreement is not under US control.

However, it has previously been reported that projections about future US action have a good deal of influence upon the decision-making of businesses and countries that stand to become investors in Iran once that foreign market opens up under the agreement. If the US maintains its own sanctions, other entities may hold back as well, either out of principle or out of fear of having their own banks fall afoul of US sanctions.

While negotiations were still ongoing, some Europeans expressed concern that the US was positioning itself to enter the Iranian market ahead of all others and thus gain greater benefit from it. This concern was so strong among the French that its legislature considered establishing a separate bank to do business with Iran without being subject to US sanctions. But this development came in spite of the fact that French negotiators were then developing a reputation for maintaining the strongest demands upon the Islamic Republic.

Today, France stands to have a major role in the opening of the Iranian export market. Reuters reports that the car manufacturer Peugeot is striving to reclaim the 30 percent share of the Iranian automobile market that it had achieved at the peak of its relationship with the country. Meanwhile, competing French automaker Renault is working to take over the gains previously made by Peugeot.

But it is certainly possible that these plans may still be sidelined by fears of the loss of American business relations, even if those same fears do not affect all countries and organizations equally. As long as the end of American sanctions remains a possibility, Asian and European firms can generally be expected to be focused on positioning themselves to compete in the new market. But if this possibility is closed off by the US Congress, some of them may turn their attention to preserving relations with the US at the expense of Iran.

Still, Kerry’s remarks suggest that this potential to influence their decision-making may diminish over time if the nuclear agreement goes into full effect and foreign entities begin to actually profit from expanded trade relations with Iran.