Trump will extend Iran sanctions relief, keeping Obama-era nuclear deal alive—for now

Key Points
  • President Trump will waive sanctions against Iran, keeping alive the deal brokered during the Obama administration.
  • Trump disavowed the nuclear deal months earlier.
  • This will be the final time Trump temporarily extends sanctions relief.
Trump to waive reinstatement of Iran sanctions
Trump to waive reinstatement of Iran sanctions

President Donald Trump on Friday announced that he will waive sanctions against Iran for the final time, extending the life of an international nuclear accord that he disavowed three months ago.

Rather than continue to periodically extend sanctions relief, which is currently required to keep the deal alive, Trump will work with European partners on developing new provisions to strengthen the deal.

Trump is essentially asking America's partners to make the deal permanent, a request that could be difficult for many to accept.

"Today, I am waiving the application of certain nuclear sanctions, but only in order to secure our European allies' agreement to fix the terrible flaws of the Iran nuclear deal," Trump said in a statement.

"This is a last chance. In the absence of such an agreement, the United States will not again waive sanctions in order to stay in the Iran nuclear deal. And if at any time I judge that such an agreement is not within reach, I will withdraw from the deal immediately."

Treasury Secretary Steven Mnuchin, in a separate statement, announced new sanctions on 14 Iranian individuals and entities in connection with various human rights abuses.

The waiver also marks the first time Trump has granted sanctions relief since he told Congress in October that the 2015 Iran nuclear deal is no longer in the country's national security interest. Trump has called the accord the "worst deal ever," but he's declined to scrap it while Congress prepares legislation to modify the agreement and his administration marshals international support to increase pressure on Iran.

The nuclear deal, hammered out in 2015 by six world powers, lifts crippling sanctions on Iran's lifeblood oil and gas industry and the broader economy. In exchange, the Iranian regime agreed to limits on its nuclear program and allowed inspectors to monitor its facilities.

An Iranian woman and her son walk past Shahab-2 (L) and Shahab-3 missiles on display in front of a large portrait of Iran's Supreme Leader Ayatollah Ali Khamenei in a square in south Tehran.
Atta Kenare | AFP | Getty Images

Trump risked sparking a diplomatic crisis with France, Germany and the U.K. — three parties to the deal — and the broader European Union if he refused to issue the waivers. Restoring sanctions against Iran, OPEC's third-largest oil producer, also threatened to roil energy markets and put a freeze on billions of foreign investment into the country.

The structure of the deal has created a recurring thorn in Trump's side. The sitting president must suspend various sanctions every 120 to 180 days. Three key waivers were scheduled to expire in the coming days, with the next deadline to certify the deal to Congress also landing this week.

Even with the waivers in the rearview mirror, analysts say the agreement remains on shaky ground. Risk consultancy the Eurasia Group gives the deal a 55 percent chance of surviving Trump's first term, while RBC Capital Markets says the prospects for the accord are "bleak" in 2018, given the constant threat of sanctions snapping back into place.

Cliff Kupchan, chairman of the Eurasia Group, maintained his odds for the deal's survival. Some of the changes Trump is seeking would not take effect for six years, so it's possible the Iranians will wait to see if Trump gets re-elected.

"The Europeans won't agree to snap back their sanctions based on US triggers, but they may be able to satisfy Trump with rhetorical support," he told CNBC in an email.

"It all depends on the wording of the emerging bill — if it tears up the deal now, it's over. If it's 6 years hence, it lives," he said.

Mark Dubowitz, CEO of the Foundation for Defense of Democracies, said the Europeans have every incentive to cooperate on modifying the deal.

"If they don't, by May of this year, President Trump will cancel America's participation in the deal and unleash powerful secondary sanctions that will deter most European companies and banks from doing business in Iran," he said in an email.

"Many are already sitting on the sidelines because of these fears. Many more will stay there if American sanctions are reinstated."

As a candidate, Trump threatened to scrap the deal, but several of his top advisors have implored him to preserve it. They have counseled him to instead apply pressure with new sanctions targeting Iran's ballistic missile program and elements of its security apparatus accused of aiding U.S.-designated terror groups and sowing instability throughout the Middle East.

The Trump administration is seeking support from European countries to address Iranian ballistic missile tests, isolate the Revolutionary Guard and modify the Iran nuclear deal.

Trump and Republicans want to prevent the expiration of key provisions of the deal scheduled to phase out in 10 to 15 years, including limits on Iran's access to nuclear material and advanced equipment. It also wants to expand international inspectors' access to Iranian military sites.

On Thursday, ahead of Trump's decision, European nations jointly implored the United States to keep the deal in tact.

"The accord is essential and there is no alternative," France's foreign minister, Jean-Yves Le Drian, told reporters. "We do not hide the other points of disagreement (with Iran) that exist."

Trump's refusal in October to certify to Congress that Iran is complying with the deal gave lawmakers the option to restore sanctions against Iran. Instead, senators agreed to work with the Trump administration to change the terms of the accord through new legislation.

U.S. Sen. Bob Corker, the Republican chairman of the Senate Foreign Relations Committee, acknowledged last week that Congress would not be ready to present Trump with legislation before this week's waiver deadlines. There is little evidence that the Senate's legislative effort has advanced much beyond a framework Corker released in October.

That plan sought to make the nuclear deal essentially permanent, a proposal that upends the accord the Obama administration negotiated. Iran has dismissed that option, saying it violates the agreement, and the proposal remains a tough sell for Democrats and European allies.

Corker's plan reflects a new strategy outlined by Secretary of State Rex Tillerson in October. It would create red lines that, if crossed by Iran, would automatically restore sanctions.

Sen. Ben Cardin, the Democratic ranking member of the Senate Foreign Relations Committee, says he remains open to discussing legislation, but said Trump's actions on Friday had set back the bipartisan process, which he has been engaging in with Corker.

"Instead of leading an international negotiation on the agreement himself, however, the President's statement making threats and dictating final terms of potential negotiations with Congress and Europe makes it more challenging to achieve this objective," he said in a statement.

On Thursday, the Justice Department announced it was forming a team of prosecutors to counter an alleged organized crime ring operated by Hezbollah, a Shiite political and militant group in Lebanon backed by Iran.

The Treasury Department has also applied new sanctions against Iran's Revolutionary Guard, a hard-line security force with financial interests through the domestic economy.

— CNBC's Kayla Tausche, Kevin Breuninger and Reuters contributed to this story.