EU Snapback Sanctions on Iran Likely Would Be Followed by More US Sanctions

If the Iran nuclear deal collapses and Europe imposes a set of automatic snapback sanctions, the U.S. would likely follow with its own set of additional Iran sanctions, including greater enforcement on non-U.S. entities and sanctions on Iran’s trading partners, said Inessa Owens, a trade lawyer with Baker McKenzie.

Owens, speaking during a July 3 Baker McKenzie webinar, said additional U.S. sanctions would be consistent with the Trump administration's maximum-pressure campaign on Iran and could be imposed soon if Iran further breaches the terms of the Joint Comprehensive Plan of Action. The United Kingdom, France and Germany issued a statement on July 2 saying they are “extremely concerned” about Iran recently surpassing its agreed-to limit of enriched uranium under the JCPOA. If Iran continues on this path, it could trigger European Union snapback sanctions, which would reimpose all EU sanctions on Iran that were in place before the JCPOA, said Ben Smith, a Baker McKenzie lawyer also speaking during the webinar. “Things really do stand on a knife edge at the moment,” Smith said.

Owens said the U.S. “would welcome” the snapback sanctions. In response, the Trump administration could increase its already strict sanctions on Iran by “making virtually all activities related to Iran sanctionable,” Owens said, similar to the U.S.’s approach with North Korea. The U.S. could also “make it even more difficult than it already is to obtain licenses to engage in certain activities in Iran” and increase enforcement of secondary sanctions. This could be achieved by sanctioning Iran’s remaining trading partners, Owens said.

But the U.S. also might not have many more moves left. Owens pointed to the U.S.’s recent sanctions on Iran’s metals sector (see 1905080065) and the country’s supreme leader (see 1906240046), adding that “it’s possible that the U.S. might be running out of impactful options.”

More sanctions would also run counter to the Trump administration's stated desire to continue negotiating with Iran, which President Donald Trump referenced in a June 24 press conference after announcing sanctions on the supreme leader’s office. At the time, Trump said the U.S. would “love” to negotiate a new trade deal with Iran. “It’ll depend on what Iran does in the coming weeks,” Owens said.