Background Briefing on President Trump’s Decision To Withdraw From the JCPOA

MODERATOR: All right, thanks everybody. So we are glad to have with us today two folks to talk about the President’s decision today to withdraw from the JCPOA. This will be on background, embargoed until the end. Our two speakers with us today are [Senior State Department Official One], and next to him is [Senior State Department Official Two]. And so they’ll start with a few comments and then we’ll take some questions.

I think – you’d like to start?

SENIOR STATE DEPARTMENT OFFICIAL ONE: Great, yeah. Hi.

MODERATOR: Senior State Department Official Number One.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Hi. So I thought we would just start with a little bit more substance, going one level deeper. You all heard the President’s remarks; you saw the Secretary’s statement. So we wanted to put a little bit more meat on the bones and then open it up for questions and use the time the way that you think is most useful for you all.

So the sanctions reimposition that the President talked about is going to come in two phases. There’s going to be one period for wind down that lasts about – that lasts 90 days, and one period of wind down that lasts six months. The six-month wind down – wind downs are, by the way, pretty standard across sanctions programs. So this is not Iran-specific, but oftentimes when we either impose sanctions or reimpose sanctions, we provide a wind down to allow both U.S. companies but foreign companies as well to end contracts, terminate business, get their money out of wherever the sanctions target is – in this case, Iran. Because what we want – we don’t want to do is we don’t want to impact or have unintended consequences on our allies and partners. We want to focus the costs and the pain on the target. And in this case, that’s the Iranian regime.

So wind downs are pretty natural. In this case, we’re providing a six-month wind down for energy-related sanctions. So that’s oil, petroleum, petrochemicals, and then all of the ancillary sanctions that are associated with that. So, for example, banking; sanctions on the CBI in particular, because the Central Bank of Iran is involved in Iran’s export of oil and the receipt of revenues. Shipping, shipbuilding, ports – all of those sanctions that are related to both the energy sector and then the banking and the shipping or transportation of that energy will all have a six-month wind down. Everything else is going to have a 90-day wind down. So that’s – the architecture of the Iranian sanctions program was quite complex, but everything else includes things like dealing in the rial, providing metal – precious metals and gold to the Iranian regime, providing U.S. banknotes.

So there’s a whole kind of swath of other sanctions that are all going to have a 90-day wind down. In addition, within the first 90 days, the Treasury Department is going to work to end – to terminate the specific licenses that were issued pursuant to the statement of licensing policy on civil aviation. So Treasury’s going to be reaching out to those private sector companies that have licenses and work to end – terminate those licenses in an orderly way that doesn’t lead to undue impact on the companies.

The other big action that has to be done is the re-designation of all of the individuals that were delisted pursuant to the JCPOA. There are over – I think 400 and some odd were specifically designated for conduct, and another 200 or so were identified as part of the Government of Iran. Treasury – that’s obviously a big – it’s a lot of work for Treasury. Their aim is to relist all of those individuals and entities by the end of the six-month wind down. They’re not going to relist entities and individuals overnight, and – both for practical reasons, but also for policy reasons. If some of those individuals and entities were relisted right away, it would impact the wind down, right? So if we’re allowing a six-month wind down for energy-related or petroleum-related business, and then you designate – you re-designate tomorrow an Iranian-related petroleum entity, it makes null and void the six-month wind down that you just provided. So that’s all going to be done in a coherent way to provide a real wind down period.

So that’s kind of the – putting a little bit of meat on the bones of what it means to reimpose the Iran architecture, sanctions architecture.

SENIOR STATE DEPARTMENT OFFICIAL TWO: That’s great.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Do you want to open it up for questions?

QUESTION: I have a question. Lesley Wroughton from Reuters. You said it’s not meant to have unintended consequences, but it does. Nobody’s going to touch Iran or – and immediately I think the U.S. ambassador to Germany just said to – told all German companies to move out immediately, so it does have unintended consequences.

QUESTION: Do you have guarantees from the Europeans that they’re going to go along with this? Or like they have with the Cuba sanctions, are they going to fight it? Do you know?

SENIOR STATE DEPARTMENT OFFICIAL ONE: So what we’re going to do and what we’ve already – since last December, when we started working with our European allies on both the nuclear file but then also the broader array of Iranian threats, we’re going to continue to work closely with them. We’re going to broaden that engagement. And like both the President said and I think the Secretary said in his statement, he’s going to lead an effort to build a global effort to constrain and to prevent, both on the nuclear front but then also on the ballistic missile front, support to terrorism and the – kind of the six or seven areas that the President has outlined as kind of the broad array of Iranian threats. We’re going to build a global coalition to put pressure on Iran to stop that behavior. That’s —

SENIOR STATE DEPARTMENT OFFICIAL TWO: And let me just —

QUESTION: What was the —

QUESTION: We’ve heard from the Brits –

QUESTION: Sorry, could you just respond to her?

QUESTION: I was going to say, I mean – go on, Matt.

QUESTION: We’ve heard from others that they not only are not going to —

QUESTION: Would you mind? I had the first question.

QUESTION: Oh, sorry. Okay. Yep, I apologize.

QUESTION: And they haven’t even answered it.

QUESTION: Yep.

QUESTION: If you don’t mind.

SENIOR STATE DEPARTMENT OFFICIAL TWO: So I just wanted to say that those are actually intended consequences. We do think that, given the IRGC’s penetration of the Iranian economy and Iran’s behavior in the region, as well as its other nefarious activities, that companies should not do business in Iran. That’s an intended consequence. And we thank our ambassador out there for reaffirming that message.

QUESTION: So all those companies that have gone in are moving out?

SENIOR STATE DEPARTMENT OFFICIAL TWO: We’re certainly going to encourage them to.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Yeah.

QUESTION: Why —

QUESTION: And what if they don’t?

QUESTION: If they don’t, are you prepared to sanction German companies, French companies?

SENIOR STATE DEPARTMENT OFFICIAL TWO: Those are discussions we’re going to have with the Europeans.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Yeah.

QUESTION: I mean, you’ve been having discussions —

QUESTION: Sorry, just a point of clarification on that. That would begin after the 180-day period is over, correct?

SENIOR STATE DEPARTMENT OFFICIAL ONE: If it’s energy-related or banking-related. If it’s related to the provision of precious metals or gold or any of the sanctions that are being re-imposed after 90 days, then that would be —

QUESTION: So you are planning to sanction European companies, or you will have those discussions? Like —

SENIOR STATE DEPARTMENT OFFICIAL ONE: We’ve already started the discussions this afternoon, right. The discussions are ongoing and the effort is ongoing. Hopefully we will build – and this is the Secretary and the President’s desire and focus, is to build this global effort to put renewed and strengthened pressure on Iran. And that will include trying to isolate Iran economically.

QUESTION: Well, why not keep the structure of the deal and address these concerns on the side, as has been discussed for the last few months?

SENIOR STATE DEPARTMENT OFFICIAL TWO: Well, I think as the President laid out, that the problem with the deal was that it reduced our ability to pressure Iran, right. It essentially cordoned off this huge area of the Iranian economy and said, “Hey, we know about the IRGC’s penetration of the economy. We know Iran’s doing all this nefarious, malign activities in the region. But because of this nuclear angle, which is only one aspect of Iran’s behavior – a critical one, but just one – you essentially can’t sanction these entities that are involved in all this other stuff.”

QUESTION: So wait, just – so the United States has basically no economic relationships right now with the Iranians, right? So there is no power of U.S. sanctions to prevent – in preventing U.S. economic activity. The only power that U.S. sanctions have is in preventing European and other economic activity, right?

SENIOR STATE DEPARTMENT OFFICIAL ONE: Secondary sanctions.

SENIOR STATE DEPARTMENT OFFICIAL TWO: The secondary sanctions, correct.

QUESTION: Why get out of the deal until you know for sure that Europe is going to go along with that secondary sanction activity or whether you’re – they’ll fight you? Because if they fight you, you’re going to be in a worse situation vis-a-vis Iran than you are now and than you are previously, right? So you don’t actually know – you’re saying that the President’s going to start this global coalition, but you don’t actually know whether even your closest allies are going to be part of that coalition, right?

SENIOR STATE DEPARTMENT OFFICIAL ONE: The President made clear on January 12th that he was giving a certain number of months to try to – for – try to get a supplemental agreement with the E3. We didn’t get there. We got close. We made a – we had movement, a ton of good progress, which will not be wasted, but we didn’t get there. So he was clear January 12th that if we don’t get this supplemental, he’s withdrawing the United States from the JCPOA, and that’s what he did. That being said, you could even see that President Macron tweeted only a few minutes after the President finished his statement that France is eager to be part of an effort – I forget the exact words, but part of an effort on a broader deal that addresses the nuclear file but also —

SENIOR STATE DEPARTMENT OFFICIAL TWO: Syria, Yemen.

SENIOR STATE DEPARTMENT OFFICIAL ONE: — Syria, Yemen, and others. So you already see – you already see from President Macron a willingness to work on a broader deal; you see from the Saudis have also issued a statement supporting our withdrawal; the Israelis did as well. No one is saying this is going to be easy, right, but the President made clear his intention on January 12th. He made good on that – on that promise.

QUESTION: You don’t know right now whether you’re going to be in a better place or in a worse place; is that what you’re saying?

SENIOR STATE DEPARTMENT OFFICIAL TWO: No, we think we’re going to be in a better place.

SENIOR STATE DEPARTMENT OFFICIAL ONE: No, we know we’re —

QUESTION: But you don’t know.

SENIOR STATE DEPARTMENT OFFICIAL ONE: We know we’re going to be in a better place because we don’t think that the current JCP – the JCPOA, as it is now, adequately protects U.S. national security. So —

QUESTION: Because?

SENIOR STATE DEPARTMENT OFFICIAL ONE: Because it allowed Iran to enrich after sunsets, after those restrictions melted away —

QUESTION: In seven years.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Yes.

QUESTION: And even then, not enriching to a level where they could build a nuclear weapon.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Listen, after – after the Israelis revealed what they were able to find —

QUESTION: All old stuff, all old – before.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Listen, it was – we have acknowledged for quite some time that the Iranians had a nuclear weapons program, but nobody knew until the Israelis found it, this well curated archive, the level of detail, right. And the – I think it reinforced in a very meaningful way that all of the Iranian statements throughout the negotiations and after were lies.

QUESTION: So the President said that we would impose sanctions on countries who helped with Iran’s nuclear program, but actually, you will reimpose sanctions on companies and countries that do any – roughly any economic activity, no matter if it has anything to do with nuclear or anything, right?

SENIOR STATE DEPARTMENT OFFICIAL ONE: In the buildup – in the buildup to the negotiations that led first to the JPOA and the JCPOA, we had an extensive architecture of secondary sanctions that started more or less with CISADA in 2010. We had to use those secondary sanctions very, very rarely. In fact, we only ever sanctioned two banks with secondary sanctions, Kunlun and Elaf in Iraq. The leverage that we gained from the secondary sanctions is what we used throughout the world with engagement to get countries to partner with us to build the economic isolation of Iran. That’s what we want to do again. It’s not about sanctioning foreign companies; it’s about using the leverage and engaging the way we did before.

SENIOR STATE DEPARTMENT OFFICIAL TWO: That’s right.

QUESTION: When you say that the – when you —

SENIOR STATE DEPARTMENT OFFICIAL TWO: This is a long-established practice, I mean, since ILSA in the late ‘90s, this is something the U.S. has been doing. Sorry.

QUESTION: When you say that the effort that you had in the negotiations with the E3 will not be wasted, will you be implementing any of that? Because I mean, it was the supposition that the U.S. would stay in the deal if these areas were addressed by the E3. The U.S. isn’t staying in the deal, so —

SENIOR STATE DEPARTMENT OFFICIAL ONE: So we made a ton of progress on ICBMs, on access, on missiles writ large, on regional issues, and then we got stuck on sunsets, right? We didn’t quite make it. That work – we’re not sure. We have to – we’re starting those conversations with the E3 today, tomorrow, so I can’t – we can’t tell you exactly how it’s going to be used, but I can tell you it will be used. That work is not going to be wasted.

QUESTION: So you think they’ll go forward.

QUESTION: But if a ton of progress was made, then why not give it more time? Why take such a dramatic action that’s going to have you basically starting over from square one?

SENIOR STATE DEPARTMENT OFFICIAL ONE: The President made very clear on January 12th his intention. If we got a supplemental agreement before May 12th, he would consider it. We didn’t get there. He said this – on January 12th, he said that was his last time waiving sanctions. He followed through on that promise.

QUESTION: And what was the sticking point? Can you just sort of tell us what didn’t work?

SENIOR STATE DEPARTMENT OFFICIAL ONE: It was the one-year breakout.

QUESTION: The sunset program.

SENIOR STATE DEPARTMENT OFFICIAL ONE: Yeah. Read the rest of this entry »