U.S. Warns Against Rush To Invest In Iran Before Sanctions Lifted

Reuters is reporting that the Obama administration has privately reminded foreign governments and U.S. bankers that sanctions against Iran remain in effect and they should not rush to invest in Iran.

The U.S. State Department recently cabled a message, known as a demarche, to embassies around the world to reiterate that sanctions on Iran are still in place, diplomatic and government sources told Reuters October 9.

The demarche stressed that sanctions on Iran would not be lifted until the International Atomic Energy Agency verifies that Tehran has fully complied with the terms of the July nuclear deal.

"The United States wants to tell governments not to get ahead of themselves when dealing with Iran," said a London-based diplomatic source.

The warning likely was prompted in part by growing criticism in Washington that other countries are rushing to invest in Iran even before it has shown it is complying with the nuclear deal.

Business delegations led by senior government officials from numerous countries have visited Tehran since July -- including Germany, Britain, France, Italy, Japan and India -- to discuss future trade opportunities.

Georgia's Deputy Foreign Minister David Dondua said in Tbilisi October 9 that the United States has asked it to refrain from "full-scale cooperation" with Tehran until it fulfills its obligations to curb nuclear activities under the Vienna agreement, TASS reported.

Because of the U.S. request, Dondua said an Iranian airline was recently denied flights to Georgia. He said he expects to be able to interreact more freely with Iran by early next year.

It is uncertain exactly when the layers of Western sanctions will be lifted, but experts have said some international financial transactions with Iran likely will be possible next year if Iran is found in compliance.

One source characterized the diplomatic cable as part of a routine effort to educate businesses and governments about the likely timeline as well as details and complexities of the deal.

The U.S. warning against jumping ahead of the sanctions has some teeth. U.S. law allows the administration to enforce sanctions by targetting financial institutions in countries that do business with the state-owned National Iranian Oil Co or its subsidiaries.

Companies that breach the sanctions risk fines, asset freezes, and being cut off from the U.S. dollar banking system.

In 2014, the United States imposed a record fine on French bank BNP Paribas, which agreed to pay almost $9 billion to resolve accusations it violated U.S. sanctions against Sudan, Cuba, and Iran.

The Joint Comprehensive Plan of Action announced on July 14 by Iran, the United States, and five other world powers imposes strict limits on Iran's nuclear program in exchange for relief from sanctions.

Iran is counting on an end to sanctions to boost its battered economy, particularly an oil and gas sector that has shrivelled under Western sanctions.

In view of Iran's vast oil and gas reserves, oil companies have been in the forefront of the rush to resume business with Tehran. A number of the world's top oil companies, including Royal Dutch Shell, France's Total, and Italy's Eni have held high-level talks with Iranian energy officials.

U.S. officials recently held round table discussions with oil industry executives and bankers in Washington and New York to reiterate that sanctions remain in effect.

The London source said Iran's decision last month to postpone a key oil conference in London for the fourth time came after U.S. officials conveyed concerns to British diplomats that the December 14 event would have taken place before the easing of sanctions. It is now planned for February 2016.

Iran's national oil company has said it plans to unveil at the February conference more than 50 new contracts for development of the country's energy reserves that have been stifled previously under the sanctions.

With reporting by Reuters and TASS