Obama Admin Secretly Guarantees Russia, China Sanctions Protection

Will allow foreign companies to do business in Iran with no penalty

John Kerry
John Kerry / AP
September 16, 2015

The United States has provided secret assurances to Europe, China, and Russia that it will protect companies working with Iran from consequences related to the possible reimposition of sanctions set to be lifted under the recently inked nuclear deal, according to a document provided to Congress and obtained exclusively by the Washington Free Beacon.

Secretary of State John Kerry admitted to Sen. Marco Rubio (R., Fla.) that the United States will work with foreign companies who financially engage Iran to shield them from penalties in the aftermath of Iran violating the agreement, a decision experts told the Free Beacon risked a corporate rush into Iran that will permanently bolster the Iranian economy and incentivize Iranian cheating.

Kerry acknowledged that the Obama administration had provided confidential guarantees that Washington "would not retroactively sanction companies" who helped bolster the Iranian economy and that the United States would work with those companies to bring their future activity in Iran into compliance with any new U.S. sanctions.

"For companies that have contracts that would otherwise continue after snapback, we have a consistent past practice of working with companies to wind down their contracts," he wrote in the on the record statement.

The statements were in response to a congressional inquiry about a provision in the Joint Comprehensive Plan of Action (JCPOA), dubbed a "grandfather clause," that would provide contract sanctity to corporations doing business in Iran. While the administration has denied that any such provision exists, Kerry admitted to Rubio that it would be provided on a case-by-case basis.

"We would consult with relevant states on a case-by-case basis to address issues that may arise," Kerry writes. "We have not, however, committed to provide a blanket exemption (or grandfather clause)."

Kerry tried to justify the assurances as necessary to convince American rivals such as Russia and China to go along with the deal. Both nations and their private companies stand to benefit greatly from arms deals and other future agreements with Iran.

"When we were negotiating this provision, some of our partners expressed concerns that if sanctions snapped back, their companies would be suddenly sanctioned for doing business in Iran that was consistent with the JCPOA," Kerry writes.

The guarantees were provided in secret letters sent to China, Germany, France, and the United Kingdom. Kerry noted that the letters were transmitted to lawmakers as part of a mandatory disclosure required by legislation providing for congressional review of the deal.

Lawmakers and their staffers are prohibited from sharing the contents of those letters with the American public. The administration appears to have intentionally mixed classified and unclassified information into that disclosure to bury the material, the Daily Beast reported in July.

Insiders told the Free Beacon that the concession undermines the effectiveness of the agreement.

"It’s the worst of all worlds," according to one analyst involved in helping lawmakers evaluate the potential results of sanctions relief to Iran. "European countries will resist any finding that the Iranians are cheating because they won’t want to endanger their corporations’ future business, and companies will know that one way or another they can act recklessly regarding investments in Iran."

These disclosures come on the heels of a Free Beacon report revealing that Iran has been spending billions to pay the salaries of terrorists.

This includes potentially millions of dollars in monthly payments to pro-government forces in Syria, more than $1 billion in military aid to fighters in Iraq, and about $20 million annually to Hamas terrorists, according to a private report commissioned by Sen. Mark Kirk (R., Ill.).

The report was assembled following a request by Kirk for the Obama administration to disclose its estimates of "Iranian military spending, as well as Iranian assistance to Houthi rebels in Yemen, Shiite militias in Iraq, the Assad government, Hezbollah, and Hamas," according to a copy of that report.

Kerry’s personal letter to Rubio also discloses that Iran is permitted to test fire ballistic missiles under the nuclear accord, the Free Beacon revealed Wednesday.

"It would not be a violation of the JCPOA [Joint Comprehensive Plan of Action] if Iran tested a conventional ballistic missile," Kerry disclosed in the document.