U.S. Keeps Iran Nuclear Deal in Place but Levels Other Sanctions -- 3nd Update

By Felicia Schwartz, in London Laurence Norman in Brussels and Ian Talley in Washington Features Dow Jones Newswires

The Trump administration extended U.S. sanctions relief to Iran as part of its 2015 nuclear agreement, senior U.S. officials said Thursday, but levied new punitive measures over Tehran's ballistic missile program, cyberattacks and terrorism support.

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Administration officials announced the decisions simultaneously, moving to keep a modicum of economic pressure on Iran despite reluctantly preserving the nuclear deal, in keeping with the strong preference of European allies.

As part of the nuclear deal, the U.S. agreed to waive a wide range of sanctions, renewing the waiver every 120 days to ensure Iran abides by its commitments. Those sanctions, along with a plunge in oil prices, had originally pressured Tehran to the negotiating table.

The nuclear deal's fate remains uncertain, however, as the Trump administration continues a review of Iran policy. Senior administration officials said the waiver is an interim decision, pending final policy determinations.

State Department and Treasury officials have been shuttling to Europe as the administration weighs its position on the nuclear deal, seeking support for tightening the agreement as well as for action on what Washington sees as other Iranian provocations in the region, outside the scope of the nuclear agreement.

"We must take into account the totality of Iranian threats, not just Iran's nuclear capabilities," said Secretary of State Rex Tillerson, speaking in London on Thursday alongside his U.K. counterpart, Boris Johnson.

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The new U.S. Treasury sanctions targeted 11 firms and individuals, including an Iranian engineering company working with the country's Islamic Revolutionary Guard Corps, two Ukrainian airline firms and an Iranian computer firm accused of conducting a series of cyberattacks on U.S. financial institutions. Treasury's actions add to a half-dozen rounds of sanctions levied this year.

Mr. Trump is nearing another deadline in October, when he must decide whether to certify to Congress that Iran is in compliance with the terms of the nuclear deal. He has twice informed Congress that Iran is meeting its obligations, but told The Wall Street Journal in July he doesn't expect to do so again.

U.S. officials said a final decision on the certification due in October hasn't been made and that it is unclear what the president will do.

The United Nations nuclear watchdog, which is in charge of inspecting Iranian activities, said again Monday that Iran is abiding by the agreement.

As it weighs its options in Washington, the Trump administration also is exploring ways to address its Iran concerns with European allies. Washington wants tougher inspections of Iranian sites, and has problems with Iran's continued missile tests and the expiration over the next decade of limits on Iran's nuclear activities.

Discussions about the terms of the deal are expected to be a focus of meetings on the sidelines of next week's gathering of world leaders for the annual United Nations General Assembly meeting.

U.K. Prime Minister Theresa May discussed Iran in a meeting with Mr. Tillerson Thursday and reaffirmed her commitment to the deal, a spokesman said.

As one option, Mr. Trump could send the issue to Congress and urge lawmakers to debate the deal, U.S. Ambassador to the United Nations Nikki Haley has said.

Under the terms of a U.S. law passed when the Iran deal was reached, Mr. Trump must certify Iran is complying with the deal every quarter. If he doesn't, Congress would have 60 days during which it could reimpose sanctions.

Such a move could give Mr. Trump leverage to negotiate stronger constraints on Iran's nuclear program, critics of the 2015 agreement said.

"President Trump's commitment to decertify, and the credible threat he could walk away from the nuclear accord, are motivating Europeans to come on board with ways to fix it," said Mark Dubowitz, chief executive of the Foundation for Defense of Democracies, who has advised the Trump administration.

Former officials, Democrats and some experts fear this approach could lead to the deal's collapse and raise questions among European about U.S. credibility on other international commitments.

The three European governments that helped negotiate the accord -- the U.K., France and Germany -- repeatedly have said they support the agreement. Russia and China, which also negotiated the agreement, continue to back it.

But to keep Washington on board with the deal and ensure the region's expanding economic links with Iran are protected, European governments have responded. Officials earlier this year recommended ways to tighten oversight of the agreement, including a greater focus on commitments Iran made not to work on the weaponization of nuclear material.

French President Emmanuel Macron said last month that while there is no alternative to the current agreement, other arrangements could deal with Iran's ballistic missile program and to ensure Iran doesn't ramp up its nuclear activities as key restrictions start to lift in coming years.

The British government also said, in its response to a parliamentary report on July 4, "it is open to discussions on longer-term plans to prevent Iran...from acquiring nuclear weapons capability."

Iranian officials have denounced proposals for inspections at military sites and have ruled out a renegotiation of the nuclear deal, known as the Joint Comprehensive Plan of Action. Iran Foreign Minister Javad Zarif tweeted: "The #JCPOA is not (re)negotiable. A 'better' deal is pure fantasy."

--Jenny Gross in London contributed to this article.

Write to Felicia Schwartz at Felicia.Schwartz@wsj.com, Laurence Norman at laurence.norman@wsj.com and Ian Talley at ian.talley@wsj.com

(END) Dow Jones Newswires

September 14, 2017 18:09 ET (22:09 GMT)