* Iran seeks broad sanctions relief in nuclear deal
* Vast network of trade and finance restrictions at stake
* Full removal could take years, in carefully crafted steps
By Justyna Pawlak and Louis Charbonneau
BRUSSELS/VIENNA, July 17 With talks between
world powers and Iran over a broad nuclear accord at an impasse,
Western governments are considering offering a significant
easing of sanctions early on in the process to try to wring
concessions from Tehran, diplomats say.
To be effective, such a plan would have to involve clear
guidance to companies made wary by U.S. fines for
sanctions-busting, be reversible and not go too far, or
sceptical U.S. lawmakers would simply reimpose restrictions.
The OPEC oil producer has seen its economy devastated by
years of sanctions imposed over its contested nuclear programme,
which Western states say appears to be aimed at producing a
nuclear bomb and Tehran says is purely peaceful.
The prospects for an immediate accord scaling back that
programme in return for sanctions relief appeared tenuous on
Thursday. Diplomats said the six world powers negotiating with
Iran - the United States, Russia, China, France, Britain and
Germany - were working out terms for an extension of talks,
beyond their self-imposed July 20 deadline, instead of seeking
to close a deal now.
If there is an agreement in the coming weeks or months,
Western diplomats have told Reuters, Iran might still have to
wait years, or as long as two decades, to see the complex web of
sanctions permanently removed.
Instead, they said, Western states may opt for a patchwork
of steps suspending sanctions in various industries that can be
easily reinstated if Tehran reneges on its nuclear commitments.
The extent of these steps would match Iranian concessions.
"When Iran does something, then we can respond with
sanctions relief," one said, speaking on condition of anonymity.
"The whole process will take years."
The timing of any easing of oil sanctions - closely watched
by the markets - which now prohibit U.S. and European importers
from buying Iranian crude and impose severe restrictions on
third country purchases, will depend on what Iran offers to do
from its side and when.
But some diplomats said restrictions on banking with Iran
might have to be eased in step with other industries, such as
shipping for example, to make sure companies can finance any
newly re-established trade.
"We can be flexible," a senior western diplomat said.
Without access to finance, relief might not materialise,
raising questions about the world powers' credibility and
endangering the implementation of the accord, they said.
Western companies are eager to enter Iran, a market of
nearly 80 million people and vast oil reserves.
But banks have been reluctant to process cash when it became
admissible to a certain extent under an interim accord struck
between Iran and the world powers last November, which provided
modest sanctions relief for some nuclear concessions.
Some experts have said overcoming this reluctance may mean,
for example, that the West would have to name several banks that
would process transactions allowed under newly allowed relief.
"Overcoming the reticence of international banks to do
business with Iran will require the (six powers) to issue clear
regulatory guidance about which multilateral sanctions are
lifted," said Elizabeth Rosenberg from the Center for a New
American Security in a research note.
French bank BNP Paribas agreed earlier this month to pay $9
billion for contravening U.S. sanctions, also against Iran, in a
move likely to increase western banks' reluctance to open up for
business with Tehran.
THE RIGHT TIMING
How sanctions relief for Iran is introduced might be a
crucial factor in ensuring the integrity of any deal, which will
likely be implemented over many years.
The West wants Iran to scale back its atom work so much that
it would take it a long time, maybe years, to assemble materials
for a bomb. To achieve that it wants Iran to limit its capacity
to enrich uranium to bomb-grade and subject any remaining work
to strict United Nations oversight.
For now, diplomats said, the sides have struggled to match
Iranian and western concessions sufficiently to craft a deal,
despite holding six rounds of talks since the start of this year
coordinated by the EU's top diplomat Catherine Ashton.
Some diplomats have said that as a goodwill gesture towards
Iran, the West would be willing to "front-load" some sanctions
relief, in return for quick stepping back from atom work.
"It's all meant to be reciprocal," one diplomat from the six
But experts warn that Congress, where Republicans and some
Democrats have called for talks to be abandoned and a return to
tough sanctions to deter Tehran from building an atom bomb, may
move ahead with new sanctions if they view a deal as too lax.
"If they try to front-load relief too significantly or lift
key elements (of the western sanctions architecture) too
precipitously, they will inspire a congressional backlash," said
Mark Dubowitz of the Foundation for Defense of Democracies, a
U.S. think-tank which advocates tougher sanctions.
Any sanctions relief would have to be closely coordinated
between the United States and Europe, some diplomats also said,
to ensure Washington's power to punish third countries for
contravening its restrictions does not complicate
It would be difficult, for example, for the Belgium-based
SWIFT, which provides banks with a system for moving funds
around the world to unblock Iranian banks from using its network
to transfer money without some easing of U.S. restrictions.
The Belgian company cut off Iranian banks in 2012 as part of
a wider international push to ratchet up sanctions that also
included a European Union embargo on purchases of Iranian oil.
The once unthinkable move - considering the extent of
dependence of some European countries on Iranian crude - pulled
between 450,000 and 600,000 barrels per day off world markets
and made it very difficult for global buyers of Iranian crude to
One western diplomat said Iran's immediate goal was to roll
back sanctions to what they were prior to EU moves in 2012.
If that happens, EU rules would only allow for the oil
embargo to be initially suspended before permanent removal.
A suspension could be easily reversed, while to reimpose
such a ban, which took months of painstaking negotiations in
2011 to agree, might be impossible again because it would
require a unanimous decision by all 28 EU governments.
In Washington, Obama can theoretically use waivers to allow
for some previously sanctioned trade. But a permanent removal of
sanctions in many industries would require congressional
support, which might be impossible to secure before Iran has
completed its side of the deal.
Several diplomats said much of the extensive western
sanctions architecture could remain in place even after an
accord is concluded.
Many U.S. measures pre-date the nuclear conflict and are
related to tensions between Washington and Tehran over a hostage
crisis following the 1979 Islamic Revolution.
The domestic U.S. oil embargo would be one example, even if
Washington gradually removes pressure on third states not to buy
(Additional reporting by Fredrik Dahl in Vienna; editing by