Enforcement Trends: Sanctions And International Risk (Transcript)

I'm Alex Rene, partner in Ropes & Gray's Government Enforcement group in Washington, D.C. Today I'm joined by Government Enforcement counsel Mike Casey. Today's podcast is part of a series of Capital Insights podcasts we're hosting to examine the issues and potential regulatory and enforcement changes emanating from Washington D.C. as we transition to a new political administration.

In this podcast we're going to discuss the sanctions environment. Our conversation will be informed by publicly available statements, past behavior and general trends we've observed in the international risk and sanctions space.

With any administration change there is some level of uncertainty and no way to perfectly predict the future. Today we will make our best predictions with currently available information. We'll begin this podcast by discussing economic sanctions.

The U.S. and EU lifted a number of sanctions against Iran as part of its obligations under the Joint Comprehensive Plan of Action, also known as the JCPOA. Mike, how do you expect the situation with Iran will look under a Trump Administration?

Mike: During the campaign, Mr. Trump was very critical of both President Obama's approach towards Iran and also the JCPOA. Once Mr. Trump becomes president in January he will have the authority to unilaterally end the United States' participation in the JCPOA because the JCPOA is a framework agreement and not a treaty. While Mr. Trump will have the power to do so, I think it's unlikely that he will choose to go down that route. The United States has negotiated the JCPOA with five other countries, all of which seem to want the JCPOA to continue. In order to end the U.S.'s involvement in the JCPOA, Mr.

Trump would need to burn a lot of diplomatic capital and upset some key U.S. allies, which I don't think he's going to be willing to do.

In my mind, a more likely outcome would be for Mr. Trump to undo certain aspects of the sanctions relief that the U.S. provided to Iran as part of the JCPOA. So, for example, the Trump Administration could revoke General License H, which is a general license issued by OFAC that allows foreign entities owned or controlled by U.S. businesses to engage in certain types of business with Iran. This act would have symbolic value and it also could have some very significant, real-world consequences for foreign subsidiaries of U.S. companies and foreign portfolio companies owned by U.S. private equity sponsors.

Because many of these...