Possibly.

According to reports, Republican House Representative Ed Royce (R-CAX) – the chairman of the House Foreign Affairs Committee – sent a letter to President Obama last week expressing his concern that the Administration might soon provide Iran sanctions relief additional to that outlined in Annex II of the JCPOA. Implicitly, Rep. Royce’s letter suggested that the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) was considering a re-authorization of the U-turn license that existed up until November 2008.

It is unclear where Rep. Royce and other Republican leaders heard this news. Treasury Secretary Jack Lew is alleged to have done a U-turn of sorts himself last week on statements he made soon following the nuclear accord when he noted that Iran would continue to be “denied access to the [U.S.] market” under that agreement. Asked to confirm whether the U.S. was still committed to denying Iran such access, Secretary Lew would not provide an affirmative answer, instead obliquely stating that the U.S. would consider future action to “make sure Iran gets relief.” That is now being interpreted as the Treasury Secretary leaving the door open to a possible re-authorization of the U-turn license.

The U.S. State Department did not comment to reporters on the letter, and the U.S. Treasury Department only emailed a statement to the Associated Press stating: “We will continue to analyze the sanctions lifting and its effects.” Thus, no official word from the U.S. government.

One thing that reports miss, though, is the fact that the JCPOA specifically contemplates a situation in which Iran is failing to receive practical benefit to the sanctions-lifting outlined in Annex II of the JCPOA due to certain surviving nuclear-related U.S. sanctions. Pursuant to § 24 of the JCPOA’s Main Text, the JCPOA parties agreed that:

If at any time following the Implementation Day, Iran believes that any other nuclear-related sanction or restrictive measure of the E3/EU+3 is preventing the full implementation of the sanctions lifting as specified in this JCPOA, the JCPOA participant in question will consult Iran with a view to resolving the issue and, if they concur that lifting of this sanction or restrictive measure is appropriate, the JCPOA participant in question will take appropriate action. If they are not able to resolve the issue, Iran or any member of the E3/EU+3 may refer the issue to the Joint Commission.

In other words, should Iran fail to be receiving practical benefit of the sanctions relief outlined under the JCPOA as a result of surviving U.S. sanctions, Iran can raise the issue with the U.S. with the aim of finding a resolution. Such solution could involve the lifting of whatever particular sanction happens to stand in the way of Iran realizing the benefit of the JCPOA sanctions-lifting. Provided that no such solution can be found for the JCPOA parties, Iran would have the option of turning to the dispute-resolution procedures laid out in the JCPOA for resolution.

It is no surprise that Iran would bring complaint. As I have detailed in a series of posts, Iran continues to be shunned by major European and Asian financial institutions, as banks resist efforts to re-engage with their Iranian counterparts and facilitate transactions with Iranian parties. There are several reasons for such reluctance – but one of them has to do with the fact that non-U.S., non-Iranian banks are not authorized to provide dollar-clearing services for Iran or Iran-related parties, so that no Iran-related transactions can pass through the U.S. financial system. This alone has proven prohibitive for banks considering re-engaging their Iranian counterparts.

A re-authorization of the U-turn license, as existed up until November 2008, could help ameliorate this issue to some extent, as non-U.S., non-Iranian banks would be permitted to process Iran-related transactions through the United States so long as the restrictive conditions of the license were met. As such, banks would not be required to entirely restructure their internal processes for dealing with Iranian and non-Iranian parties – at least not to the degree required at present. It is thus not a shock to hear reports that OFAC is considering permitting Iran indirect access to dollar-clearing services in the United States. (Indeed, I had suggested that the U.S. should consider authorizing such transactions here in a post here two weeks ago.)

Will this come to fruition? That much is unclear. Iran is running into obvious problems; and insofar as the nuclear accord is a political agreement in which both sides balance incentives against each other, Iran’s troubles will prove to be the U.S.’s as well. No doubt, the U.S. has tried to resolve banks’ issues through thorough consultation, but provided that this does not work (and it does not appear to be moving the needle), further steps may well be necessary. It is perhaps the case that banks are telling U.S. representatives that, without a reinstatement of the U-turn license or something akin to it, the chance of them re-engaging Iran are slim-to-none. Regardless, the issue is one that all interested observers should be training their eyes on.