Published: 25 February 2018 Author: Stefan Talmon
The United States of America imposed a series of unilateral sanctions on Iran which almost prevented Iran’s Minister of Foreign Affairs, Javad Zarif, from attending the 2018 Munich Security Conference (MSC), which was held in the Bavarian capital from 16 to 18 February 2018. Foreign Minister Zarif had planned to stop over in Munich on his way from Mumbai to Moscow to address the conference on its final day. However, a week before the conference, Munich airport informed the Iranian consulate general in Munich that the Minister’s aircraft could not be refuelled as local fuel companies refused to do so out of fear that they would contravene U.S. sanctions against Iran. The airport authorities suggested that the Minister’s aircraft either bring enough fuel for the onward journey or refuel elsewhere. This was unacceptable to Iran and the Iranian Foreign Minister Zarif’s attendance at the conference was put in jeopardy. At this stage, the German Federal Foreign Ministry requested the assistance of the Federal Ministry of Defence. On 18 February 2018, the German military – the Bundeswehr – refuelled the Minister’s plane with 17,000 litres of kerosene and invoiced the Iranian consulate general for its services. The Federal Ministry of Defence was rather tight-lipped about the matter, simply stating that “the Bundeswehr provided assistance at Munich airport on February 18.”
After the news of the German military refuelling the Minister’s government aircraft broke, Iran’s Ministry of Foreign Affairs tried to play down the affair. On 28 February 2018, the spokesperson of Iran’s Foreign Ministry declared:
“As FM [Foreign Minister] Zarif’s visit to Munich was very short and there was a time limit for the FM and his accompanying delegation to head for Moscow, the fuel companies operating at the Munich Airport experienced unwanted delays and uncertainty. Finally, in order to avoid facing any problems and to ensure the [on time] presence of FM Zarif in Valdai Club Conference [sic], we followed up the case and coordinated the issue with the German Foreign Ministry. [Therefore], the problem was resolved and fuel was provided for the delegation’s aircraft.”
The spokesperson also emphasized that all Iranian flights to destinations across the globe, including the European stops, were regularly conducted on a daily basis and that there were no problems with refuelling.
Iranian aircraft had been facing refuelling problems in Germany and elsewhere since July 2010 as a consequence of the U.S. Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010. The Act expanded U.S. sanctions against Iran under the Iran Sanctions Act of 1996. The amended Iran Sanctions Act provided that
“the President shall impose 3 or more of the sanctions described in section 6(a) with respect to a person if the President determines that the person knowingly, on or after the date of the enactment of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010—
(i) sells or provides to Iran refined petroleum products—
(I) that have a fair market value of $1,000,000 or more; or
(II) that, during a 12-month period, have an aggregate fair market value of $5,000,000 or more.”
The term “refined petroleum products” included “jet fuel (including naphtha-type and kerosene-type jet fuel), and aviation gasoline.” The nine sanctions described in section 6(a) of the Iran Sanctions Act would prohibit to anyone providing jet fuel to Iran:
- Export assistance from the Export-Import Bank of the United States;
- Licenses for export of U.S. military, “dual use”, or nuclear-related goods or technology;
- Private U.S. bank loans exceeding $10 million in any 12-month period;
- If the sanctioned person is a financial institution, designation as a primary dealer in USG debt instruments or service as a repository of USG funds;
- Procurement contracts with the United States Government;
- Foreign exchange transactions subject to U.S. jurisdiction;
- Financial transactions subject to U.S. jurisdiction;
- Transactions with respect to property subject to U.S. jurisdiction;
- Imports to the United States from the sanctioned person.
These sanctions also applied to companies providing jet fuel to State-owned or State-controlled Iranian aircraft at airports outside the United States, once sales volumes exceeded a fair market value of US$ 5 million per year. The Comprehensive Iran Sanctions, Accountability and Divestment Act was signed into law by U.S. President Barack Obama on 1 July 2010 and only a few days later major international oil companies like British Petroleum, Shell and Total operating at German airports refused to deliver jet fuel to Iranian airlines. As a result, Iranian aircraft had to stop over in third countries on their flight to Germany. This significantly increased flight costs and prolonged the journey time.
On 14 July 2015, Iran, the P5+1 countries – the United States, the United Kingdom, France, Russia, China, and Germany – and the European Union agreed on a Joint Comprehensive Plan of Action (JCPOA) to ensure that Iran’s nuclear program would be exclusively peaceful. As a result of the JCPOA, on 16 January 2016 the European Union and the United States lifted some of their unilateral nuclear-related economic sanctions on Iran. The United States committed, inter alia, to lift the sanctions in section 5(a)(3) of the Iran Sanctions Acts of 1996 that apply to “non-U.S. persons” who engage in the sale or provision to Iran of refined petroleum products. With the implementation of the JCPOA German airports started to refuel Iranian planes again.
On 12 January 2018 U.S. President Donald Trump, while stopping short of reimposing unilateral U.S. sanctions against Iran, announced that he would withdraw the United States from the JCPOA in 120 days time if the United States’ European allies did not agree to a new supplemental agreement that would impose new multilateral sanctions if Iran developed or tested long-range missiles, thwarted inspections, or made progress toward a nuclear weapon. In February 2018, the oil companies at Munich airport thus were not yet technically prohibited by U.S. law from selling jet fuel to the Iranian government. However, the changed political climate made some oil companies cautious – and rightly so. At the very conference in Munich U.S. National Security Adviser H.R. McMaster said on 17 February 2018:
“Now is also the time to address serious flaws in the Iran deal [the JCPOA] and counter Iran’s destabilizing activities, including its development and proliferation of missiles—and its support for terrorist proxies and militias that fuel destructive conflicts across the greater Middle East. The Iranian regime foments this violence with support from commercial entities affiliated with the Islamic Revolutionary Guard Corps or IRGC—including Mahan Air, which lands right here in Munich Airport.
As a matter of international security and moral conscience, we must stop doing business with IRGC-affiliated interests, encourage the development of a true commercial sector in Iran, and pressure the regime to respect the rights of its people.”
Against the background of an impending reimposition of unilateral U.S. sanctions the oil companies at Munich airport refused to sell jet fuel to the Iranian government in an act of anticipatory obedience. This is a general phenomenon. Many companies in Germany and elsewhere are uncertain about the exact scope and reach of U.S. extraterritorial sanctions and, out of fear of adversely affecting their business operations in the United States of America, voluntarily comply with U.S. law that technically is not applicable to them. This may also explain Iran’s reaction to the incident. The Iranian Ministry of Foreign Affairs was anxious to downplay the refusal of the oil companies at Munich airport to refuel the Foreign Minister’s aircraft in order not to alert other companies to (non-existing) U.S. sanctions.
These considerations did not play any role in the case of the German military. It is to be assumed that the Federal Government was fully aware that U.S. law did not prohibit the refuelling of the Minister’s aircraft. Even if the Iran Sanctions Act had been applicable to the sale of jet fuel at Munich airport the provision of 17,000 litres of kerosene would not have reached the threshold requirement under section 5(a)(3)(A) of the Act. In any case, the Iranian Sanctions Act does not apply to foreign governments. There was thus no question of U.S. sanctions busting by Germany.