Within hours of the announcement of an Iran nuclear deal early on Tuesday, lawyers around Washington were fielding calls from U.S. corporate clients eager to know what the 159-page deal would mean for their business prospects.
In the near term, the answer for most of them is: not very much.
U.S. companies face losing out to foreign competitors in Iran as they wait for signs that Tuesday’s historic nuclear agreement is sticking and that U.S. lawmakers are willing to loosen long-standing restrictions on trade and investment, according to corporate lawyers and company executives.
Iran’s agreement with major world powers to curtail its nuclear program in exchange for the lifting of economic sanctions opens up the world’s fourth-largest oil reserves, second-largest natural gas reserves and an 80 million population to multinationals.
But the strict, decades-old U.S. restrictions on doing business with Tehran, which predate the nuclear crisis and relate to other concerns such as terrorism support and human rights abuses, will remain in place.
“U.S. persons and banks will still be generally prohibited from all dealings with Iranian companies, including investing in Iran, facilitating cleared country trade with Iran,” a senior U.S. administration official said at a briefing on Tuesday.
The deal hammered out in Vienna does open some avenues for U.S. companies to expand in Iran. U.S. firms will now be allowed to sell or lease commercial passenger aircraft to Iran, as long as they procure licenses from the U.S. government, giving companies such as Boeing an opportunity.
The deal also allows the U.S. government to license foreign subsidiaries of U.S. companies to operate in Iran, which was banned by Congress in 2012.
A Treasury official told Reuters that decisions on licenses would be made by the Office of Foreign Assets Control, and that such subsidiaries would be subject to restrictions.
“The scope of the license has to be shaped and determined,” the official said.
U.S. executives and trade groups worry that the embargo may force U.S. companies to watch as European and Asian rivals move in, unless there is Congressional action to relax the rules.
“It (the deal) will not result in a green light for U.S. companies in most cases to resume business in Iran,” said William McGlone, a lawyer who specializes in export controls and sanctions at Latham and Watkins in Washington.
“Democrats as well as Republicans are still very strongly in favor of maintaining primary sanctions against Iran on the Hill for various reasons, and it’s hard to see that dynamic changing in the near term.”
McGlone said he spoke on Tuesday with a Fortune 50 company executive who wanted to know if it could resume foreign subsidiary dealings with Iran in place prior to 2012. Several other sanctions lawyers told Reuters they spent much of Tuesday answering Iran-related queries from clients.
Even if allowed, companies are likely to be wary of rushing into Iran due to concerns the policy could be reversed if a Republican wins the presidency in 2016. At least three Republican candidates said on Tuesday they would do so.
Pro-business groups have been treading carefully on Capitol Hill amid strong Republican opposition to the deal.
Republicans in Congress have long been working to sink an agreement, and several dismissed concerns that U.S. businesses would be disadvantaged in a post-deal environment.
“I think we are a long way from that,” said Republican Senator John Cornyn, in response to a question about U.S. firms operating in Iran.
Some of the most influential business lobby groups have been largely muted on Iran, in contrast to their more active role in pressing for an easing of sanctions against Cuba and Russia.
Business Roundtable, made up of chief executives of the largest U.S. firms, including Boeing and Exxon Mobil Corp. , told Reuters they have not been involved in the Iran issue. The Chamber of Commerce, National Association of Manufacturers, and National Retail Federation did not respond to requests for comment.
In the global race to tap Iran’s vast energy resources, U.S. companies have already gotten off to a slow start. Iranian officials estimate the country needs $230 billion of investment in the petroleum sector alone, to upgrade its aging energy infrastructure and expand oil and gas production.
However, major U.S. firms said they have not broached discussions with Iran, in order not to fall foul of their government. In contrast, several European oil companies were quick to express their interest in Iran both before and after the deal was announced.
A spokeswoman for oil giant Shell said on Tuesday the company was “interested in exploring the role Shell can play in developing Iran’s energy potential,” within the boundaries of the law.
A spokeswoman for Norwegian oil services firm Aker Solutions said: “We’ve done business in Iran before and will be interested in looking at new possibilities when sanctions are lifted.”
Italian oil and gas group Eni also said on Tuesday it would consider investing in Iran again if sanctions are lifted and Iran improves its contract terms.
U.S. oil giants Chevron Corp and ConocoPhillips both stressed that they act in full compliance with U.S. law, and ConocoPhillips stated it is not engaged in business discussions with Iran. Exxon, the world’s largest publicly traded oil company, declined to comment.
Other U.S. firms were similarly quiet. General Motors Co. declined to comment on Tuesday on “potential future scenarios” and said it is committed to complying with U.S. sanctions. Starbucks, the world’s biggest coffee chain, said on Tuesday it had no plans to enter Iran, while Coca-Cola said it was too early to comment.
Corporate lawyers and trade groups said U.S. companies may start to push legislators to loosen restrictions now that the deal is signed, and as they start to see the tangible impact of losing out.
“What’s particularly difficult for American companies is if they are the only ones that are prohibited whereas the rest of the world will be trading,” said Vanessa Sciarra, vice president of the Emergency Committee for American Trade.
“Every time you’re at a disadvantage relative to your foreign counterparts, you lose market share.”