On 19 July, Iran and the P5+1 (United States, United Kingdom, Germany, France, Russia, and China, coordinated by EU High Representative Catherine Ashton) agreed to extend the interim agreement (which had been implemented since 20 January) until 24 November. Negotiators failed to agree on a final deal as differences between both sides on the extent to which Iran has to roll back its nuclear program, remained too high. Despite having built a strong momentum around the 20 July deadline, the negotiating parties failed to reach a final agreement. Negotiations continue and it is a positive sign that Iran converted its 20%- enriched uranium in compliance with the interim deal, as was confirmed by the International Atomic Energy Agency (IAEA). Nevertheless, agreeing on a final deal remains challenging and far from certain. Indeed, mid-term elections in November may complicate the US’ stance towards a new deal, but also in Iran hardliners could put pressure on the government to avoid major concessions.

Impact on country risk

As a result of the talks extension, the existing sanctions regime (and the temporary suspension of sanctions) remain(s) into effect, though the US agreed to release USD 2.8 billion of frozen Iranian funds in exchange  for the continuation of converting Iranian uranium stocks into fuel. It was announced last November that ‘nothing is agreed until everything is agreed’. Therefore, a failure to reach a final agreement would reinstall the suspended sanctions and could result in an even more severe sanctions regime, affecting future Iranian payment morality. For the time being, Credendo Group remains off cover for Iran, taking into account the sanctions that remain in place and the still temporary nature of the suspension of the sanctions.

Analyst: The Risk Management Team, s.vanderlinden@credendogroup.com