US-Iran Memorandum Faces Challenges for Proposed Investment Fund
A new $300 billion investment fund for Iran, part of the recent US-Iran agreement, might encounter significant legal hurdles due to existing US sanctions laws. This raises questions about the viability of the proposed plan, even if both parties reach a final agreement.
On Wednesday, President Donald Trump and Iranian President Masoud Pezeshkian signed a memorandum aimed at ending hostilities and restoring trade routes through the Strait of Hormuz. This 14-point plan includes the US easing sanctions on Iran, allowing the country to boost its oil revenues and gain access to certain international banking services.
However, one of the key features—a $300 billion investment fund for reconstructing Iran—could conflict with long-standing US views that Iran’s construction sector is closely linked to the Islamic Revolutionary Guard Corps (IRGC).
Legal experts express concern that if investments are targeted at sectors already seen as under IRGC control, the fund’s operation may rely on temporary waivers or special licenses. Such a situation could scare away long-term investors and complicate the overall deal.
In 2020, the State Department determined that Iran’s construction sector was either directly or indirectly controlled by the IRGC, a conclusion it reaffirmed in May. According to the Iran Freedom and Counter-Proliferation Act (IFCA), this classification poses risks for individuals or companies looking to engage in that sector.
Miad Maleki, a former official at the Treasury Department, highlighted that these legal issues go beyond simply needing Congressional approval. He pointed out that a solid investment plan would likely require both US government support and cooperation from allies to establish the fund.
While the president does have some authority to ease restrictions, such as revoking executive orders or issuing licenses, that may not be enough to attract serious investors. Maleki noted this fund could be created through a presidential action, but would require renewals every 180 days, which poses additional risks for potential investors.
The framework could draw attention in Congress, as the limited duration of waivers might require repeated justification for suspending sanctions in an IRGC-controlled sector.
Critics warn that the memorandum could give Iran significant economic advantages while delaying key discussions on nuclear and security issues. Maleki expressed that the US had leverage over Iran that hasn’t been seen before but seems to be trading that away in return for reopening the Strait of Hormuz.
He cautioned that Iran may use the investment process as a way to delay reaching a final agreement, saying that the country is likely to stall rather than push for a resolution quickly.
Meanwhile, John Hannah, a senior fellow at the Jewish Institute for National Security, warned that any economic benefits from the agreement could allow the IRGC to rebuild its military capabilities swiftly.
This evolving situation suggests that while steps are being taken toward better relations, many challenges still lie ahead in making the proposed investments a reality.
