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Published: Tuesday January 21, 2014 MYT 1:40:04 AM
Updated: Tuesday January 21, 2014 MYT 1:41:00 AM

U.S. begins Iran sanctions relief, sees tough talks ahead

WASHINGTON (Reuters) - The United States has followed through on promised sanctions relief for Iran covering oil exports, trade in precious metals, and automotive services as part of a nuclear agreement that began taking effect on Monday, U.S. officials said.

In exchange for steps that Tehran took to halt its most sensitive nuclear activity, the White House said the United States, Britain, France, Germany, Russia, China and the European Union "will today follow through on our commitment to begin to provide the modest relief agreed to with Iran."

"At the same time, we will continue our aggressive enforcement of the sanctions measures that will remain in place throughout this six-month period," White House spokesman Jay Carney said in a statement.

The move is the controversial culmination of a promise that President Barack Obama made as a presidential candidate to engage with U.S. adversaries, including Tehran.

It has tested ties with top ally Israel and prompted both fellow Democrats and opposition Republicans in Congress to pursue legislation that would increase sanctions against the longtime U.S. foe. Obama has vowed to veto such action.

State Department spokeswoman Jen Psaki said the Iran deal would pave the way for negotiations on a long-term deal to contain Iran's nuclear program. Those negotiations, she said, "will be even more complex, and we go into it clear-eyed about the difficulties ahead.

Because Iran had fulfilled its initial nuclear commitments under the deal, the administration had taken "the necessary steps to pause efforts to further reduce Iranian crude oil exports," the U.S. Treasury Department said.

This will allow the six current customers of Iranian oil to maintain their purchases at current reduced levels for the six-month duration of an interim nuclear deal between Iran and world powers, it said.

A U.S. official said Iran was currently exporting about 60 percent less oil than it was two years ago and would be held to those reduced levels.

The official said Washington would allow Iran to access, in installments, $4.2 billion (2.5 billion pounds) of oil revenues frozen overseas in a set schedule across the six-month period. The last instalment would be accessible on the final day of the period, he said.

The United States also took steps to suspend sanctions on non-U.S. people engaged in transactions related to Iran's petrochemical exports, as well as certain trade in gold and precious metals with Iran and provision of goods and services to Iran's automotive sector.

"This temporary relief will not fix the Iranian economy. It will not come close," a senior administration official, speaking on condition of anonymity, told reporters on a conference call. The official noted that inflation in the country remained near 40 percent - one of the highest in the world - and its economy was expected to contract further.

"Iran is not and will not be open for business until it reaches a comprehensive agreement with the international community that addresses all outstanding concerns," he said.

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