Who would have thought U.S. export sanctions would have a ripple effect in the world of sports?

But President Donald Trump’s decision to renew Iranian export sanctions and pull out of the Iran nuclear deal in May has done just that—and now it’s affecting more than just trade between the two countries.

Nike has voluntarily decided to cut all ties with the country ahead of 2018’s World Cup, citing export compliance and current export sanctions as the main reasons. The company, which supplies over 60 percent of the soccer cleats for the World Cup, made it clear that it would no longer be supplying them to Iran due to the recent revival of export sanctions against the country by Trump.

“The sanctions mean that, as a U.S. company, we cannot provide shoes to players in the Iran national team at this time,” Nike said in a statement on Friday.[i]

Penalties for Export Compliance Violations

The U.S. Department of the Treasury’s Office of Foreign Assets Control imposes harsh penalties against companies and individuals who openly violate current sanctions, fining violators with up to $1 million and 20 years in prison.

While American financial institutions can face “civil penalties of up to the greater of $250,000 or twice the transaction value.”[ii]

Iran’s Response

Although Nike is simply maintaining export compliance given the export sanctions, Carlos Queiroz, head coach of the Iranian national team is furious and called the decision unfair.

Queiroz said in a statement to reporters on Wednesday.

Queiroz has called on FIFA to address the issue and make a ruling.

“I haven’t gotten clarity on what legal basis [Nike] is using to say this. They should reference what part of the sanctions they are talking about, since technically they’re not selling anything,” said Trita Parsi, current president of the National Iranian American Council.[iii]

Special Licenses for Export Sanctions

As it stands, Iran will likely have to change their equipment. According to Richard Nephew, a former director for Iran at the National Security Council and an export sanctions expert, special licenses can be granted for humanitarian goods, but in his words, “shoes usually don’t count.”[iv]

No major rulings regarding Nike’s decision have been made by any of the major regulatory bodies as of yet, but one wonders what opportunities Nike might loose should Iran pull off a miracle and win the 2018 World Cup! Surely Iran would have the last laugh.

Further reading:

For more information about the U.S. export and OFAC sanctions imposed on Iran, please visit the Iran OFAC Sanctions page on Visual OFAC, which is part of eCustoms’ suite of export, trade and financial compliance solutions. More information about how the U.S. pulling out of the Iran nuclear deal could impact export compliance can be read in our article “Nuclear fallout? How the U.S. pulling out of the Iran nuclear deal could impact export compliance.

[i] Nike cuts ties with Iran’s World Cup team, citing U.S. sanctions. News Article. NBC News. https://www.nbcnews.com/news/sports/nike-cuts-ties-iran-s-world-cup-team-citing-u-n881481. Accessed June 10, 2018

[ii] Ibid

[iii] Ibid

[iv] Ibid