Factbox: U.S., EU, U.N. close to lifting Iran sanctions. Here's how it will work

By Louis Charbonneau and Arshad Mohammed UNITED NATIONS (Reuters) - The United Nations and world powers are close to lifting sanctions on Iran under a historic nuclear deal struck in July between Tehran, the United States, Britain, France, Germany, Russia and China. The United States and the European Union both took formal legal steps in October to lift sanctions on "implementation day" - the day Iran meets all conditions under the deal. That is expected to happen in the next few days, Iranian and Western officials said. The green light to lift sanctions will come via a report the International Atomic Energy Agency (IAEA) will send to its governing board and the U.N. Security Council verifying Iran's compliance with its obligations under the deal. BREAKOUT The July 14 nuclear deal aims for the next decade to extend the amount of time it would theoretically take Tehran to produce enough fissile material for an atomic bomb - so-called breakout time - from several months to a minimum of one year. Critics of the deal in the U.S. Congress and Israel worry that once the main restrictions on Iran's nuclear program expire in 10 to 15 years, Tehran will be in a position to quickly develop an atomic weapon, if it wishes. The Obama administration says the deal will ensure long-term scrutiny of Iran to deter it from developing a bomb. CENTRIFUGES Iran will reduce its centrifuges by two thirds. It will be permitted to operate up to 5,060 first generation centrifuges for 10 years at its Natanz plant. It will cap its level of uranium enrichment at 3.67 percent, well below the 90 percent level needed for bomb-grade material. Iran will keep 1,044 first-generation centrifuges at its underground Fordow enrichment plant, which will be converted into a nuclear, physics and technology center. Before the deal, Iran had 20,000 centrifuges installed at Natanz and Fordow. The deal says Iran can continue to conduct enrichment research and development - without accumulating enriched uranium - including work with certain types of advanced centrifuges. ARAK Heavy water reactors, such as the one Iran had started building at Arak, can produce weapons-grade quantities of plutonium. Under the deal, Iran agreed to convert the Arak reactor so that such a "plutonium pathway" to a nuclear bomb is ruled out. The core of the Arak reactor has been removed and has been filled with concrete, Washington said on Thursday, so it will cease to be operational. The original core is expected to remain in Iran. URANIUM STOCKPILE Iran had to reduce its enriched uranium stockpile from around 10,000 kg (22000 lb) to 300 kg (660 lb) for 15 years. U.S. officials have described it as a 98 percent reduction in Iran's stockpile of uranium, enriched to no more than 3.67 percent. On Dec. 28, the United States said a ship carrying more than 11,000 kg of low-enriched uranium materials had left Iran for Russia. POSSIBLE MILITARY DIMENSIONS Iran helped the IAEA complete an investigation into what Western powers said was past nuclear weapons research. The IAEA's board of governors last month ended the agency's inquiry into the so-called "possible military dimensions" of Iran's nuclear program. That came after the IAEA issued a report strongly suggesting Tehran had a nuclear weapons program for years. Iran denies ever having considered developing atomic weapons. U.N. SANCTIONS Once the IAEA informs the U.N. Security Council and IAEA board that Iran has met its obligations, all U.N. sanctions resolutions passed between 2006 and 2010 will be terminated. However, a new resolution adopted on July 20 carries over some U.N. restrictions. Iran will be "called upon" to refrain from work on ballistic missiles designed to deliver nuclear weapons for up to eight years, language that critics of the deal say does not make it obligatory. The U.N. arms embargo barring Iran from selling weapons will remain in place for up to five years. The resolution allows for supply of ballistic missile technology and heavy weapons, such as tanks and attack helicopters, to Iran with Security Council approval, but the United States has pledged to veto any such requests and to continue to act as if Iran's ballistic missile program is banned. U.N. restrictions on the transfer to Iran of nuclear technology for peaceful purposes will remain in place for a decade. A committee of the parties that negotiated the deal - known as the "joint commission" - will handle disputes over possible violations of the agreement. If the complaining state is not satisfied with how the commission addresses its concerns, it could then take its grievance to the U.N. Security Council. EU SANCTIONS Once the IAEA confirms Iran has met its obligations under the deal, the EU will lift all nuclear-related economic and financial sanctions, including those applying to the following: financial transfers; banking; insurance and reinsurance; the SWIFT system; trade financing; oil, gas, petroleum and petrochemical products and related technology; naval equipment and technology; design and construction of cargo vessels and oil tankers; access to EU airports; trade in gold, diamonds and precious metals, and other areas. U.S. SANCTIONS Under the agreement, the United States will suspend nuclear-related sanctions against Iran. In practice, this means lifting the restrictions that now prevent non-U.S.-companies, entities and individuals from engaging in a wide array of transactions with Iran. For the most part, restrictions on U.S. actors will remain in place. The most dramatic U.S. sanctions to be eased will be those that had prevented non-U.S. actors from buying oil from Iran, except in very limited circumstances, or from investing in its petroleum sector. Among other things, non-U.S. actors will largely be able to carry out transactions involving the Iranian rial; provide U.S. banknotes to the Iranian government; release Iranian oil-sale revenues held abroad; issue Iranian sovereign debt; provide insurance underwriting; trade precious metals; sell goods and services to Iran's auto sector; and undertake many financial and banking dealings. Most U.S. sanctions involving U.S. actors remain in place. So, while non-U.S. banks may trade with Iran, U.S. banks may not do so directly or indirectly. However, the U.S. government has committed to allow companies, including U.S. actors, to seek licenses to sell commercial aircraft and spare parts to Iran and to license imports of Iranian carpets, caviar, pistachios and other food stuffs into the United States. SNAPBACK The so-called snapback mechanism is designed to allay fears that Iran might fail to keep its promises once sanctions are lifted. Under snapback, punitive sanctions are automatically reintroduced if Iran fails to comply with the deal. A July 20 Security Council resolution allows all U.N. sanctions to be re-imposed if Iran breaches the deal in the next 10 years. If the council receives a complaint of a breach it would then need to vote within 30 days on a resolution to extend sanctions relief. If the council fails to vote on a resolution, the sanctions would be automatically re-imposed. This procedure prevents any of the veto powers which negotiated the accord, such as Russia and China, from blocking any snapback of Iran sanctions. (Reporting by Louis Charbonneau, Arshad Mohammed, Michelle Nichols, Shadia Nasralla, Francois Murphy, editing by Ross Colvin)