Iran Oil Exports–VS–New American Sanctions.

                  by David Parmer / Tokyo

US Sanctions on the Islamic Republic of Iran will “snap back” on November 5, 2018. The ailing Iran economy is expected to be heavily impacted, and Iranians are already protesting the move. US President Donald Trump used his executive powers to pull the US out of the JCPOA or “Iran nuclear deal” because he considered it a bad deal, and that the funds released by the lifting of sanctions would be used to fund Iran’s military activity in the region. The administration also felt that the deal itself was really not “comprehensive” because it did not include Iran’s missile development program although that program was not part of the 2015 agreement.

The other parties to the JCPOA including the EU, UK, France, Germany, Russia, and China have been working to try to save the deal despite the withdrawal of the United States. This has generally been tough going since global businesses mainly use US dollars and many European companies fear sanctions against themselves and their US operations. This has caused many countries to pull out of agreements that were just getting going after the lifting of sanctions in 2015.

In an effort to save the JCPOA, the Europeans are in a process of setting up a Special Purpose Vehicle to allow their companies to continue to trade with Iran. This entity would not be a bank, and would not use US dollars. Another idea is to use barter for goods, a method that will be employed in “humanitarian” exceptions to the sanctions. Another work-around would be to use currencies other than US dollars for trade.

In an opinion piece in the Financial Times published on Nov. 4, 2018, US Treasury Secretary Steve Mnuchin used strong language to warn those who would try to dodge or subvert sanctions:

We will not tolerate banks companies or other entities that seek to circumvent our sanctions. We will view them as complicit in funding Iran’s malign ambitions.”

The US is clearly waging economic warfare on the Islamic Republic. The rationale is that this will bring about:

  • Some kind of regime change due to popular uprising
  •  Cessation of military actions in Iran’s neighborhood
  • A change in Iran’s nuclear and missile programs
  •  A return by Iran to the negotiating table to discuss the above

It does not take a lot of forethought to see that this will not happen. Iran has survived sanctions before, and just as in the case of US sanctions on Cuba, the sanctions only rally the people to the side of the government, and the country survives in an atmosphere of depravation and self-reliance.

Already the sanctions are somewhat porous in that the US will give 8 countries waivers to continue to import Iranian oil for the short term.

Finally, many consider that US actions in pulling out and reposing sanctions has seriously damaged US credibility and prestige. In short: the US cannot be trusted to honor its word given in an internationally sanction treaty.

Time will tell what happens with Iran-US relations, and with US-European relations that appear to be rapidly cooling. Please let us know your thoughts on this issue.

Photo:  Kharg Island by alisamii via flickr