The barrage of US sanctions on Iran continue as President Donald Trump issued an executive order on Thursday, May 9—to sanction Iran’s steel, aluminium, copper and iron sectors that provide crucial foreign currency earnings for its crippled economy—after ending exemptions over oil sanctions last month.
This comes a day after Tehran threatened to partially withdraw from the 2015 nuclear agreement, a year after it was abandoned by the US. Iran’s threat was accompanied by a 60-day ultimatum for the remaining parties of the nuclear deal to protect the Islamic Republic from US oil and banking sanctions.
Instead of relaxing its hardline stance even after Iran’s clear message it would increase uranium enrichment, the US has threatened further action unless Tehran “fundamentally” changed its behaviour. Meanwhile, the escalating tensions between the nuclear powers could devolve into more armed conflict in the already boiling Middle East.
Does the US hope for a repeat of 1979?
The White House on April 22 announced that waivers for India, China, Japan, South Korea, and Turkey to purchase oil from Iran would expire in May, dealing its most serve blow to the country grovelling in poverty and dependent massively on oil trade.
By tightening sanctions on Iranian oil exports, the US hopes to cripple its economy enough for popular unrest to rise against the existing power structures and hammer out an acceptable nuclear deal, or do one better – bring the nation to its heel once again.
The Islamic Revolution of 1979 had proven to be a tipping point in Iran-US relations when millions of Iranians overthrew the Shah—widely believed to have been controlled by the CIA—and put the clerical regime in power. Ever since, the US has not been able to infiltrate Iranian politics and the Republic’s policies soon became synonymous with anti-US rhetoric.
The tyranny of sanctions
The Trump administration has taken a number of measures and policy approaches to get under Iran’s skin of late. It branded the country’s Revolutionary Guards (IRGC) as a foreign terrorist organisation. It also sanctioned 14 individuals and 17 entities linked to Iran’s sketchy Organization of Defensive Innovation and Research recently.
In January, it held a global summit along with Poland, focused on issues of stability and security in the Middle East, particularly Iran. Tehran was vocal about its opinion of this being a hostile act and threatened to reciprocate. Warsaw quickly issued a statement, defending its right to discuss various regional and global problems, and develop a platform for action and prosperity for the Middle East.
US sanctions, imposed first in August 2018, saw many European companies back out for fear of sanctions, choking an already ailing Iranian economy. Oil sanctions began in November, following which foreign shipping lines started backing out of Iranian deals under pressure from US sanctions.
Trump’s policies have since cut Iranian oil exports by about one million barrels per day. With the complete end of exemptions, analysts now expect the Islamic Republic’s exports to fall by another several hundred thousand barrels per day. With sanctions now hitting the metals sector—the largest non-petroleum-related source of export revenue, nearly 10 percent of Iran’s export economy will be affected.
How’s Iran taking it?
Not too well and certainly not backing down.
Besides declaring the US army as a militant organisation (in return for CIA’s designation of the IRGC), Tehran threw a curveball at Washington this week, threatening to partially withdraw from the existing nuclear agreement.
The accord was aimed at curbing Iran’s nuclear ambitions in return for sanctions relief; it was brokered by Barack Obama in 2015 and has had its efficacy questioned time and again by Trump, who believes it is too lenient on the Iranian nuclear programme.
Tehran on Wednesday hinted it may increase uranium enrichment, suspending key commitments under the deal’s Joint Comprehensive Plan of Action (JCPOA).
Nuclear pushback, deal in tatters
President Hassan Rouhani said he will no longer sell enriched uranium stocks abroad, conveying his decision to the remaining parties of the deal—France, Germany, Russia, China, and the UK. He also threatened to resume production of higher enriched uranium in 60 days, if they failed to meet their financial and oil commitments to the deal.
Rouhani was very clear about what happens if these nations follow US sanctions or refer the nuclearisation case to the United Nations Security Council. “Iran would begin higher enrichment of uranium, which is currently capped, and begin developing its Arak heavy water reactor based on plans made prior to the deal,” BBC reported the Iranian leader as saying.
US-Iran tensions have been on the rise ever since Trump abandoned the nuclear deal last year, but the latest foreign policy targeting Iran’s oil-dependent economy has further escalated tensions between the two nuclear powers.
MENA heating up
Reports that the US has deployed a US aircraft carrier in the Gulf region, following Secretary of State Mike Pompeo’s unscheduled meeting in Iraq on Wednesday, May 8, has piqued fears of armed conflict.
During the visit, he accused Tehran of transporting short- and medium-range ballistic missiles aboard boats in the region, much of which falls within Iranian territorial waters or the country’s Exclusive Economic Zone. Tensions later flared after what US officials called “credible Iranian threats” against US military forces in the region, claims that Iran has rejected.
The situation, as some political observers have pointed out, bears an uncanny resemblance to the lull and lies before the US went to war against Iraq in 2002.
According to US media, National Security Advisor John Bolton and Pompeo may soon be sending additional firepower, including anti-missile defence systems to the region.
A massive step backwards
After North Korea, Iran has not only become another site of Trump’s failing strategies at neutralising Asian nuclear threats, but the consequences of playing hardball with Tehran are more immediate, far-flung, and economically dire.
Jonathan Friedland writing for The Guardian condemns the US for being a rogue state risking global security, while acknowledging that Iran’s regime since the 1979 Islamic Revolution is a prime funder of terror groups in the Middle East and North African (MENA) region, an ally of Bashar al-Assad’s murderous rule in Syria, with a brutal record of suppressing domestic dissent.
But the US entered the deal in 2015, knowing fully well that Iran’s foreign and domestic policies were flawed and contradicted some of its own. What should have mattered is that Iran has kept up its end of the bargain as far as the nuclear deal is concerned. The US was the one that walked away without any concrete reason.
The 2015 agreement simply sought to stall the country’s nuclear ambitions for a decade and a half, and was hailed even by the UN as a “major achievement in nuclear non-proliferation and diplomacy and has contributed to regional and international peace and security”.
Now that deal hangs by a thread, depending heavily on European players, Russia, and China to de-escalate the war-like situation brewing in the Gulf region.
UK Foreign Secretary Jeremy Hunt reportedly alerted Pompeo to the real consequences if Iran were to pull out of the deal that Hunt called “a very important achievement.”
“Iran does not have nuclear weapons and its neighbours have not responded by getting nuclear weapons,” Hunt said. “It would be a massive step back for the region if it became nuclearised.”
While France and Germany also vowed to salvage the deal, they have not openly blamed the US for the current crisis, as Russia has. China has strongly condemned US threats to attack Iran; the UN has called its unilateral sanctions a direct violation of human rights that may precipitate “humanitarian catastrophes of unprecedented proportions.”
Simply put, none of Trump’s European allies particularly have his back owing partly to his alienating policies with each of them and the dilemma that now faces them: to meet Iran’s demands and keep its centrifuges silent, or return to the unstable world in which Iran is moving toward nuclear capability.
An alternate channel of payments like INSTEX—instituted by these European nations to skirt US sanctions last year— could be enforced to continue oil trade with Iran and end the tyranny of sanctions. That would salvage Iran’s and the global economy, and whatever’s left of the 2015 nuclear deal.
Rogue USA spells woes for India
“Because of our action, the Iranian regime is struggling to fund its campaign of violent terror as its economy heads into an unprecedented depression, government revenue dries up, and inflation spirals out of control,” Trump boasted in a statement Thursday, when the plan, like every other US foreign policy in the middle east has every chance of backfiring.
The year has been marked by rising protests across Iranian society; independent labour unions are being suppressed, even as workers and reporters came down on the streets in hordes on May Day, followed swiftly by their arrests. But few outsiders think that the regime overthrow, that John Bolton so explicitly wants, is close.
For India, the second biggest customer of Iranian oil, a difficult road lies ahead as it prepares for life without it.
Although the US is working to ensure adequate oil supplies from the UAE, Kuwait, Mexico, Dubai or Saudi Arabia to India, it will not be able to ensure the discounted rates Tehran offered. Furthermore, if Iran carries out its threat to blockade the Strait of Hormuz, or if oil stops flowing from other hotspots, like Libya and Venezuela, “Oil could hit $100 a barrel or more; about 0.6% could be wiped off global growth this year, and inflation could rise by 0.7 percentage points,” reports Al Jazeera.
Prarthana Mitra is a Staff Writer at Qrius.