Robert Harneis-TDO- (FRANCE)- The United States has re-imposed sanctions aimed at Iran’s automotive, precious metal, steel and aluminum sectors as well as rial transactions and civilian aircraft sales. The move is less severe than the oil sanctions due to resume in November, but it could still damage in Iran’s strained economy in the short term at least. They will also stimulate Tehran to solidify business ties with countries such as Russia, China and India that are less vulnerable to US pressure.
The Iranian government needs to keep the economy growing in the face of high unemployment. Tehran has been troubled by months of protests, fueled in large part by economic grievances. US, Western and Israeli intelligence services have no doubt being doing their best to encourage them. The reimposed sanctions can only increase the pressure.
Despite efforts by European governments to salvage the JCPOA agreement and continue doing business with Iran, Washington is forcing Western companies to pull out because of threats against their much larger interests in the US. The automotive industry is one of Iran’s larger manufacturing sectors. It is also the source of a lot of jobs, which is part of the reason why the Iranians have prioritized it.
The Aug. 6 sanctions also target civil aviation sales to Iran, effectively canceling any pending deals from US and European firms such as Boeing and Airbus. The nuclear deal explicitly allowed such sales so that Iran could replace and upgrade its aging airline fleet, which has been severely depleted from decades of US sanctions. The French Italian company ATR scrambled to get 5 airliners, out of 20 ordered, into the country by the deadline to avoid sanctions. The ATR 72-600 passenger planes landed at Tehran's international Mehrabad airport on Sunday morning, a day before the United States reimposed the first round of sanctions on Iran. The Iranian government described the move as “positive”.
In the longer-term Iran has taken precautions against the United States going back on the JCPOA deal. In the case of Total and the French car manufacturers Peugeot there is a provision for Chinese firms to take over the investments and they are doing so.
After Trump withdrew from the deal in May, Iranian Foreign Minister Mohammad Javad Zarif embarked on a tour of the agreement’s remaining participants — Britain, France, Germany, Russia and China. Zarif has since visited multiple other countries seeking to shore up investment in Iran, while President Hassan Rouhani has also pressured Europe to keep the deal alive at meetings in Switzerland and Austria in July.
In an effort to maintain some business with Iran, the European Union is working on a so-called blocking regulation that would punish firms for complying with US sanctions. It is doubtful that this will have much effect. Major firms, have already made clear that they can’t afford to get shut out of US financial markets and have begun pulling out of Iran. These include Peugeot, General Electric, Boeing, Maersk, Siemens, Total Oil and Gas, and India’s Reliance refining complex. One Kazakh and two Russian steel companies have also ceased business ties with Iran.
Iran is also challenging the sanctions at the UN’s International Court of Justice under a treaty with the United States that predates the 1979 Islamic Revolution. The Trump administration calls the lawsuit, which observers agree is a long shot at best, as “baseless.”
Meanwhile, the nuclear deal’s US opponents have warned Europe against resisting Trump and the Republican-led Congress. In July, Sen. Ted Cruz, R-Texas, led nine other Republican senators in a letter to the British, French and German ambassadors in Washington to urge them to “comply with all American sanctions, but also to emphasize we would consider it particularly troubling if you sought to evade or undermine American statutes.”
President Rouhani has consistently argued that Europe should save the deal, although he can have had little doubt that Europe would cave in to US demands. Iran’s main concern is the continuation of oil exports which keep the government finances afloat. It is precisely at these that the US is aiming.
China is very likely to either maintain or increase its current oil imports from Iran even as US allies Europe, Japan and South Korea cut theirs. India also has shown no signs of stopping importing Iranian oil. In a sign that the Trump administration is not entirely confident that it can strangle the vital Iranian oil exports, it has recently indicated that it is open to granting sanctions exemptions for some countries to continue importing Iranian oil as long as they make some reductions.
Another indicator that the US government is not sure it can achieve its aim, is the date of the re-imposition of oil exports, only two days before the vital mid term US elections. Any failure would not by then have become obvious to US voters.
Iran has never trusted the United States not to go back on the July 2015JCPOA nuclear deal, knowing as they do the control that Israel has over much of the US political scene. Israel has bitterly opposed the agreement. They have worked hard to protect themselves and keep their economy afloat. The next year will show how effective their preparations have been.