A ‘new mechanism’ is needed to protect companies that want do business with the Iranian market. Europe must honor its commitments
Urayb ar-Rintawi – ad-Dustour
The second installment of U.S. sanctions on Iran has entered the phase of implementation, specifically targeting its two strategic sectors, energy and banking. Washington’s original wager was on cutting Iran’s oil exports down to ‘zero’ and severing its relations with the international banking system (SWIFT). But there are serious doubts about its ability to achieve these aims; in fact, some people believe that it is more likely to return to negotiating table with Iran from a much lower point than that suggested by [U.S. Secretary of State] Mike Pompeo’s twelve demands.
As the first ‘exemptions’ that Washington has allowed eight countries were announced, four have been revealed – Turkey, South Korea, Japan, and India. And this has immediately confirmed that it is impossible to implement a ‘zero exports’ policy. After all, these four exempted countries alone consume half of Iran’s crude oil exports. And when the identity of the other four countries is revealed, the proportion of exported oil will rise, possibly significantly.
Moreover, because replacing Iranian oil does not seem easily achievable for the oil-producing and exporting countries, the price of crude oil is expected to rise notably in the coming phase, which means that Iran will compensate for any reduction in its income as a result of the U.S. ban on its exports via these high prices. Consequently, Tehran will be able to maintain a ‘reasonable’ level of oil returns.
Furthermore, if Europe succeeds in honoring its commitments by creating a ‘new mechanism’ that protects those of its companies that want do business with the Iranian market, Tehran would ensure its trade exchanges with the most important international centers outside the U.S., such as Russia, China, India, the BRIC countries, Turkey, and the EU.
Tehran is well known to have escaped the clutch of previous strict and comprehensive international and global sanctions, in which most of the abovementioned parties took part. Is it likely to submit to the new sanctions in the coming days, when most of the world’s countries have no intention of complying with the American demands?
As for using the dollar as the currency for Iran’s trade exchanges and its exclusion from the ‘SWIFT’ system, which it never joined to begin with, this is a different story; one whose medium-term effects on Washington may be even worse than its effects on Tehran. For the Trump administration’s excessive imposition of sanctions on a large number of countries around the world – in effect two billion of the globe’s inhabitants – is driving these countries to seek alternative and parallel systems to ‘SWIFT’ and the U.S. dollar as the currency for international trade. Iran would be the main beneficiary of such a new system, and many countries are ready to continue trading with Tehran using local currencies or hard currencies other than the U.S. dollar.
Furthermore, Iran is not a party that can be easily broken or uprooted from the region, or whose role in many of the region’s conflicts can be ended. It has built many ‘mansions’ inside Yemen, Iraq, Syria, Lebanon, and Palestine over the past four decades. It is unimaginable that any of these countries’ open-ended crises can find a final resolution without Tehran’s presence at the negotiating table in some form or another. Indeed, Washington’s regional cards are neither more numerous nor significantly stronger than Tehran’s. Experience has demonstrated Iran’s success in winning its wagers on its allies in more than one arena, unlike Washington, which has often displayed little staying power in managing these crises or trying to resolve them.
For these reasons, the Trump administration has continued to issue one invitation after another to Tehran to join a new round of negotiations over its nuclear and missile programs and regional influence. And, in fact, despite the deafening din of the confrontation between them, many well-informed sources speak of direct and indirect negotiations mediated by various parties – one of which is Oman – in order to contain the situation and prevent a slide towards the abyss of a confrontation whose outcome is unknown, possibly leading to new understandings over the abovementioned issues.
The sanctions will not break Tehran’s back. They will not compel it to raise the white flag of surrender and accept Pompeo’s preconditions, which are just a variation of Netanyahu’s terms. But it is also naïve to believe that Iran will be unaffected by these harsh sanctions, or to think that it has not adopted sufficient measures to avert severe damage to its economy and its citizens’ prosperity. And this means that the confrontation and the arm-twisting game between the two sides may last for a long time to come.
“In fact, Trump may leave the White House before Tehran screams out in pain or collapses to its knees and begs for the U.S.’s forgiveness