US-Iran tensions pushed to new level

Tuesday, 2018-11-06 13:27:15
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The new US sanctions are aimed mainly at Iran's oil and financial sectors. (Photo: Reuters)
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NDO – The latest package of US sanctions, aimed mainly at Iran’s oil and financial sectors, officially took effect on November 5 as planned. Washington has stated that these are the strongest measures, while Tehran also stays ready to take measures in response and retaliation. The new move of the White House has been criticised by many parties as being wrong, pushing tensions between the US and Iran to a new level.

According to a report by the US Department of the Treasury, more than 700 individuals and entities have been named for Iran-related sanctions since November 5. This is the second measure package since Washington restored sanctions against Tehran following its withdrawal from the historic nuclear deal signed with Iran in 2015, officially called the Joint Comprehensive Plan of Action (JCPOA). Accordingly, sanctions have been reimposed on Iran’s oil exports, energy, shipbuilding, transport, and banking sectors, and many other key economic sectors of the country, causing direct impacts on banks and companies of countries currently having cooperative or business relations with Iran, except for those from the eight countries and territories temporarily enjoying immunity. The US Treasury Department has also sent a warning to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) about the risk of facing US sanctions if it provides services to Iranian entities named in the aforementioned blacklist.

With the restoration of sanctions covering most of the areas that the US once dismantled under its JCPOA commitments, the second round of sanctions has clearly reflected the White House’s goal of tightening its “grip” on all areas of the Islamic nation, aiming to break Iran’s cooperation channels with outsiders, thereby putting pressure and forcing Tehran to cede Washington’s demands for “major changes” in Iran. Through these sanctions, which US Secretary of State Mike Pompeo said were “the strongest ever”, Washington also hopes Tehran’s influence and role in the Middle East will decline, as the export value of Iranian oil fell sharply, nearing zero, causing economic exhaustion and uncertainties in the domestic public opinion.

Although the Iranian leaders have repeatedly reassured the domestic public opinion and Tehran has also received support from many of the signatories to the JCPOA, it is undeniable that this comprehensive and powerful offence from the US has put Iran’s economy at risk of an all-around “shock” by eliminating most of its oil revenues. As soon as the White House announced the reimposition of sanctions on Iran, some countries, mainly in Europe, have been forced to cease trading Iranian oil, causing the Middle East country’s oil exports to plunge sharply. Some US allies in Asia have also stopped importing Iranian crude oil. Therefore, it is difficult for Iran to avoid difficulties in the medium and long term as its oil revenues fall, the domestic currency loses value, the lives of people become difficult, and the unemployment rate rises. Many forecast that Iran’s oil export volume may fall by two-thirds, while the economy will possibly shrink by 3% this year and 4% in 2019. Meanwhile, Iran is currently the third largest oil producer in the Organisation of Petroleum Exporting Countries (OPEC), so US sanctions against Iran’s oil sector risk threatening the balance of the global crude oil market.

However, along with Tehran’s efforts to facilitate cooperation, the goodwill and support of its partners continues to be a factor for the Iranians in not being too pessimistic about the economic prospects of their country. In fact, major buyers of Iranian oil, including China, India or Turkey, will not easily agree to sever ties with Iran; and the US will have to make more flexible adjustments to suit the reality. In late August, the European Commission approved a package of financial aid, demonstrating the EU’s goodwill and commitment to maintaining cooperation with Iran despite pressure from the US.

US unilateral sanctions were not only strongly condemned by Iran, but also faced protests from the international community. Even the US’s close allies, such as the UK, France and Germany, have strongly criticised the US’s re-imposition of sanctions on Iran, while pledging to protect European businesses that have business ties with Iran. Protests have even been on the rise in the US with many considering the sanctions a wrong decision and an undoubted failure.

Looking at the reality of the situation at large and the ability to combat US sanctions over recent times, observers say that the Tehran administration can still take proactive and timely steps to adapt and respond to the second sanction package from the US, while Washington has been condemned for using unilateral measures which are not favoured by the international community. What’s worrisome is that the US is likely to fall into a “double-edged sword” by attaching oil issues with politics in the Middle Eastern “fire span”, which have already been sensitive and hot.