29 Mar 2024
Thursday 1 November 2018 - 22:55
Story Code : 325290

Five reasons why Trumps Iran sanctions will fail

Reuters | Seyed Hossein Mousavian: The next round of economic sanctions on Iran, which willstart going into effect on Nov.4,will mainly target the countrys oil and gas industries. These sanctions were eased after the 2015 signing of the Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal, but are being phased back in following President Donald Trumps decision to withdraw from the accord six months ago.

Trumps goal in reinstituting the sanctions is to kill the nuclear deal, to bring Irans economy to the point of total collapse, to contain Irans regional involvement in Syria, Iraq and Yemen, and,in spite of Washingtons denials,presumably tocelebrate the collapseof Irans ruling regime. The White Houses official position is that, by increasing economic and political pressure, it aims to bring Iran back to the negotiating table in order to replace the JCPOA with a newdealthat bears Trumps name.



There are at least five reasons why Trumps strategy will fail.

First, while the United States seeks to cut Irans oil exports tozero, it has become clear that this is impractical; there is no viable replacement for Irans 2.5 million barrels per day in oil exports. While Saudi Arabia previouslyclaimed it had made upfor any shortages, experts believe that Riyadh and its alliesdo not have the capacityto fully offset the loss of Iranian oil. Now that Irans oil exportshave droppedto an estimated 1.5 million bpd down from more than 2.5 million before the U.S. withdrawal from the JCPOA in May the price of the OPEC reference basket has gone up toaround$76. If forecastsindicatingthat it could jump to $100 per barrel are correct, the price hike will make up for Irans loss of revenue even if Tehrans exports are cut further to1 million barrels.

Second, Trumps trade war with China and the U.S. imposition of economic sanctions against Russia make Beijing and Moscow less likely to work with Washington on Iran. Moreover, the White House cannot count on cooperation from the European Union, which initiated nuclear negotiations with Iran in 2003 and which sees the JCPOA as one of its signature foreign policy achievements. Further, the EU increasingly views extraterritorial sanctions as a threat to its own identity andindependence. French Finance Minister Bruno Le Mairesaidrecently that the outcome of that crisis with Iran will be the chance for Europe to have its own independent financial institutions, so we can trade with whoever we want. In the past, cooperation with all major powers was critical to creating an effective Iran policy.

Third, U.S. sanctions have laid the groundwork for a historic change in the global financial system. For many decades, the U.S. dollar has dominated the international financial markets. However, American withdrawal from the JCPOA has encouraged countries such as Russia, China, India andTurkeyto use their local currencies to trade with Iran. If Europe succeeds in creating a financialsystemthat is separate from the U.S. dollar, other states can use euros in trade with Iran, diminishing U.S. domination of global markets.

Fourth, the remaining signatories to the JCPOA view the nuclear deal as a means to counter Americanunilateralism.This is due to the fact that the JCPOA is a multilateral agreement backed byUN Security Council resolution 2231, which the Trump administration exited unilaterally and is now trying topunishother nations for implementing. Any capitulation to Washington on this issue would further buttress the current U.S. approach. To avoid this, both Iran and the international community will see preserving the JCPOA as a strategic necessity.

Fifth, powerful U.S. allies such as the EU and Japan continue to support the JCPOA. Only a handful of regional allies namely Saudi Arabia, the UAE and IsraelsupportedTrumps decision to withdraw from the deal while other major regional players such as Turkey, Oman and Iraq continue to support the accord.At the same time, developments in other regional crises do not favor the United States and its allies: Bashar al-Assad, backed by Russia and Iran,is winning Syrias civil war; the U.S.campaignin Afghanistanhas failed; Saudi Arabia has beenunable to defeatthe Tehran-backed Houthis in Yemen and Qatar hasprevailed against the Saudi-led blockade.These developments will make it easier for Tehran to find workarounds to sanctions imposed by Washington.

For the past six decades, the United States has been the regions hegemonic power. However, Trumps unilateralist approach and the future of JCPOA may change the calculation by creating ariftamong the transatlantic allies, and bringing the eastern bloc powers, Europe and regional powers such as Iran, Turkey and Iraq, closer together. Moreover, the JCPOA has paved the way for other world powers specifically Europe, China, Russia and India to preserve international agreements without the United States. This, coupled with American withdrawal from the international scene, has the potential to transform international power politics, shifting from an American-led system to a multi-polarworld, with regional actors playing a more substantial role.

Against this backdrop, the next round of U.S. sanctions against Iran is likely to increase Middle East tensions and unlikely to bring Washington closer to achieving its goals on Iran.

 
Seyed Hossein Mousavian is Middle East Security and Nuclear Policy Specialist at Princeton University and a former spokesman for Irans nuclear negotiators. His most recent book,Iran and the United States: An Insiders view on the Failed Past and the Road to Peace was published in 2014.




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