(Persia Digest) - Of all the countries in the world, Iran seems to be President Trump’s main squeeze — and not in a good way. On Monday, his administration confirmed that it was ending the temporary waivers it had granted a handful of countries so they could keep importing Iranian oil while avoiding sanctions imposed by the White House on the Iranian oil industry. The decision caught energy markets and a number of key American partners, many of whom had anticipated receiving an additional extension on the waivers, off guard. Oil prices spiked to six-month highs after the news was first reported by The Washington Post on Sunday.
Ishaan Tharoor writes in The Washington Post that at a news conference, Secretary of State Mike Pompeo justified the measure as a bid to further reduce what leverage the Islamic Republic may have on the world stage. “The goal remains simple: to deprive the outlaw regime of the funds it has used to destabilize the Middle East,” he said, adding that the United States wanted to bring Iranian oil exports “to zero." That means tightening the screws and compelling some major importers of Iranian oil — including China and India — to turn off the tap.
For the Trump administration, it’s only the latest confrontational move against Iran. After unilaterally withdrawing from the nuclear deal negotiated between Iran and world powers, the United States placed sweeping sanctions on senior Iranian officials and various sectors of the country’s economy. And it recently listed Iran’s influential Revolutionary Guard Corps as a “foreign terrorist organization,” an act that probably will make it harder for future U.S. administrations to mend fences with the government.
Now, it’s raising the stakes for other major powers. “Any nation or entity interacting with Iran should do its diligence and err on the side of caution,” Pompeo warned. "The risks are simply not going to be worth the benefits.”
But it’s not fully clear whether the Trump administration has done its own due diligence. The United States is probably banking on Saudi Arabia and other major oil producers to help offset the Iranian oil taken off the market. But energy experts warned that may be a trickier proposition than it seems, and will almost certainly jack up gas prices for the average American.
“The Saudis, OPEC, and Russia could cover for Iranian oil, but the market will be really tight, and prices will increase significantly, as there will not be much spare capacity left in the market for any potential additional supply interruption,” Sara Vakhshouri, an Iranian oil expert, told Foreign Policy.
And the White House may see its pressure tactics rebuffed by other regional powers. Tehran exports roughly 1 million barrels of oil daily, half of which go to China. Other nations seeking waivers include India, Turkey, South Korea and Japan — all major trade partners of the United States that aren’t pleased with Washington’s coercive tactics.
“Their compliance with the eleventh-hour White House demand that they end purchases immediately of Iranian oil or face U.S. financial sanctions will be difficult, if not impossible, to achieve,” noted Gerald Feierstein, senior vice president of the Middle East Institute.
The #US decision to end sanctions waivers on #Iran oil imports will not serve regional peace and stability, yet will harm Iranian people. #Turkey rejects unilateral sanctions and impositions on how to conduct relations with neighbors. @StateDept @SecPompeo
Both Chinese and Turkish officials issued strong statements decrying U.S. unilateral sanctions and indicated their desire to continue doing business with the Iranians.
As for India, analysts suggested it probably will continue purchasing a reduced amount through a rupee payment. Tanvi Madan, a South Asia expert at the Brookings Institution, pointed to the damage that may be done to ties between the world’s largest democracies.
“These developments will reinforce the very Indian instinct that American policymakers dislike: the quest for strategic autonomy, which is in no small part based on a sense that the [United States] is not a reliable partner and will not be mindful of Indian interests,” Madan wrote.
Trump’s hostility to Iran has already antagonized allies in Europe, who are still trying to persuade Tehran to remain within the nuclear deal. “We regret yesterday’s announcement by the United States not to renew oil waivers,” Maria Belovas, spokeswoman for the European Union’s delegation to the United States, told Today’s WorldView. She added that the decision further “risks undermining" a nonproliferation agreement that’s “critical for regional and global security.” The U.N.'s International Atomic Energy Agency, Belovas noted, has already confirmed Iran’s compliance with restrictions on its nuclear activities 14 times.
But the White House’s latest steps make the task even harder. In a tweet, Peter Westmacott, a former British ambassador to the United States, warned that the canceling of the waivers would stoke “regional instability,” anger U.S. partners, hurt both the Turkish and Iranian economies, and strengthen the hand of Iranian hard-liners who want nothing more than Iran to adopt a more hostile pose against American pressure. That could include restarting uranium enrichment and other activities barred under the terms of the nuclear deal.
Tehran may take a more watchful approach. “They’re not going to make a rash overreaction to this,” Ellie Geranmayeh, of the European Council on Foreign Relations, told the Independent. “They’ve already said they’re going to be in consultation with partners. It will take some time to determine how much oil Iran can sell through illicit networks or through some sort of a special state-sanctioned mechanism.”
But critics of the Trump administration argued that it wants to goad Iran into a fight. Aaron David Miller and Richard Sokolsky, former State Department officials who served in both Republican and Democratic administrations, lamented what they see as this administration’s “pattern of relying on coercion and intimidation rather than diplomacy” — tactics zealously pursued by Pompeo and hawkish White House national security adviser John Bolton.
“All these results were no doubt intended by Pompeo and Bolton, and work together with the economic warfare the administration is waging against Iran, which is aimed at provoking internal unrest inside the country that could ultimately lead to a toppling of clerical rule,” wrote Miller and Sokolsky. “The imposition of the total embargo on Iranian oil exports, if successful, will inflict even more economic misery on the Iranian people, hardening the perception that the U.S. government is an enemy not only of the ruling regime but also of the Iranian people — an attitude that will make it harder to ratchet down hostility toward America in the future.”
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