Iranians brace for harder times as US oil sanctions close in

The White House announced yesterday it was calling an end to six-month waivers that had exempted several countries from unilateral US sanctions on Iranian oil exports. (AFP)
Updated 24 April 2019
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Iranians brace for harder times as US oil sanctions close in

  • When the 2015 nuclear deal was struck, hopes were high that it would end the country’s years of crippling economic isolation
  • Hopes were shattered when President Donald Trump withdrew the US from the accord last year and reimposed sanctions

TEHRAN: Iranians, already hard hit by punishing US economic sanctions, are bracing for more pain after Washington abolished waivers for some countries which had allowed them to buy oil from Iran.
“In the end the pressure (America) is putting out is on the people,” said a 28-year-old technical instructor in Iran.
“Some have crumbled, and those still standing will probably give up when things worsen,” he added, asking not to be named.
In 2015 when Iran struck a landmark nuclear deal with world powers, hopes were high that it would end the country’s years of crippling economic isolation.
Thousands even flooded the streets of the capital, Tehran, to celebrate and hail Foreign Minister Mohammad Javad Zarif as he arrived back from tough negotiations in Vienna.
But those hopes were shattered when President Donald Trump withdrew the US from the accord last year and reimposed sanctions.
Pressure has piled up ever since, with Washington saying Monday it would sanction all countries that buy Iranian oil, in a move meant to squeeze Iran’s main source of revenue down to zero.
Iran’s economy has been battered. Inflation has shot up, the country’s currency has plummeted and imports are now vastly more expensive.
“The country’s revenues will naturally reduce and maybe the rial will drop further,” the instructor told AFP.
Analysts have put Iran’s oil exports in March at around 1.9 million barrels a day, while the Central Bank had forecast revenue from oil sales in 2019 at around $10.57 billion.
Many of the country’s woes pre-date Trump and the sanctions, however, as it has struggled with a troubled banking system, a stifled private sector and the lack of foreign investment.

Yet life continues at Tehran’s Tajrish Bazaar, located north of the city.
On Tuesday people thronged the tight alleyways, drawn in by the tantalising smells of fresh vegetables and fruit as stall-owners shouted out prices, haggled with customers and hurriedly packed their goods.
But other parts of the bazaar selling non-essential goods such as pots, perfume and clothing were noticeably less busy.
“Have sanctions affected me? Which rock have you been hiding under all these years?” asked one irritated stall-owner, keeping an eye out for potential customers among the window-shoppers.
A 55-year-old housewife agreed.
“We have a limited wage, you see. (When sanctions came back) we were forced to spend what was meant for food and meat on the rent that went up,” she said.
Most people questioned by AFP asked to remain anonymous, and complained bitterly about inflation, saying they were especially pressured by growing housing and food prices.
According to the Statistical Center of Iran, overall inflation for the Iranian month of Farvardin (March 21-April 20) rose to 51.4 percent compared to the same month last year.
Food and services prices shot up by by 85 and 37 percent respectively over the same month.
This has caused “the class gap to really widen. There is only rich and poor now, nothing is left in between,” said the housewife.
“It will get worse. As ordinary citizens, we already expect prices to rise further” if oil exports reach zero, she added.
Iranians have also been forced to cut back on traveling, a tradition during the Nowruz, the Iranian new year which started on March 21, as prices grew out of many people’s reach.
“The situation is shocking,” the head of Tehran’s travel agencies association, Amir Pooyan Rafishad recently told ISNA news agency.
“Demand for trips, whether abroad or in Iran has dropped significantly.”

For Zarif, the US move to sanction Iran’s oil sales is another instance of what the Islamic Republic has repeatedly called “economic terrorism.”
“Escalating #EconomicTERRORISM against Iranians exposes panic & desperation of US regime,” he wrote Tuesday on Twitter.
The foreign ministry denounced the sanctions as “illegal” and said Iran was in “constant talks with its international partners including the Europeans.”
Russia on Tuesday called the US tightening of sanctions an “aggressive and reckless” policy.
Other major sources of income for the Iranian economy are minerals, about $8 billion annually, and agricultural exports, at about $5 billion — but it also imports large quantities of both, offsetting much of that income.
Oil Minister Bijan Namdar Zanganeh, however, has said he believes the US will not be able to block Iran from selling its oil.
“America’s dream for bringing Iran’s oil exports to zero will not be realized,” he told lawmakers on Tuesday, ISNA reported.
“America and its allies have made a big mistake by politicizing oil and using it as a weapon,” he added. “Given the market’s circumstances, (it) will backfire on many.”


Sabotage of oil tankers stirs concerns over Gulf shipping

Updated 22 May 2019
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Sabotage of oil tankers stirs concerns over Gulf shipping

  • The acts of sabotage near the UAE coast highlight new threat to maritime traffic and global oil supplies
  • Experts say increased threat to navigation and global oil supplies not limited regionally but has global dimension

DUBAI: Amid rising tensions between the US and Iran, sabotage attacks on four commercial vessels off the coast of the UAE’s Fujairah port have raised serious questions about maritime security in the Gulf.

The incidents, which included attacks on two Saudi oil tankers, were revealed by the UAE government on May 12, drawing strong condemnation from governments in the Middle East and around the world as well as the Arab League.

Now experts have warned that the sabotage attacks highlight a new threat to maritime traffic and global oil supplies.

A Saudi government source said: “This criminal act constitutes a serious threat to the security and safety of maritime navigation, and adversely affects regional and international peace and security.”

The Organization of Islamic Cooperation (OIC) said the incidents threatened international maritime traffic.

While crimes on the high seas, including piracy, have tapered off in recent years, the attacks on the ships, three of which are registered to Saudi Arabia and the UAE, have called into question common assumptions about the Gulf’s stability.

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Theodore Karasik, a senior adviser at Gulf State Analytics in Washington D.C., said governments of the Gulf region are mandated to watch over oceans and waterways. “On top of this requirement is the need for a new regime of maritime coordination to prevent attacks on shipping because of the repercussions for logistical chains, corporate strategies and insurance rates,” he told Arab News.

The sabotage attacks took place east of Fujairah port, outside the Strait of Hormuz, a narrow waterway through which most Gulf oil exports pass and which Iran has threatened to block in the event of a military confrontation with the US.

Johan Obdola, president of the International Organization for Security and Intelligence, said the recent attacks underscore the need for closer intelligence-coordinated capabilities among the Gulf Cooperation Council (GCC) countries, including satellite communication and maritime or vessel security technology.

“The threats to oil tankers are not limited to the Gulf, but have a global dimension,” he said.

According to Obdola: “A coordinated joint task force integrating oil, intelligence security and military forces should be (established) to project and prepare (for potential future attacks). This is a time to be as united as ever.”

GCC countries have intensified security in international waters, the US navy said. Additionally, two US guided-missile destroyers entered the Gulf on May 16 in response to what the US called signs of possible Iranian aggression.

“The attack has brought (the region) a bit closer to a possible military confrontation amid the escalation in tensions between the US and Iran,” Abdulkhaleq Abdulla, a former chairman of the Arab Council for Social Sciences, told Arab News.

He said Iran is purposely dragging Saudi Arabia, the UAE and possibly other Gulf countries into its fight with the US. “The credibility of the US is at stake and Trump has said he will meet any aggression with unrelenting force. If Iran continues on this path, we might see some kind of a military showdown on a limited scale.”

Given the importance of the region’s oil supplies to the US, Abdulla said “it’s not just the responsibility of Arab Gulf states but an international responsibility” to keep the shipping lanes safe.