The vice tightens on Iran with no sign of US sanctions easing

The vice tightens on Iran with no sign of US sanctions easing

An Iranian woman walks past members of an Iranian band Lahzeha playing music on a sidewalk in Tehran on October 8, 2019. (AFP)
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For the Middle East as a whole, especially here in the Gulf, the start of 2020 could not be more of a high-wire act. The killing of Iranian Quds Force General Qassem Soleimani, followed by Iran’s retaliation against US military installations and the downing of a Ukraine jetliner, has given all of us a true sense of not knowing what could possibly transpire next.
One thing seems for certain, however: Don’t expect a reversal of US economic sanctions policy — aka the maximum pressure campaign — anytime soon by the Trump administration.
“I think it’s effective in terms of the effort to deprive Iran revenue. We’re seeing more Iranians, as well as the people in other states in which Iran has had a heavy hand, speaking up, and it is about time,” said Francis Fannon, US Secretary of State of Energy Resources.
Fannon was speaking at the Atlantic Council Global Energy Forum in Abu Dhabi about that campaign, triggered in May 2018 as the US exited the JCPOA, to put continuous economic pressure on Iran. 

Don’t expect a reversal of US economic sanctions policy — aka the maximum pressure campaign — anytime soon by the Trump administration.

John Defterios

It started with an effort to stymie Iran’s number one export earner, crude, but the economic vice continues to tighten. On Jan. 11, the Trump administration put forward another round of sanctions targeting senior Iranian officials, plus the country’s construction, textile and steel making sectors. The move was in response to the attacks on bases in Iraq hosting US military personnel.
The maximum pressure campaign is a three-pronged strategy that includes diplomatic isolation, military deterrence and economic pressure, Fannon told me during our on-stage, one-on-one session.
To most everyone’s surprise, the US effort to get Iran to nearly zero oil exports has worked in less than a two-year period. Under the lifting of nuclear sanctions, Iran was exporting 2.7 million barrels a day.  Those who track Iran’s energy movements say that the figure is now well below a half million barrels a day.
Sara Vakhshouri, a former executive at Iran’s state oil company, said the figure has been hovering between 250-300 thousand barrels a day for months. Japan, South Korea and India have taken imports from Iran down to zero. China, which initially resisted pressure from Washington, is now receiving the balance, but it is an oil repayment swap between Tehran and Beijing for past debts.
“The situation in Iran is really dire; economic pressure is one of the major grievances but there are also many other factors,” said Vakshouri.  
The other factors swing in importance depending what Iranians are faced with on the ground. The lack of food, medicine and other day-to-day staples of life are blamed on the US due to the rigor of the sanctions regime. Prior to the intense spat in 2020 and the horrific downing of the Ukrainian jetliner, Iranians were on the streets in their thousands protesting against gas price hikes which financially squeezed the average consumer.
During background briefings at the Atlantic Council meeting, former US administration officials said the Trump White House should begin sending signals to Iran that point to a diplomatic off-ramp to get out from underneath the sanctions regime.
At this juncture and after the latest round of sanctions, Fannon, the US Assistant Secretary of State, would not stray from the official line of the Trump administration — there is a 12-point plan for Iran to meet to normalize relations; until then don’t expect any easing of sanctions.
Another theme, however, emerges during many conversations and interviews with leading Iranian observers and from my own experiences in Iran over the last few years. The 2003 US invasion of Iraq and subsequent ouster of Saddam Hussein left the people in the country without power, water, medicines and often lacking food. It took a decade to rebuild the country, a process which still has not finished.  What has transpired in Syria and Libya since then, strategists rightly say, could make Iranians hesitant to seek radical change.
“It is very hard to predict because people in Iran have seen their neighbors. They are worried, if they change the government, what the alternative is,” concluded Vakhshouri.

John Defterios is CNN Business emerging markets editor and anchor based in Abu Dhabi. Twitter: @JDefteriosCNN

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