How Washington managed to strangle Tehran’s economy
Iran, Russia, China and America’s Democratic Party presidential candidate Joe Biden agree on one thing: The US under President Donald Trump is “isolated.” Iran even goes as far as to declare victory over America. In his speech to the UN General Assembly last week, President Hassan Rouhani said that whoever is elected president in the November US election “will have no choice but to surrender to the resilience of the Iranian nation.” Economic indicators, however, tell a different story.
Since Trump turned against the Iran nuclear deal, which was signed between Tehran and major world powers in 2015, and reimposed unilateral sanctions on Iran in 2018, the latter’s economy has been in freefall. The International Monetary Fund reported that, in 2019, Iran’s gross domestic product shrank 7.6 percent, while inflation rose 41 percent. So far this year, the rial currency has lost 49 percent of its value.
European governments in Berlin, Paris and London promised to circumvent the US sanctions. Moscow and Beijing were also on board. However, despite their best efforts, the five capitals could not weaken America’s powerful financial grip and Washington managed to strangle Iran’s economy.
More recent developments include a looming major deadline. On Oct. 18, a UN arms embargo from 2007, which is referred to in the nuclear deal, is set to expire. When Washington consulted with the three European capitals, all their leaders expressed vehement opposition to the end of the embargo and promised to back America in its efforts to extend it at the UN.
Tehran wasted no time. It threatened the European three that, should Biden be elected president and US sanctions on Iran removed, they would lose lucrative contracts that their companies had won after the nuclear deal was approved at the UN Security Council (UNSC). The biggest contract was worth $25 billion, signed between Iran and aircraft manufacturer Airbus. The Europeans balked and told America they had a change of heart on the arms embargo.
Iran and the Europeans are now betting that, if Biden is elected president, US sanctions would be removed.
America saw in the European turnaround an opportunity to trigger the nuclear deal’s “snapback” mechanism to reinstate UN sanctions. With the Europeans apparently more concerned about contracts than security, Washington first called their bluff by allowing its embargo resolution to be voted on, and handily defeated, at the UNSC, and then demanding the activation of the snapback mechanism.
Although the US held that the mechanism would simply be activated when a signatory to the treaty informed the UNSC, the Europeans, Russia and China countered that America had withdrawn from the deal when it unilaterally reimposed sanctions. Washington said that, legally, its name was still there as a signatory to the deal and hence all it had to do was inform the UN of its decision to initiate the snapback process.
So, while Iran and Russia celebrated the defeat of the US resolution on the arms embargo and depicted it as the end of global unilateralism and American hegemony, supposedly proving that America had become isolated, the White House went on to consider the UN sanctions on Iran reinstated and instructed its government agencies to act accordingly.
UN shenanigans and international trash talk aside, the US sanctions on Iran have proven that, when the UN acts against America, it is not the US that suffers isolation: It is the UN that risks irrelevance.
American unilateral sanctions have caused the Iranian economy to contract at an unprecedented rate. The UN could do nothing to mitigate, let alone remove, those sanctions. Iran and the Europeans are now betting that, if Biden is elected president, US sanctions would be removed and America would rejoin the nuclear deal. But, if Biden does not remove the sanctions, or if Trump is re-elected, there is little the UN can do.
By going against the UN, America was neither the first nation nor will it be the last to pursue its interests regardless of global opinion and the UN. Russia stands in defiance of the global consensus against its occupations of parts of Georgia and Ukraine, while China disregarded the entire world as it clamped down on Hong Kong. Even the Europeans, often behaving as if standing on higher moral ground, flout a dozen international regulations, while Iran — famous for its sponsorship of global terrorism — is in violation of a number of UN resolutions.
By outmaneuvering Washington at the UNSC, Tehran, Moscow, Beijing and the European capitals did not beat America. They undermined the UN.
- Hussain Abdul-Hussain is the Washington bureau chief of Kuwaiti daily Al-Rai and a former visiting fellow at Chatham House in London. Copyright: Syndication Bureau