Will Iran Cope With Trump’s Sanctions? By Muhammad Usman Ghani

On May 5, 2018, the United States’ president Donald Trump unilaterally torpedoed the Joint Comprehensive Plan of Action (JCPOA) which is renowned for the Iran Nuclear Deal. The JCPOA is an arbitration between P5+1 and Iran that happened on July 14, 2015, and ensured that Iran’s nuclear program was meant for energy and peaceful objectives. Under the JCPOA all the economic sanctions imposed by the US on Iran were elevated. However, the transition of power from Barack Obama to Donald Trump in the US has altered things in the world, and Iran especially. Therefore, Trump pulled out of JCPOA with a claim that Iran is not abiding by the rules of the deal and is manufacturing nuclear weapons, though the rest of the signatories (France, China, Germany, Russia, and Britain) were reluctant to withdraw from the deal, since they found Iran to be a fair partner that is abiding by the rules of the deal. Trump, while torpedoing the JCPOA, explicitly declared that imposition of sanctions on Iran will take effect on November 2018.
Now following the prescribed wind-down period, all of the US sanctions over Iran are going to be in effect. Trump says the purpose is to compel Iran to abandon rouge behaviour in the Middle East and nuclear activities. The US president termed these sanctions the “strongest ever imposed.” On Friday Trump announced that he is going to consummate unfinished sanctions by reimposing them stringently on purchases of oil from Iran, and the Iranian petrochemicals and petroleum commodities.
The question now stands is that what would happen? Is Iran capable of riding out these sanctions? The answer is nebulous, as it brings with it a lot of ambiguity and intricacy.
Most of the leaders have condemned the decision of Trump. Tayyip Erdogan, the president of Turkey, has stated that these sanctions aim to unbalance the world and Turkey will not abide by them. Pakistan has also denounced the US’ scrapping of the deal. A few months earlier in May, leaders from Britain, Germany, France, Russia, and China endorsed compliance with the JCPOA and denounced Trump’s unilateral move
Iran has the world’s fourth-largest crude oil reservoirs, its GDP relies much upon exporting oil. Hence, the US’ aimed sanctions on the Iranian oil export to other nations is going to strangle Iran’s economy. The White House also foretells that amidst sanctions any country which engages with Iran in trade will be sanctioned as well. Also, the US has given waivers to eight countries (South Korea, China, Taiwan, Turkey, Greece, Japan, India, and Italy) with consent that they can import oil from Iran for the next six months, but on the condition to reduce oil import gradually. About his waiver Trump claimed that, “We have imposed the mightiest sanctions ever on Iran. Yet, on oil we want to be moderate as I don’t want to drive the oil prices in the world.” He further added, “I could get the Iranian oil down to zero within no time, but it would shock the market.” From amongst the eight countries that the US has conferred waivers, Japan and South Korea have zeroed their import of the Iranian oil, and the rest have diminished their import, except India and China as these countries are biggest oil importers from Iran. However, China will be allowed to import 360000 bpd half of what China imported in the last two years. Owing to the six months respite, Japan and North Korea can resume their oil imports from Iran.
According to the US’ secretary of state Mike Pompeo, 100 biggest international companies have withdrawn from Iran owing to the hovering sanctions.
However, one must bear in mind, that these sanctions imposed by Trump administration are far-ranging than those implemented by the predecessor of Trump, Barack Obama in 2012. In the sanctions of 2012, many countries paid heed to Barack Obama’s appeal on imposing sanctions on Iran, at that time Iran suffered isolation from every front and thus encountered a downfall in its economy. In 2018, things seem to have changed. Upon these sanctions, most of the countries expressed resentment and opposed the US for its unilateral stance of torpedoing the JCPOA.
This time the nexus of aspiring powers -Russia and China- are inclined towards Iran, as China is the largest importer of Iranian oil, and the US and China are at loggerheads in the trade war. On the other hand, Russia is the cold war opponent of the US would gain to oppose the latter since it aspires to salvage its lost pride by pushing the US back.
The European Union has exhibited a keen desire to trade with Iran irrespective of the sanctions; the EU has embarked on a Special Purpose Vehicle (SPV) mechanism, which enables companies to trade with Iran without trials. The SPV is capable of handling transactions between companies and Iran as a banking system does. So, in the case of importing oil from Iran, the EU country would pay its price in SPV. But trading through the means of SPV can pose a threat to the third party because of secondary sanctions.
Most of the leaders have condemned the decision of Trump. Tayyip Erdogan, the president of Turkey, has stated that these sanctions aim to unbalance the world and Turkey will not abide by them. Pakistan has also denounced the US’ scrapping of the deal. A few months earlier in May, leaders from Britain, Germany, France, Russia, and China endorsed compliance with the JCPOA and denounced Trump’s unilateral move.
The writer is an electrical engineer who is also a CSS aspirant
Published in Daily Times, November 27th 2018.
Source: https://dailytimes.com.pk/326540/will-iran-cope-with-trumps-sanctions/

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