Iran Tries to Get Round U.S. Sanctions
By Shahriar Kia
U.S. President Donald Trump has put in place crippling economic sanctions that affect Iran’s oil industry. He has called on foreign countries to cut their imports of Iranian oil to zero. Although it was initially announced that no waivers would be given, a number have been, but on the condition that the countries gradually reduce their imports from Iran to zero over a fixed time period.
The sanctions are already having an effect on Iran’s economy but the regime has tried to downplay the impact. Furthermore, several members of the Iranian regime have admitted that the country is going to ignore the sanctions and will continue to export its oil.
Last week, 700,000 barrels of crude oil were sold through the IRENEX, Iran’s energy bourse. This is the second such trading session and it has been reported that three undisclosed buyers purchased the oil. This strategy is a clear defiance of the U.S. sanctions and the Iranian regime is taking advantage of the fact that it will be more challenging for the United States to monitor and put an end to such sales.
Nevertheless, Iran’s crude oil exports have dropped more than what was predicted.
Even though selling oil on the energy exchange will boost its oil sales revenues, it is unlikely that this is going to be a solution that Iran can depend on. It is more of a longer-term strategy, but time is not on the Iranian regime’s side.
The U.S. administration has made it very clear that it is going to put as much pressure on the Iranian regime as it can and that further sanctions are very possible. As the Trump administration enforces the sanctions, less buyers are going to be willing to get caught in the crosshairs. Those that are least likely to be concerned about the U.S. sanctions are Asian purchasers for the simple reason that they do not trade in U.S. dollars.
The U.S. administration is clear that the sanctions are in place to cut the Iranian regime off from the funding that it is using to finance terrorist activities and proxy groups and militias across the Middle East. It has said that it is determined to make sure that Iran does not have the resources to continue with its malign activities.
However, the European Union is undermining this strategy by trying to set up a Special Purpose Vehicle. This is a payment mechanism that will protect those that carry out financial and trade transactions with Iran.
This is just another form of appeasement towards the Iranian regime and many hope that the system does not come to fruition. Already, there have been no countries in the European Union that are willing to host the system because U.S. retaliation is a great possibility.
The U.S. sanctions, if they work as they should, will squeeze the regime so hard that it has no choice but to curb its belligerence.
The people of Iran who are already experiencing the adverse effects of the economy welcome the sanctions because they want the regime pressured into being accountable for its actions and for its negligence of domestic issues. They know that regime change is inevitable because it cannot continue down this road much further.