War of Sanctions Against Iran (III)

BERLIN/TEHERAN/WASHINGTON (Own report) - The escalation of the conflict over Iran hampers the German government's efforts to pursue an independent global policy even contrary to US interests. Following US President Donald Trump's announcement, he would impose punitive measures on all countries planning to purchase Iranian oil, Teheran responded by declaring it may begin to enrich uranium again, if the partners of the nuclear agreement continue to breach their commitments and refuse to allow Iran to sell its goods freely. This is actually the case, due to US threats to impose punitive measures. Berlin's efforts to salvage trade with Iran by means of a barter-based financial vehicle does not bear fruit. Washington is now preparing new threats against this vehicle ("INSTEX"). Despite the de facto trade blockade in violation of the nuclear agreement, German Foreign Minister Heiko Maas is demanding that Teheran must “fully” comply with the nuclear agreement. In the meantime, US President Trump is increasing pressure with new sanctions.

The Oil Boycott

Over the past few days, the Trump administration has intensified its aggression against Iran in two ways. On the one hand, it has insisted, since the beginning of the month, that all countries, without exception, comply with the sanctions against Teheran and cease the purchase of Iranian oil. Recently, oil sales have comprised nearly 40 percent of Iran's revenue. With a total loss of its oil revenue, the country is threatened with economic ruin. This is precisely Washington's aim, to incite hunger revolts within the population, the overthrow of the government and the installation of pro-US forces. Whether the Trump administration can achieve Iran's economic strangulation is uncertain. Particularly China and Turkey have protested the US threats to punish those purchasing Iranian oil in the future. India has clearly shown its resentment, however, has notably begun to reduce its oil imports from Iran. in April it imported nearly a third less than it had in March and more than half less than its imports in March 2018. TÜPRAŞ, Turkey's largest refinery operator, announced yesterday that it will reduce imports from Iran to zero. The EU countries have already completely halted their oil imports. How much oil Iran will be able to sell on the “grey market” remains unclear.

The Struggle Against "INSTEX"

It is also not clear whether Germany, France, Great Britain, and the EU will succeed in their plans to sustain their trade with Iran by way of the financial vehicle, "INSTEX" ("Instrument in Support of Trade Exchanges"). Until now, INSTEX was seen as inoperable. (german-foreign-policy.com reported.[1]) Brussels has announced it would significantly increase the financial volume of this instrument and otherwise intensify its efforts to trade with Iran. Washington, however, is already planning to apply measures against INSTEX. A senior official of the US Department of Finance pointed out that Iranian authorities, who cooperate with EU countries within the INSTEX framework, do not comply with the rules of the Financial Action Task Force (FATF), a Paris-based body founded in 1989 to prevent money laundering and - since 2001 - also terror financing. The latter is particularly relevant, because the Trump administration has recently classified the Islamic Revolutionary Guard Corps, IRGC a "terror organization." Because the IRGC maintains a huge economic empire, its "terrorist" classification offers new options for sabotaging trade with Iran. Every opportunity will be seized upon to halt business with Iran, the senior official of the US Department of Finance announced.[2]

Gunboat Diplomacy

Alongside Washington's presumption of a right to globally impose punitive measures on those importing Iranian oil, it is now also making military threats. In addition to the "Abraham Lincoln" aircraft carrier strike group, which was already scheduled to sail for the Middle East, the Trump administration has now hastily dispatched a squadron of B-52 bombers to the region under the pretext of undefined Iranian "threats."[3] This heightens the risks of military escalation even more.

Western Breachers of Contract

Teheran has now reacted, not so much, because Washington is placing it under heightened military pressure, but primarily because the nuclear agreement has de facto become obsolete. The United States has officially broken it; the European countries have, under pressure of US sanctions, dramatically reduced their trade with Iran, promised in return for the termination of the nuclear program, and completely ceased buying Iranian oil. Even in the cases of Russia and China, it remains unclear whether the Trump administration's threats of sanctions can also force sharp declines in trade. With this in mind, the Iranian government has issued the nuclear agreement signatories a 60-day time limit to uphold their part of the trade bargain. Now, the government is preparing to halt its sale of excess enriched uranium, and, in 60 days, will again begin enriching uranium, announced Iran's President, Hassan Rouhani. "We have not withdrawn from the nuclear agreement. We are merely exercising our legitimate right, to respond to the breach of contract."[4] As soon as the parties to the agreement uphold their side of the bargain, Iran will uphold its, announced Rouhani.

The German Dilemma

Berlin has a dilemma. The German government had backed the nuclear agreement, not least of all, because it held the promise of reopening Iranian – alongside Arab – markets to German industry. The Iranian markets are considered potentially one of the most lucrative throughout the region. (german-foreign-policy.com reported.[5]) Recently, in the dispute over the Trump administration's breach of the agreement, the German government had taken an offensive stance in relationship to Washington, thereby elevating the conflict to a touchstone of its claim to global policy making "at eye-level" with Washington.[6] Since Berlin is in no position to protect its trade with Iran, including its oil trade, against US sanctions - German business interests in the USA are overwhelming - this policy is doomed to failure. Yesterday, Foreign Minister Heiko Maas flamboyantly proclaimed, "we want to salvage the agreement." However, Berlin is not even living up to its own commitments to expand its economic cooperation with Iran. All the same, Maas declares that Berlin "expects" ... "that Iran will fully implement the agreement - to the letter."[7] Maas did not explain why Teheran should abide by the agreement's stipulations, when the western powers do not.

The Next Sanctions

At the same time, the situation is getting worse. Yesterday, US President Donald Trump announced new sanctions, under which Iran is not supposed to export its second most important export item - various metals. These sanctions are supposed to apply to all nations. Washington is seeking to speed up Iran's strangulation. Teheran must eventually react to the economic aggression. The nuclear agreement's complete collapse is therefore drawing nearer. If Berlin cannot prevent this, it would mean that its first attempt to oppose the USA on the world stage and making its mark as a global player would have been a failure.


[1] See also War of Sanctions against Iran (II).

[2] Francois Murphy: EU-Iran trade vehicle unlikely to meet anti-money-laundering norms: U.S. reuters.com 07.05.2019.

[3] Kyle Rempfer: B-52 bombers are off to rebuff Iran after threats to US troops; DoD won't say what those were. militarytimes.com 08.05.2019.

[4] Iran setzt Vertragspartnern 60-Tage-Frist. sueddeutsche.de 08.05.2019.

[5] See also Competing for Business with Iran.

[6] See also Die Tauschbörse der EU.

[7] Außenminister Maas zur Wiener Nuklearvereinbarung mit Iran. Pressemitteilung des Auswärtigen Amts. Berlin, 08.05.2019.