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American Sanctions Are Back On Iran — Will It Work?

Life (as usual?) in Tehran
Life (as usual?) in Tehran
Gil Yaron

-OpEd-

BERLIN — Thousands of students marched through Tehran last weekend, and state television broadcast the protest march live. The crowd burned U.S. flags and pictures of President Donald Trump in front of the building of the former U.S. embassy. And, yes, they chanted: "Death to America."

After the U.S. withdrawal from the nuclear treaty in May, the second round of sanctions against Iran started this month. The purchase of oil and petrochemical products from Iran's national oil company and other corporations in the country is now prohibited. The oil industry, of course, is central to the Iranian economy.

But while Israeli Prime Minister Benjamin Netanyahu praised the new round of sanctions as a "historic step," the European Union made its displeasure clear. The EU's Foreign Affairs Commissioner, Federica Mogherini, expressed her regret at the return of sanctions, along with the foreign ministers of France, Germany and Britain, who had also signed the agreement in 2015. The countries want to save the deal, under which Iran renounced the development of nuclear weapons.

The question is: What have the sanctions achieved so far, and what will new sanctions bring? One thing is certain: The first round of sanctions, which came into force at the beginning of August and bans Iran from buying and selling U.S. dollars, and from trading in precious metals, has serious consequences for the country. The Iranian currency lost 70% of its value last year.

Not a fake — Source: Donald Trump's Twitter account

According to the Iranian central bank, food prices have risen 46.5% since September 2017. Numerous international corporations have stopped doing business in Iran for fear of American penalties. Oil exports, from which the government finances half of its entire budget, fell from 2.5 to 1.5 million barrels per day. Since half of Iranians depend on social assistance the International Monetary Fund expects a recession next year, while a study by the Iranian parliament predicts a decline in economic output of up to 5%.

This economic pressure should "fundamentally change Iran's destabilizing behavior," U.S. Secretary of State Mike Pompeo declared. He has drawn up a list of 12 demands, including the end of the proliferation of ballistic missiles, an end of Tehran's support to terrorist organizations and of its military involvement in Syria. Washington also wants to renegotiate the nuclear treaty with Iran. Tehran is the main adversary of the U.S. and its allies in the region and has repeatedly threatened Israel with extinction. Washington's calculation is simple: the involvement of the Revolutionary Guards abroad is expensive. According to estimates by Western secret services, the Lebanese militia Hezbollah alone receives more than $700 million a year from Tehran. Yet "the population actually needs this money," says Professor Uzi Rabi, Director of the Moshe Dayan Center for Middle Eastern and African Studies at Tel Aviv University.

Tehran has remained tough.

It is generally accepted that it was the sanctions that led Iran's political leaders to make significant compromises within the framework of the 2015 nuclear deal, the same one that Trump has withdrawn from in order to bring the regime back to compromise.

So far, Tehran has remained tough. It's said that the treaty will not be renegotiated or subjected to new conditions. The regime claims that it's well prepared for the new sanctions. According to media reports, India wants to invest $500 million in Iranian ports. Russia and China are considering establishing alternative trade routes via Iran to bypass the Suez Canal. At the same time, Tehran is expected to temporarily store large quantities of oil in Asia so that it can participate in Asian markets.

In addition, the U.S. is allowing eight countries to continue sourcing oil from Iran, including India and Iraq. The EU plans to set up a mechanism that will allow European companies to bypass U.S. sanctions. Nevertheless, Iran expert Uzi Rabi believes that "Nobody can compensate for the U.S. sanctions, neither the EU, Russia nor China."

In any case, the U.S. sanctions have had an impact on Iran's domestic policy. In large cities like Isfahan, Shiraz, Mashhad, and Tehran, there were summer protests against poverty . Thousands of demonstrators have blamed the regime's aggressive foreign policy for their plight. But the level of discontent has not yet reached a critical mass.

Iran's Supreme Leader Ayatollah Ali Khamenei recently declared that the risk of the regime being destabilized to be small: "America's goal has been to reestablish the domination it had (before 1979) but it has failed. America has been defeated by the Islamic Republic over the past 40 years."

Uzi Rabi sees it differently. "Tehran will change its policy if and when sanctions actually threaten the rule of those in power."

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