Secretary Pompeo on Iran Oil Export Declines, Turkey, India, Japan Granted…

With a new level of economic sanctions, the US wants to isolate Iran. The Iranian president is combative – and wants to continue to export oil.

By contrast, eight other states, including Turkey, India, Japan, and South Korea, apparently granted the White House exemptions allowing Iranian imports until May 2019.

On Twitter, both sides rode heavy rhetorical guns again on the weekend. US Secretary of State Mike Pompeo called Iran’s leadership a government of mismanagement, theft and brutality. Iran’s Supreme Revolutionary Leader Ali Chamenei wrote that US President Donald Trump was a shame for the remnants of American prestige.

From today’s Monday, all sanctions of the White House against the Islamic Republic are now in force again. The embargo should bring the country to its knees with “maximum pressure”, halt its oil exports and cut its connection to the international banking system. 700 companies, individuals, aircraft and ships put Washington on the boycott list. At a background discussion in Washington, US journalists reported that Pompeo had been urging the new punitive package “as part of the US government’s efforts to change the behavior of Ayatollah Khomeini” – known to have been dead since 1989.

The European signatories to the nuclear treaty – Germany, France and the United Kingdom – also regard the American approach as similarly unclear. “We deeply regret the reinstatement of sanctions by the US,” said a joint statement with EU foreign policy chief Federica Mogherini. A so-called Special Purpose Vehicle should allow companies of the European Community to continue trading with Tehran, without getting into the American spell. The whole thing should work like a kind of exchange. Iranian oil is traded for European goods without the need for money to change sides.

The US government reacted “disturbed and deeply disappointed”. For unlike his predecessor Barack Obama, Donald Trump should find it much harder to isolate the Islamic Republic politically and economically over a longer period of time. Europe is breaking down, China and Russia are not moving. Saudi Arabia, the main regional opponent of the Islamic Republic, has suffered an international blow after the Khashoggi murder. And neither the Syrian war nor the devastating Yemen conflict will be pacified any time soon, if Iran is left out of the negotiations. In the Obama era, there was a unanimous black and white view of Iran as the only evil actor in the region, says Ellie Geranmayeh, Iran specialist for the European Council on Foreign Relations. Meanwhile, the political debate has differentiated and there is an awareness that “everyone in the Middle East is playing a dirty game”. That does not mean that Iran is now a saint, but the judgments have become more nuanced.

Oil tankers turn into ghost ships

At the same time, it is fermenting inside the Islamic Republic. Few months before the 40th anniversary in February 2019, the mood is more rebellious and frustrated than ever. Since the beginning of the year, riots and protests are mounting. They feed on the legitimacy of the clerical leadership, whose hardliners on Sunday conspicuously celebrated the 39th anniversary of the occupation of the Tehran US Embassy in 1979 with 444 hostages. For Tehran, it depends even more on how oil revenues actually develop under the new sanctions regime. In the spring, exports were around 2.5 million barrels a day. Following the announcement of the US embargo in May, they fell to 1.7 million barrels, a loss partially offset by higher world market prices. Washington will not be able to push Iran’s oil exports below a million barrels a day, these days Vice President Eshagh Jahangiri boasted – the minimum his country needs for economic survival. And so Iran is now acting fully again in the long-tested penalty mode. All of the country’s oil tankers have shut off their position signals and reverted back to ghost ships. Others were flagged to disguise themselves. In addition, Russia has apparently offered to mix Iranian and Russian oil and then market both together.

Europe also announced, against all American threats, that Iran’s oil and gas would continue to decline. By contrast, eight other states, including Turkey, India, Japan, and South Korea, apparently granted the White House exemptions allowing Iranian imports until May 2019, albeit at a much lower level. India was reportedly agreed to reduce its imports by 40 percent from 490,000 to 290,000 barrels a day. The list with the exact quotas wants to announce Washington yet.