US sanctions against Iran were seen as a vehicle to pressure Tehran to the negotiation table and dull its influence over the Middle East. Is it working?

Iranian rials, US dollars and Iraqi dinars at a currency exchange shop in Basra, Iraq, November 3, 2018.
Iranian rials, US dollars and Iraqi dinars at a currency exchange shop in Basra, Iraq, November 3, 2018. (Reuters)

“These are the most biting sanctions ever imposed,” US President Donald Trump tweeted on August 7 2018, shortly after the first round of US sanctions on Iran went into effect. All of the planned sanctions have taken effect gradually, following two “wind-down” periods ending on August 6 and November 4.

The sanctions followed US withdrawal from the 2015 accord, in which a group of world powers including the US, UK, China, Russia and Germany agreed to the removal of crippling economic sanctions against Iran in exchange for Tehran’s agreement to limit its nuclear programme, which became public in 2002. 

“Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!” Trump said.

Here’s a look at the impact of US sanctions on Iran:

“Iran is seeking alternative solutions”

With its far-reaching sanctions, the US has been aiming to push Tehran into economic isolation to bring it to the negotiating table with Trump for a new deal. In this way, the US planned for Iran to finally end its military involvement across the Middle East, says Seyed Hossein Mousavian, an Iranian policymaker and scholar who served on Iran's nuclear diplomacy team in negotiations. 

According to Massoumeh Torfeh, A Research Associate specialising in Iran at the London School of Economics and Political Science, Tehran is dealing quite successfully with the sanctions by circumventing them through other countries.

The sanctions put pressure on the oil, petroleum and banking industries, while aiming to shut down purchasing or acquisition of the US dollar.

Some countries, like Turkey, India, Russia and China use their local currencies to trade with Iran. 

This month, Iranian President Hassan Rouhani claimed that Iranian oil exports have improved since US sanctions. 

With oil exports of 2.5 million barrels per day, Iran is a major oil exporter alongside Saudi Arabia, the UAE and Russia. US officials have said the goal is to reduce Iran’s oil exports to zero. According to a Reuters report, the sanctions brought Iran’s oil exports down to an estimated 1.5 million barrels per day (bdp) from 2.5 million bdp. 

Torfeh says that rather than dealing with dollars, “Iran is talking with the European Union, China, Russia, and other countries to barter for its exports and imports,” as an alternative. 

“In that way, Iranians have received several positive answers from South Korea, China, Russia, and Iraq,” Torfeh says, stating that it is Tehran’s way of trying to implement a regional barter system.

Iraqi Prime Minister Adel Abdul Mahdi said on December 11 that he would send a delegation to the US to seek an exemption, as the country faces regular protests over its lack of basic services. 

Pressuring its allies to get in line with its sanctions, Washington has found support in Saudi Arabia and Israel. 

Some countries have been granted temporary waivers to buy energy from Iran, but it’s only on condition they reduce purchases over time.

“When it comes to oil and gas, Europeans, Russia and China are thinking about their own national interests as many of them are heavily involved with trade in Iran,” Torfeh says. 

“They are trying to assert their own authority by saying ‘you cannot make us lose what benefits us’ - national interests dictate that they should have good relations with Iran - they don't want to be denied the right to purchase the oil and gas from Iran.”

The Organization of Petroleum Exporting Countries (OPEC) last week exempted Iran, along with Venezuela and Libya, from oil production cuts and offset a drop in Iranian oil exports.

Fatima Karimkhan, a journalist for Iranian Students' News Agency (ISNA), tells TRT World that the OPEC decision was a victory for Iran against the sanctions. 

“Iran has long-term experience in dealing with is obvious that these sanctions will cause some problems but it can’t be considered as a serious threat to Iran,” she says, adding that this wave of sanctions is not as efficient as the ones before that were revoked in 2015. 

“At that time there were clear and worldwide [sic] agreed sanctions against Iran, which were backed by the United Nations Security Council. This time the sanctions are mainly from the USA,” adds Karimkhan.

Despite US pressure, the European Union still supports the nuclear deal that the US pulled out of, and is looking for ways to keep funds flowing to Iran. The European Commission recently revealed a plan to improve its independent foreign policy mechanism by reducing its dependence on the US dollar.

For Karimkhan, the bigger problem regarding the sanctions facing Iran is that it doesn’t yet have a “reliable back door for trade and money transfer as they had in the last term of sanctions”. 

But, she says, with the recent EU agreement the government currently is “not in need of such a back door”.

Internal struggle is "not necessarily" about sanctions 

With the re-imposition of sanctions in August, rallies swept through Iran, with thousands of protesters angered by economic hardship and other internal issues such as social freedoms.

“[The] economy is in a bad way. There are demonstrations across the country. These things are bringing the government to a point where it thinks it needs to find the solution,” Torfeh explains. 

But she says these problems are not necessarily caused by the sanctions against Iran, nor will the sanctions necessarily have the desired effect.

She says: "Whether anti-Government or pro-Government
an overwhelming majority of people think that the new US sanctions are unjustified."

“When you impose such sanctions that almost break up a country, they are not going to look to you (the US) for change,” she says. 

Source: TRT World