Tehran opts for brinksmanship as US applies ‘maximum pressure’ on Iranian oil exports

“In the very short term, I don’t expect the Iranian government to do much, beyond the usual rhetoric criticising the US," said Thomas Juneau, a Middle East expert at the University of Ottawa.
Sunday 28/04/2019
Iranian President Hassan Rohani (C) attends an annual military parade in Tehran, April 18. (dpa)
Under “maximum pressure.” Iranian President Hassan Rohani (C) attends an annual military parade in Tehran, April 18. (dpa)

ISTANBUL - Iran is fiercely criticising the decision by the Trump administration to push the country’s oil exports to zero but analysts said concrete counteractions by Tehran were unlikely.

Iranian Supreme Leader Ayatollah Ali Khamenei called the end of oil sanctions waivers by the United States a “hostile measure” that “won’t be left without a response.” He was commenting on an announcement by the United States that it will no longer grant sanctions exemptions to Iran’s oil customers and will start imposing sanctions on countries such as India, China and Turkey if they continue to buy Iranian oil.

The decision by Washington is a further escalation of a “maximum pressure” campaign that the US government says is a tool to force Tehran to end its aggressive policies in the Middle East but analysts said they doubt that US President Donald Trump can bring about policy changes in Iran by economic pressure.

At the same time, Tehran is not expected to resort to retaliatory measures such as blocking the Strait of Hormuz in the Persian Gulf. Alireza Tangsiri, commander of naval forces of the Islamic Revolutionary Guard Corps, said Iran could stop tanker traffic in the strait, a crucial waterway for the international oil trade.

“I don’t think the fundamentals of Iran’s wait-and-see approach have changed,” Alex Vatanka, an Iran expert at the Middle East Institute in Washington, said by telephone.

Vatanka said the leadership in Tehran was hoping that Trump would not be re-elected next year, which could open the way for a thaw in relations. In the meantime, Iran was eager to portray Washington as an “irresponsible party” that slaps illegal sanctions on a sovereign nation and other countries.

Last November, Washington reimposed oil sanctions on Iran, suspended under the 2015 international nuclear deal with Tehran until the United States left the accord last year but the United States initially gave eight governments 6-month reprieves. Those exemptions will end May 2, the day the latest measure, designed to reduce Iran’s oil exports to “zero,” as US Secretary of State Michael Pompeo put it, will kick in.

A further drop in oil exports, which stood at 2.5 million barrels per day (bpd) before the sanctions and have fallen to just more than 1 million bpd since then, is likely to hit Iran’s economy hard.

Iranians are bracing for tougher times, Agence France-Presse reported. “It will get worse. As ordinary citizens, we already expect prices to rise further” if oil exports reach zero, the news agency quoted a 55-year-old housewife in Tehran as saying.

The Iranian leadership remains defiant, however, and says Washington will not bring the country to its knees. “Enemies have repeatedly, in vain, taken action against our great nation [and our] revolution… but they must know Iranians won’t give in,” Khamenei said.

The United States says Iranian meddling in Iraq, Syria, Lebanon and Yemen is destabilising the region but Thomas Juneau, a Middle East expert at the University of Ottawa, said a further slump of the economy would not bring about a new Iranian foreign policy.

“Tehran will not change its foreign policy significantly in response to the latest US measures,” Juneau said via e-mail.

“Historically, there has not been a direct correlation between the state of the Iranian economy and its foreign policy assertiveness. In other words, the US further strangling the Iranian economy is not likely, in the short term at least, to force Iran to cut back on its many investments abroad.”

Juneau agreed with Vatanka that drastic countermeasures by Tehran are not likely. “In the very short term, I don’t expect the Iranian government to do much, beyond the usual rhetoric criticising the US,” he wrote.

Once the dust of the announcement from Washington on the sanctions exemptions has settled, the United States and Iran could quietly opt for policies that are much less radical than the war of words between them suggests.

“The Trump administration is after the big headlines and that is what they got,” Vatanka said, referring to Washington’s attention-grabbing “zero” announcement. With China, an international power and a major importer of Iranian oil, complaining about the new sanctions, the US administration might conclude that it needed “to have a hard look” at the waiver question again in the coming weeks.

Iran will do what it can to keep its oil exports as high as possible. “The Islamic Republic has become, over the years, highly skilled at finding multiple ways to evade sanctions,” Juneau wrote. “This will help it to ensure that, despite US efforts, its oil exports will not fall to [zero].” It was a “reality that some countries will be able to continue importing at least some Iranian oil.”

NATO member and Iranian neighbour Turkey could be one of those countries. Turkish Foreign Minister Mevlut Cavusoglu posted on Twitter that his country, which is at odds with Washington over a Turkish plan to buy a Russian missile defence system, “rejects unilateral sanctions and impositions on how to conduct relations with neighbours.”

Vatanka said the Turkish government faced the question of whether it should “make a big public deal” about its rejection of America’s Iran policy or if it was wiser to wait for the “zero” policy to soften. He said it was reasonable for Ankara to expect the United States to tolerate a certain amount of oil being exported from Iran.