On May 8, President Donald Trump took the United States out of the nuclear deal between Iran and the P5+1 — formally the Joint Comprehensive Plan of Action (JCPOA) reached in July 2015 and implemented from January 2016 — and announced a phased reimposition of sanctions at the end of two “wind-down” periods of 90 and 180 days. The 90-day window closed Monday, and the first set of sanctions was to “snap back” at 12.01 am EDT (9.31 am India time) Tuesday.
Which sanctions, when
In the National Security Presidential Memorandum issued May 8, Trump directed the Secretary of State and the Secretary of Treasury to draw up a roadmap for a return to a full-sanctions regime. According to an explanatory document posted on the website of the Treasury Department, updated June 27, the following sanctions will “snap back” starting Tuesday:
* On Iran buying/acquiring US dollars;
* On Iran’s trade in gold/precious metals;
* On direct or indirect sale or supply from or to Iran of graphite, aluminum, steel, coal, software for integrating industrial processes;
* On “significant transactions” related to purchase or sale of Iranian rials, or maintenance of “significant funds or accounts” in rials outside Iran;
* On buying or facilitating the issuance of Iranian sovereign debt; and
* On Iran’s automotive sector.
The import of Iranian carpets and foodstuffs will also be stopped after Tuesday.
The second wind-down window of 180 days closes on November 4. The additional three months are available to companies in Iran’s energy, infrastructure and financial sectors. Thereafter, sanctions will return on:
* Iranian port, shipping and shipbuilding operations;
* Purchase of petroleum and petroleum products from Iran;
* Transactions by foreign financial institutions with the Iranian central bank and financial institutions;
* Providing underwriting, insurance, or reinsurance services in Iran; and
* Iran’s energy sector.
Impact of sanctions
The sanctions re-imposed are “extraterritorial” — they apply to not just American individuals and businesses, but to non-American businesses or individuals as well. Their aim is to penalise trade and investment activity related to Iran by everyone who is not specifically excluded from the sanctions.
Many big international companies have shuttered their Iranian businesses already, or are preparing to do so. The European guarantors of the JCPOA issued a joint statement Monday saying they regretted Trump’s decision to pull out of the deal, and Tehran declared that American efforts to isolate Iran had ended up isolating Washington DC, instead.
“We deeply regret the re-imposition of sanctions by the US… the JCPOA is working and delivering on its goal, namely to ensure that the Iranian (nuclear) program remains exclusively peaceful, as confirmed by the International Atomic Energy Agency,” the statement, signed by the EU’s High Representative for Foreign Affairs Federica Mogherini, and the French, German and British Foreign Ministers, Jean-Yves Le Drian, Heiko Maas, and Jeremy Hunt respectively.
Iranian Foreign Minister Mohammad Javad Zarif said while “American bullying and political pressures may cause some disruption, the fact is that in the current world, America is isolated”.
The Europeans’ statements of outrage notwithstanding, many economists and strategic affairs experts question their ability and determination to stand by Tehran in a direct “with-us-or-against-us” confrontation with the US, more so if that means joining hands with China and Russia. Iran’s economy, which is heavily dependent on oil exports, has taken a hit since May as companies have called off deals and cancelled investments, and the rial has crashed to half of its April value. The US has told third countries they must halt imports of Iranian oil or face US sanctions. During a meeting in June, US Ambassador to the UN Nikki Haley asked Prime Minister Narendra Modi to lessen India’s dependence on Iranian oil. India’s official position so far has been that it can get oil from “anywhere” depending on “geopolitics” and the national interest.
What happens next
Secretary of State Mike Pompeo declared Sunday that the US was “going to enforce the (reimposed) sanctions” until there is “enormous change on the part of the Iranian regime”. Iran, he said, was being led by “bad actors” who were engaged in “malign activity”, and demanded that “they’ve got to behave like a normal country”.
Wire services quoted unnamed European diplomats as saying such language was essentially code for a regime change demand by the US. They expressed apprehensions that should Iran’s government really collapse, the outcome could be catastrophic, and could include civil war or a total or partial takeover by radicals — similar to what happened in Syria or Iraq — and a massive new refugee crisis for Europe. Pompeo said the Iranian people were unhappy “not with the Americans but with their own leadership”.