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U.S. lowers the sanctions boom on Iran, again

A worker stands on an offshore oil platform operated by National Iranian Offshore Oil in the Persian Gulf's Salman Oil Field on Jan. 5. 2017. (Ali Mohammadi/Bloomberg News)

When the United States levies sanctions against most countries, it rarely announces them in advance. Except when it comes to Iran.

The State Department and the White House have been sending out a series of warnings about the looming sanctions against Iran, none more ominous than President Trump’s cinematic tweet Friday declaring “SANCTIONS ARE COMING.”

For more than a week, the State Department has been tweeting out red-letter alerts that sanctions on Iran will be back in full force on Monday.

The presentation is in countdown form, each day featuring one of 12 requirements set by Secretary of State Mike Pompeo for Iran to act “like a normal state.”

The coming sanctions and the social media offensive are the centerpiece of the administration’s maximum-pressure campaign on Iran after the U.S. withdrawal from the 2015 nuclear deal. Sunday marks the end to a 180-day grace period for countries and companies doing business with Iranian banks, oil and shipping companies. Hundreds of people and groups that got sanctions relief under the deal will be relisted. Anyone who assists their trade can be sanctioned, too.

The administration aims to squeeze Iran’s already-precarious economy, particularly by denying it the oil revenue that makes up 80 percent of the government’s tax income. U.S. officials are optimistic that the financial starvation diet will eventually force Iran to stop supporting militant groups in Syria, Yemen and Syria, and to renegotiate the nuclear deal. It’s a strategy opposed by all but a handful of countries in the world.

The reimposed sanctions represent the latest chapter in almost four decades of hostility between the United States and Iran. In a coincidence of timing, Sunday is the anniversary of the storming of the U.S. Embassy in Tehran in 1979 when Iranian students took 60 U.S. diplomats and citizens hostage.

But it’s unclear if what Pompeo calls the “laser-focused approach” will succeed in getting Iran to bend to Washington’s will. Many of the negative effects have already happened.

Multinational companies that dipped into the Iranian market after the nuclear deal have departed in recent months. The Iranian rial has collapsed since the U.S. withdrawal, driven to a historic low against the dollar. Iran’s oil exports have slumped from about 2.5 million barrels a day to below 1.5 million. The International Monetary Fund predicts the economy will shrink by 3.6 percent this year.

“In some ways the worst is already over,” said Barbara Slavin, director of the
Future of Iran Initiative at the Atlantic Council. “Iran is now ready to hunker down and wait out the Trump administration on the assumption it is going to be one-term administration.”

A foiled assassination attempt in Denmark may have cost Iran a partner against U.S. sanctions

It’s difficult to know how much more pain the sanctions can inflict, or whether Iran will succeed in evading them by tricks like blending its oil with foreign oil, and removing electronic identity tags from its tankers.

Europeans who were partners with the United States in enforcing previous sanctions and negotiating the nuclear accord issued a statement Friday lamenting the U.S. actions and vowing to try to keep the deal alive. To circumvent sanctions, the Europeans have proposed setting up a clearing house for trade with Iran, with payments in goods instead of cash. But the complicated mechanism has not been formed yet, and U.S. officials are skeptical it would ever function.

The Europeans appear to have at least some leverage, however — mostly in terms of blocking American efforts to ban Iran from SWIFT, a Belgium-based banking messaging service designed to facilitate financial transactions. Of the company’s 25-seat board, only JPMorgan and Citi are U.S. banks. In theory, European operators could defy Washington on banning Iran from the service. But U.S. authorities announced that they could threaten banks on the company’s board unwilling to review their policy on Iran.

The differences ensure that the United States will find few allies willing to help them enforce the sanctions.

“We may be very vigilant in terms of trying plug the holes in sanctions regime, but the fact is we’re not going to be joined by too many others,” said Dennis Ross, a former Middle East envoy who now is with the Washington Institute for Near East Policy. “So we’re going to have to be doing this largely on our own.”

Little is expected to happen on Monday, beyond a relisting of about 400 people and companies that were delisted when the nuclear agreement took effect, and the addition of about 300 others. Officials say they will release the names of the eight nations that have been granted temporary waivers from secondary sanctions so they can continue to buy oil.

But sanctions apply to activities that happen from Monday going forward, so it could be weeks or longer before any new punishments come down.

“People have to actually break rules,” said Jarret Blanc, who worked on monitoring Iranian compliance on the nuclear deal in the Obama administration and now is with the Carnegie Endowment for International Peace. “Cases have to be built, and the administration has to decide whether to immediately sanction. Under normal sanctions it takes months.”

Iran will likely hobble along. Turkey and India are expected to get waivers. China, the biggest customer for Iranian oil, has sent mixed signals.

Even less uncertain are the prospects for Iran to change its behavior and renegotiate the nuclear deal, the ultimate U.S. goals.

“As they face the economic heat, they will have a strong incentive to negotiate,” said Robert Einhorn, a senior fellow at the Brookings Institution. “But they’ll want to make sure that they’re negotiated with a United States willing to be reasonably flexible in arriving at the outcome. So far, all they see is the Trump administration determined to force them to capitulate or collapse.”

James McAuley in Paris, Quentin Ariès in Brussels, Min Joo Kim in Seoul and Akiko Kashiwagi in Tokyo contributed to this report