The second set of US sanctions against Iran just came into force. These sanctions mainly target two strategic sectors: energy and banking. Washington’s wants to “zero” Iran’s oil exports and cut Tehran’s ties to the global banking system called Swift.
However, there are severe doubts about the ability of the United States to reach these goals, and there are some who say it is likely for the US to return to negotiate with Iran starting from a point far below the Mike Pompeo’s famous 12 conditions.
The first set of exemptions issued by Washington included eight countries, we know four of them: Turkey, South Korea, Japan and India, which made it clear that it will be impossible to carry out the policy of zero exports.
These four countries alone consume about 50% of Iran’s crude exports. When the other four countries exempted from the US embargo are unveiled, this percentage will rise, and perhaps it will increase a lot.
Replacing Iranian oil does not seem easily possible by any of the oil producing and exporting countries. Therefore crude oil prices are expected to rise significantly in the next stage, which means Iran will be compensated with higher rates for the drop in oil exports due to the US embargo. This will enable Iran to keep a reasonable level of oil revenues.
If Europe succeeds in fulfilling its obligations, it will create a new mechanism to protect its companies dealing with the Iranian market, then Tehran will ensure the continuity of trade with the most important international centres except for the United States, and those centres are: Russia, China, India, the Brix, Turkey and the European Union.
Previously Tehran escaped international and UN-enforced sanctions, which were strict and comprehensive, and in which most of the parties mentioned above got involved, so will it be subjugated in the upcoming days although this time most parties do not intend to respond to US calls?
As for the dollar as a currency for trade, and Iran’s exit from the Swift system, which it did not take part in, to begin with, this is a story that may have a more moderate-term severe impact on Washington than its repercussions on Tehran.
The Trump administration is imposing sanctions on a large number of countries around the world, with a population of more than 2 billion people. This will drive these countries to seek alternative systems, parallel to SWIFT and parallel to the dollar as a currency of world trade.
Iran is the biggest beneficiary of such a system, and many countries are willing to continue trading with it using local currencies or different hard currencies, other than the US dollar. Iran is not a fragile party that can be uprooted from the region or have its role ended in many of the region’s conflicts.
Over the past four decades, Tehran has rooted itself in Yemen, Iraq, Syria, Lebanon and Palestine. The open-ended crises in these states cannot reach settlements or final solutions without Tehran being part of this solution.
Washington’s cards in the region are not much stronger than Tehran’s, and experience has shown that Iran has managed to win many bets on more than one occasion, unlike Washington, which has a short breath in managing or seeking to resolve these crises.
Therefore, Trump’s administration does not stop repeating the call for Tehran to enter into a new round of negotiations on its nuclear and missile programs and its regional influence.
Despite the tumultuous confrontation between the two sides, many knowledgeable sources are talking about direct and indirect negotiations, mediated by many parties, including Oman, to contain the situation and prevent reaching a confrontation where there is a possibility to return to new understandings about addressed issues.
The sanctions will not break Iran’s back, and they will not push it to raise the white flag and accept the conditions of Pompeo, which are a reproduction of Netanyahu’s terms. It is naive, however, to assume that Iran will not be affected by these harsh sanctions and that it has taken enough measures to stave off severe damage to its economy and the welfare of its people.
That is, confrontation and biting fingers may go on between the two sides and Trump may leave the White House, before Tehran surrenders or kneels asking for American forgiveness.
This article first appeared in Arabic in The New Khalij on 6 November 2018
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.