With great fanfare and a weird Game of Thrones reference, the Trump administration just reinstated sanctions that aim not only to cut off Iran’s exports, but to push countries that continue to buy Iranian oil out of the dollar-based international financial system. Proving that the administration still has some use for diplomacy, Secretary of State Mike Pompeo and his team negotiated exemptions for eight countries that might have otherwise balked at the sanctions. This means major customers like China, India, and South Korea can continue importing Iranian oil for now — but Pompeo said they’ve agreed to “greatly reduced” levels of oil purchases, and (theoretically) they’ll cut back completely in the next 180 days. The administration’s pressure and sanctions have already knocked Iran’s oil exports back to 2016 levels, and now they will fall further. Not to zero, but Obama-era sanctions had cut Iranian exports by more than half, and Trump’s may come close to that.
The Trump administration is ambiguous externally — and doesn’t seem to agree internally — on the ultimate goal of the pressure. “The Iranian regime has a choice. It can either do a 180-degree turn from its outlaw course of action and act like a normal country, or it can see its economy crumble,” Pompeo said at a press conference on Monday, adding, “We hope a new agreement with Iran is possible.”
The secretary of State has tried to get Europe to agree that the endgame is to get Iran back to the negotiating table — not to find a better version of the 2015 nuclear deal, but to hammer out an agreement that goes much further, restricting Iran’s ballistic-missile program and cutting off the country’s support for regional terror groups and militias.
Despite the hawks’ reservations, this new round of sanctions will likely be successful in putting more pressure on the Iranian government at home, where it is already unpopular and dealing with multiple strikes and protests. The sanctions and banking restrictions will raise the costs of imports, or make them completely unavailable, affecting products from medicines to new homes to airplane parts. Iranians were frustrated that the relaxation of sanctions following the 2015 deal didn’t bring them bigger consumer benefits, and they were already taking out that anger on the current government, which is perceived to be relatively moderate, sandwiched between hard-liners and reformists.
Yet some Trump officials — National Security Adviser John Bolton chief among them — and GOP senators have made it clear that they believe the only acceptable outcome is regime change in Tehran. The U.S. hard-liners were rumored to have rebelled last week, believing the administration’s new sanctions didn’t go far enough. Bolton decided not to participate in the public rollout, while Senator Lindsey Graham openly grumbled that U.S. must “stay strong against the Iranian regime,” adding, “I share the concerns expressed by my colleagues regarding the potential ‘softness’ of Iran sanctions.”
But sanctions are also likely to raise instability in oil prices just as cold weather comes to the Northern Hemisphere. The markets are reacting calmly so far; the sanctions date was well-known, buyers have been walking back from Iran for months, and OPEC, the U.S., and Russia are all producing at high levels. But analysts see prices drifting up as weather gets colder. That gives those countries a little more influence over Washington, at a time when our ties to Russia remain fraught, and our relationship with Saudi Arabia has grown colder over the killing of dissident journalist Jamal Khashoggi.
The one outcome that almost no one expects is a change in the Iranian behavior Trump is complaining about. The International Crisis Group released an analysis going back decades that showed no correlation at all between the economic pain inflicted on Iranians and their government’s national security policies.
As if to prove this point, last month not one but two European states accused Tehran of trying to assassinate dissidents on their soil. This at the same time the Europeans are trying to help Iran by setting up work-arounds to keep some trade alive under the Trump sanctions.
The latest sanctions weaken everyone except Iranian hard-liners, who look strong standing up to the U.S. president, and … Trump, who can hit back with some tough posturing of his own. Meanwhile, there’s talk of a vacuum in which ISIS could return to Syria; intense pressure on all sides in the catastrophic Yemen conflict to consolidate their military positions and seek a cease-fire; and uncertainty surrounding the government in Iraq, where Iran also has large influence. The sanctions move just adds one more potential source of instability to a region that already has far too much of it — and can export it to the U.S.