U.S. sanctions against Iran can hit Ukraine

Author : Natalia Slobodian

Source : 112 Ukraine

President Trump fulfilled his promise and on August 7 introduced a first package of sanctions against Iran, which deals with financial transactions, trade restrictions on metals, cars and manufactured goods, and software
22:12, 21 August 2018

112 Agency

The second, tougher package of sanctions will come into force on November 4 this year and will deal with restricting oil trade. However, Iran was already experiencing a similar situation. President Mahmoud Ahmadinejad resumed the uranium enrichment program in 2005, receiving immediate reaction of the United States and the United Nations by imposing sanctions. Subsequently, in 2010, Washington imposed even more restrictive restrictions, adopting the Comprehensive Iran Sanctions, Accountability, and Divestment Act, severely restricting Iran's ability to conduct business internationally, and the world community supported the American initiative almost unanimously. And yet the Iranian regime stood it. So, the question is: will the current Ruhani regime survive under the storm of sanctions? Will Washington succeed in creating a broad anti-Iranian coalition? And what side effects from Iranian sanctions can hurt Ukraine?

Internal situation in Iran: Something out of government control

There is no doubt that the 10 years of sanctions (2005-2015) had a devastating impact on the Iranian economy. However, due to Iran's information deficit, inaccessibility, and sometimes unreliability of the data, it is extremely difficult to assess the impact of sanctions on the country's economy and the social status of citizens. So, it is known that in 2012 the rial lost more than two thirds of its value. The exchange rate has decreased from 10 000 r. for the dollar to 36,000 before the end of the year. The rapid fall of the Iranian rial is observed even today after the introduction of sanctions: thus, recently 1 dollar was sold for 100,000 riyals. The government used command economy methods, restricting currency trading and creating an official exchange rate.

President Hassan Ruhani came to power in 2013 as a reformer, promising to reconstruct the economy and improve the lives of ordinary Iranians. In 2015, he reached a nuclear agreement with the West and a gradual easing of sanctions. Expectations were high, and when sanctions were gradually lifted, the Iranians were looking forward to improving the situation for their families, because in recent years, an ordinary Iranian family of 5 people lived on average $ 5 per day.

However, expectations were not justified. The growth in GDP due to the easing of sanctions happened primarily because increased oil sales and benefited a small group of Iranians. First and foremost, officials and representatives of the security sector, namely the Islamic Revolutionary Guard Corps and other elites received raised salaries. The second part of the income was used to intervene in the Syrian conflict and support terrorist groups in Palestine. That is why Iranians came out with the posters "Death to Syria" and "Death to Palestine", "Death to unemployment" and "Death to inflation" during protests of the last months. Despite all efforts, the Ruhani government has not convinced the Iranians that the US is responsible for their economic problems. Protesters make claims to their own government regarding the inefficiency of management.

Protests in Iran by 2018 mostly did not go beyond Tehran, the target group of protesters consisted of students and intellectuals and did not have broad support in Iran. But large-scale protests at the beginning of this year arose even before it became clear that the sanctions would be restored, and had a wider geography and demographic composition.

Will the US succeed in assembling an anti-Iranian coalition?

In order for American sanctions to achieve their goal, namely, force the Iranian government to abandon nuclear programs, a team game is necessary, that is, support of the European partners, China, India, Russia and Turkey. However, since May, when Trump announced his intention to withdraw from the nuclear agreement, prior to the imposition of sanctions in August, a compromise between the transatlantic partners was not found. It seems that the US and the EU are in a political impasse over the Iranian issue, and most of all them are separated by energy security issues.

Thus, the European Union views Iran as a potential and alternative energy supplier. Last year, EU countries imported 37% of their natural gas and 30% of oil from Russia, and this is a significant dependence, so they must look for alternative suppliers, and one of such could be Iran. Which, by the way, has no political goals in Europe in addition to earnings, as Russia has. The US does not have any dependence on Russian or Iranian gas and oil. Thus, the goals of the United States in the Middle East lie more in the political plane than in the economic one, namely, the "reset" of the balance of power in the Middle East, and in this context, Iran is an unclear, inconsistent, dangerous and destructive element.

Trump's government rightly believes that it can cope with the Iranian problem alone, without European partners. This is absolutely true. But the synergy between Washington and Brussels will certainly accelerate this process, as well as mitigate possible negative consequences for both global actors.

In this confrontation, Beijing is on the side of Brussels, as it, like the European Union, is in a state of trade war with the United States. China has already said that it will not stop the import of Iranian oil, and Iran in return has offered to reduce the price of petroleum products for Chinese customers. Now the Heavenly Empire hedges its rates, without increasing or reducing the import of oil from Iran. This may be a kind of signal from Beijing for negotiations and a search for a compromise with Washington, or for a relatively independent policy in the Middle East and open indifference to American politics. Such a special position of China on the Iranian issue can provoke the creation of a coalition of states against American sanctions. Already today, Russia and China are talking about an alliance against the US sanctions policy. And some regional states, such as Iraq, which Iran has always seen as either an enemy or a rival, certainly do not oppose the imposition of US sanctions, but in return it wants to bargain for additional economic preferences from the United States.

The Iranian problem and Ukrainian risks

The Iranian problem can have a very negative impact on the energy market in November, when the second stage of sanctions will be introduced. Stopping the supply of Iranian oil to world markets could provoke a rise in the price of oil products, and subsequently gas prices, because the cost of oil lies in the formula for determining the price of gas. Consequently, Ukraine must draw several conclusions from the Iranian crisis: first, the escalation of the conflict between the United States and Iran could trigger an increase in prices in the energy market, including oil and gas; Secondly, despite the tightening of sanctions, it is obvious that the United States has already set priorities on the "axis of evil", placing Iran and North Korea in the first row, while Russia, as a violator of the world order, is put out of brackets; Thirdly, if internal protests and external pressure on Iran intensify, the Ruhani government will seek a mediator for negotiations with the United States, and here Russia may be one of the contenders.

A difficult question arose for the Ukrainian Foreign Ministry today - to take solid position regarding Iranian sanctions. If Ukraine joins the United States, it may lose part of the trade with Iran, which last year amounted to about $ 600 million, and worsen relations with the EU. On the contrary, in case of actions in the fairway with the European Union, Kyiv risks to damage relations with Washington and lose military support.

Read original article at

Related: Sentsov not to be fed forcefully, - Russian Federal Penitentiary Service

Related: Microsoft uncovers new Russian hacking attempts on US political groups




Система Orphus

If you find an error, highlight the desired text and press Ctrl + Enter, to tell about it

see more
latest news
editor's choice