CPC - Caspian Policy Center


impending sanctions on iran indicate a long standoff ahead

Impending Sanctions on Iran Indicate a Long Standoff Ahead


Oct 3, 2018

President Trump announced in May that the United States (U.S.) would cease participation in the Joint Comprehensive Plan of Action (JCPOA) and reimpose sanctions against Iran. The U.S. Departments of State and Treasury immediately kicked off a plan to reimplement sanctions within 180 days. Most sanctions were waived during the first 90 days, which gave businesses time to finish outstanding transactions with Iran. This period ended on August 6th. Since then, most sanctions on Iran have been in full effect, but a select few industries are not having sanctions re-imposed until the end of the full 180-day period. This second period will end on November 4th, and all sanctions lifted by the JCPOA will come back into full effect the next day. Sanctions returning on November 5th are mainly those targeting the banking and energy sectors. The Treasury Department specifically notes that these sanctions are on port operators and shipping sectors, petroleum and petrochemical transactions, transactions between foreign financial institutions and the Central Bank of Iran, underwriting services and insurance, and Iran’s energy sector. Together, the sanctions are designed to slash Iranian oil exports, and recent reports indicate that they may be effective in doing so. Several Indian and Chinese companies have suggested plans to decrease purchases of Iranian oil. China’s Sinopec announced that it cut its use of Iranian oil in half over the last month. China and India are Iran’s two largest export markets, and oil comprises the vast majority of that trade (62 percent to China and 81 percent to India). Losing ground in these two markets would be devastating to Iran’s economy, yet Iranian officials insist they have no intention of decreasing their oil production. Meanwhile, the U.S. has been ramping up its criticism of Iran. Last week, the U.S. State Department’s Iran Action Group released a report censuring the Iranian regime, and referencing sanctions in relation to Iran supporting terrorist groups, developing ballistic missiles, and conducting cyber-attacks. Iran’s human rights record was also heavily criticized. Stopping support for extremists and missile development have always been on the U.S.’s list of demands from Iran, first laid out in Secretary of State Mike Pompeo’s speech in May. However, the new report’s addition of cyber-attacks and human rights may indicate that the U.S. is raising the bar higher—in terms of conditions for lifting sanctions on Iran. That, combined with Iran’s insistence that it will conduct business as usual, portends a long standoff ahead. Given that oil prices have already reached their highest level in the last four years, a lengthy showdown is likely to be costly for everyone, not just Iran.   Photo: Anadolu Agency

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