U.S. officials are claiming that looming sanctions are putting economic pressure on Iran and helping to stir up street protests, with President Donald Trump saying he expects the economic “pain” to force Tehran to seek a deal with Washington.
“I know they’re having a lot of problems and their economy is collapsing. But I will tell you this, at a certain point, they’re going to call me and they’re going to say, ‘Let’s make a deal,’ and we’ll make a deal. They’re feeling a lot of pain right now,” Trump said at a news conference in Brussels on July 12, 2018.
Trump and his Secretary of State Mike Pompeo, while attending a NATO summit in the Belgian capital, have been pushing European allies to increase the economic pain in Tehran by supporting the U.S. sanctions, which are due to go into effect on Nov. 4, 2018.
“We ask our allies and partners to join our economic pressure campaign against Iran’s regime,” Pompeo said in a tweet before meeting with European Union foreign policy chief Federica Mogherini.
But Europe’s biggest economic powers — France, Germany, and Britain — have pledged to try to counteract the U.S. sanctions as part of their efforts to keep honoring Iran’s 2015 nuclear deal with world powers, which provided Tehran with sanctions relief in exchange for curbs on its nuclear activities.
Secretary of State Mike Pompeo
Trump pulled out of the nuclear deal in May 2018 and announced the reinstatement of U.S. sanctions.
Pompeo has pointed to the recent arrest of an Iranian diplomat in Germany in connection with an alleged plot to bomb a gathering of Iranian expatriates in Paris in trying to convince U.S. allies to join the Washington’s pressure campaign on Tehran.
“There’s no telling when Iran may try to foment terrorism, violence, and instability in one of our countries next,” he tweeted. “We must cut off all funding the regime uses to fund terrorism and proxy wars.”
During a visit to Dubai on July 12, 2018, Sigal P. Mandelker, a U.S. Treasury undersecretary, said the economic pressures on Iran were helping fuel street protests and should prompt Tehran to stop what she called its “malign activities” in the Middle East.
“You’ve seen the Iranian people, of course, stand up loudly, at risk of their own lives, shouting in protest about the corruption that’s happening within Iran,” Mandelker said. “So much money has gone to support malign activities elsewhere, with very little focus on the economy itself.”
Iran’s support for the Lebanese Shi’ite militant group Hizballah, Shi’ite rebels in Yemen, and embattled Syrian President Bashar al-Assad all represent a “despicable use of Iranian revenue,” she said.
Since the United States moved to reimpose sanctions on Iran, the Iranian rial has plummeted to 78,500 to the dollar, nearly half the official exchange rate, while unemployment has remained high.
Economic protests swept the Iranian countryside at the end of 2017 and have occurred in recent weeks as well. Wildcat strikes and demonstrations have also erupted over water scarcity.
Promised billion-dollar deals with Western firms that emerged after the nuclear deal was signed have evaporated in recent weeks, with businesses citing worries about being penalized by the U.S. sanctions and cut out of the U.S. consumer market if they continue to operate in Iran.
Reuters reported that Iranian oil exports to India, Iran’s second largest customer for crude, fell by 16 percent in May 2018 as privately owned refineries cut back purchases even as state refineries increased purchases from Iran.
After a meeting with Russian President Vladimir Putin in Moscow on July 12, 2018, Iranian Supreme Leader Ayatollah Ali Khamenei’s top adviser said Russian firms are prepared to fill in for some of the loss of business.
“Putin said that Russia is prepared to continue its oil investment in Iran at the level of billion. It means Russia is ready to invest this amount in Iran’s oil sector,” Ali Akbar Velayati told Iranian state television.
“This is an important amount that can compensate for those companies that have left Iran,” he said.
Velayati claimed that one of Russia’s major oil companies has signed a billion deal with Iran, which he said “will be implemented soon,” without elaborating.
“Two other major Russian oil companies, Rosneft and Gazprom, have started talks with Iran’s Oil Ministry to sign contracts worth up to billion,” he said.
Mandelker said the Trump administration was aiming to “very significantly reduce” Iran’s crude oil exports. She said the administration also wants to make sure allies shut off financial avenues Tehran could use to evade the sanctions.
“The world needs to be wise to the ways in which they move deceptively,” she said.
However, limiting Iran’s ways of evading sanctions could prove difficult in the Persian Gulf region. The United Arab Emirates (U.A.E.), in particular, has a large ethnically Persian population and a long history of trade with Iran.
Iran has already exploited the U.A.E.’s free economic zones to set up companies to acquire otherwise-prohibited materials, and a recent report found that Dubai’s luxury real-estate market offers a money-laundering haven for Iranians.
Moreover, Dubai has traditionally served as a hub for exports to Iran, with data showing such exports totaled .9 billion in 2017.
Despite these extensive ties, Mandelker said Washington has an “excellent partnership” with the U.A.E. and that “there’s no question in my mind that working together, we can take significant action to disrupt [Iran’s] ability to fund themselves.”
This article originally appeared on Radio Free Europe/Radio Liberty. Follow @RFERL on Twitter.