As sanctions bite, where next for Trump's Iran strategy

A wave of US sanctions kicks in against Iran on Tuesday, cementing Washington's hard line against Tehran after President Donald Trump pulled out of the 2015 nuclear pact.

Already facing broad economic fallout as their currency implodes, Iranians are wondering how the next phase of the crisis in US relations will play out -- and what, exactly, America's long-term strategy is toward their country.

At least for now, the US is fixated on bringing as much diplomatic and economic pressure to Iran as possible -- though it is not clear where things are headed, or if there is an increased risk of conflict.

The US walked out of the 2015 nuclear deal in May and is bringing back "maximum pressure" sanctions for most sectors on August 6, and the energy sector on November 4.

As of 0401 GMT Tuesday, the Iran government can no longer buy US banknotes and broad sanctions will be slapped on Iranian industries, including its rug exports.

After months of fierce rhetoric, Trump surprised observers last week when he offered to meet with Iranian President Hassan Rouhani "any time" -- and without preconditions.

The dramatic about-face, which Secretary of State Mike Pompeo quickly tamped down, came just days after the enigmatic US president and Rouhani traded barbs.

Trump at one point unleashed a Twitter tirade in which he blasted, using all caps, Rouhani's "DEMENTED WORDS OF VIOLENCE".

He was responding to a July 22 warning from Rouhani that the US should not "play with the lion's tail" and warned that any conflict with Iran would be the "mother of all wars."

Trump's offer for dialogue came after Pompeo seemed to suggest support for a change in Iran leadership, telling an audience of Iranian expats in California that the regime had been a "nightmare".

And John Bolton, the president's national security advisor, is a well-known Iran hawk who has advocated for regime change.

"For Bolton and others, pressure is an end in and of itself," Suzanne Maloney, deputy director of the foreign policy program at the Brookings Institution, told AFP.

For the administration, "if it leads to a wholesale capitulation fine, if it leads to regime change, even better," she added.

- Under pressure -

Trump's pressure campaign appears to have had some results.

For instance, US officials in recent years have accused both the regular Iranian navy and the Iranian Revolutionary Guards Corps of routinely harassing American warships in the Gulf.

But this year, to the surprise of some military officials, there have been no such incidents.

If Iran senses "American steel they back down, if they perceive American mush they push forward -- and right now they perceive steel," said Mark Dubowitz, chief executive of Foundation for Defense of Democracies, a Washington think tank that lobbied for a renegotiation of the Iran nuclear deal.

Dubowitz, who noted that Iran has tested fewer missiles of late, said Trump's rhetoric and position on Iran actually lowers the risk of escalation toward conflict.

"He's assuming that if he talks tough, that will bolster the credibility of American military power," Dubowitz told AFP.

Both Trump and Rouhani are due to address the United Nations General Assembly in New York next month.

It's not inconceivable a meeting on the sidelines could occur then -- Tehran will be looking anxiously to a November deadline for oil buyers to stop purchasing Iranian crude.

Over the weekend Trump once again floated the idea of meeting, tweeting "I will meet, or not meet, it doesn't matter -- it is up to them!"

"Iran, and its economy, is going very bad, and fast!" he said in the same missive.

US Defense Secretary Jim Mattis said on July 27 there was no policy that had been put in place with the goal of collapsing or changing the Iranian regime.

"We need them to change their behavior on a number of threats they can pose with their military, with their secret services, with their surrogates and with their proxies," Mattis told Pentagon reporters.

Experts see a number of possible outcomes for the current US policy toward Iran.

Sanctions and diplomatic pressure could pile enough pressure on the regime that it comes to the negotiating table -- something Trump has advocated for.

The financial crisis in Iran could worsen to the point that mass protests make it impossible for the regime to hold on to power -- though economic pressures risk galvanizing growing anti-American sentiment and support for hardliners.

Or the regime could start to address what America calls its "malign influence" in the region, including its support to Syrian President Bashar al-Assad and threats to shut down the strategic Strait of Hormuz, a vital shipping lane for international oil supplies.

"I think (the Trump administration) would be pleased with any one of those end states," Dubowitz said.

European losers in new Iranian sanctions game
Paris (AFP) Aug 5, 2018 - US President Donald Trump's decision to pull the United States out of the 2015 nuclear accord with Iran and reimpose a raft of sanctions will hit European businesses working in Iran.

Here is an overview of how firms stand to be affected when the sanctions kick in Monday:

- Auto -

French automakers Renault and PSA have taken different approaches publicly.

PSA, behind the Peugeot, Citroen and Opel brands, said in June it was preparing to suspend activities in the Islamic republic, its chief foreign market by volume, noting those units account for "less than one percent of sales".

The group, which is Europe's second biggest carmaker, last year sold more than 445,000 vehicles in Iran, making the country one of its biggest markets outside France.

Renault says it intends to keep up activities in Iran albeit scaling them back. On July 16, the automaker announced a 10.3 percent drop in sales in Iran to 61,354 units.

Germany's Daimler was teaming up with two Iranian firms to assemble Mercedes-Benz trucks.

Volkswagen also said last year it would seek to resume sales in Iran for the first time in 17 years, yet the scale of its US activities could force the jettisoning of those plans.

German firms' business with Iran was a modest $2.6 billion of 2016 exports rising to 3.0 billion last year.

Italy is Iran's main European trading partner -- but Germany is still the bloc's biggest exporter to Tehran.

- Aviation -

Aviation saw beefy contracts drawn up following the nuclear accord as Iran targets modernisation of an ageing fleet.

Airbus booked deals for 100 jets although to date only three have been delivered after having US licences bestowed upon them -- a necessity given some parts are US-made.

The potential loss of business in Iran would not weigh overly heavily on Airbus as overall orders on its books at the end of June stood at 7,168 planes.

Franco-Italian planemaker ATR was fretting on the fate of 20 planes earmarked for Iranian delivery -- though Iran Air said Saturday five ATR-72600 aircraft would arrive Sunday, creeping under the deadline to add to eight already delivered.

- Oil -

French energy giant Total has moved away from a contract to develop an offshore gas field at South Pars in what would have been the first project of its kind since the 2015 nuclear deal.

Because Total's investment in the field had barely just begun, the company is avoiding incurring significant losses on a $5 billion project which Iran says Chinese group CNPC will now take up.

After a 30 percent jump in 2016 in exports of Italian-made goods to Iran, Italian exports grew 12.5 percent last year to 1.7 billion euros, according to official data.

But energy giant Eni has held back on returning to Iran, preferring to wait on the impact of the latest sanctions.

Britain's BP, which started life as the Anglo-Persian Oil Company, has no presence in Iran. Although Anglo-Dutch giant Royal Dutch Shell signed a deal in 2016 to explore possible investments it does not currently have any operations on the ground.

- Railways and shipbuilding -

Italy stands to lose out in these sectors with national railway operator Ferrovie dello Stato Italiano having signed a deal to build a high-speed line linking Qom to Arak in northern Iran.

Shipmaker Fincantieri, engineering firm Maire Tecnimont and gas boiler maker Immergas has also signed a string of deals with Iran which now are also threatened.

- Tourism -

British Airways and German carrier Lufthansa face having to stop only recently resumed direct flights to Tehran or face losing Transatlantic business.

The dilemma applies to French hotel chain AccorHotels, which opened an establishment in Iran in 2015, as well as to Emirati group Rotana Hotels, which has designs on its own Iranian operation.

Spain's Melia Hotels International chain, which signed a 2016 deal to run a five star hotel in Iran, the Gran Melia Ghoo, says the establishment is under construction and that discussion of its future is "premature."

- Industry -

Siemens returned to Iran in 2016 seeking to sell gas turbines and generators for electricity stations and has won a contract to sell compressors for a natural gas processor.

"The mega contracts hoped for when sanctions were lifted were never realised," KPMG advisor Kaveh Taghizadeh was recently quoted as saying in Stern magazine.

"Siemens will continue to ensure it remains in strict compliance with relevant international export control restrictions and all other applicable laws and regulations, including US secondary sanctions," Siemens spokesman Yashar Azad told AFP.

He added Siemens "will take appropriate actions to align its business with the changing multilateral framework regarding Iran."

French industrial gas group Air Liquide says it will "cease all commercial activity" in the country although a spokesperson says the firm has "no investments" there.

- Pharmaceuticals -

Pharmaceutical giant Sanofi, in Iran for over a decade, remains operating "in full compliance with international regulations", a spokesman said, while adding "it is still too early to comment on the potential impact" of sanctions.

- Banks -

Germany's big banks, Deutsche Bank and Commerzbank, stayed clear of Iran after the US fined them hugely in 2015 for violating previous sanctions. Regional banks Helaba and DZ Bank pulled out of Iran after the US announced it was reimposing sanctions.


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NUKEWARS
Trump says willing to meet with Iran leaders 'any time'
Washington (AFP) July 30, 2018
Donald Trump seemed to jettison threats of impending war with Iran on Monday, saying he was willing to meet the country's leaders without precondition, a dramatic about-face by the enigmatic US president. Barely a week after warning Iran it would suffer untold "consequences," Trump said he would meet the country's leader Hassan Rouhani "any time" and without preconditions. "I would meet with Iran if they wanted to meet," Trump said at a joint White House press conference with Italian Prime Minis ... read more

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As sanctions bite, where next for Trump's Iran strategy As sanctions bite, where next for Trump's Iran strategy Reviewed by Defense Alert on 02:11:00 Rating: 5

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