On July 14, 2015, when the Joint Comprehensive Plan of Action (JCPOA) was finally signed between Iran on the one side and China, Russia, France, Germany, the UK, the EU, and the US on the other, everyone thought that the historic deal was putting an end to years of international sanctions on Iran’s economy.
Although the deal never delivered on all of its promises, Iran started to rebuild its economic ties with the rest of the world in the months following the signing of the JCPOA, despite the protestations of hardliners in Iran and the far right in the US.
The US withdrawal from the deal in May 2018 hardly came as a surprise to anyone as Donald Trump had promised it during his campaign for the 2016 presidential election. The remaining signatories of the JCPOA expressed their willingness to continue honoring the deal with or without the US presence.
However, the Trump government’s decision to impose a new round of sanctions on Iran has cast doubt on the future of not only the nuclear deal but also Iran’s relationship with the West.
Following a set of sanctions that came into effect in August, limiting Iran’s access to the US dollar, gold, and other precious metals, the US started targeting Iran’s oil industry, oil exports, banking, and shipping on November 4. As an oil-based economy, Iran traditionally relies on foreign exchange earnings from oil exports, which could be undermined by the new sanctions.
According to the terms of the new US-imposed sanctions, any country importing goods from Iran or doing business with it will be penalized by the US. Despite being a huge deterrent, this cannot stop Indian, Chinese, or even European companies with no assets or interests in the US from doing business with Iran.
The US had threatened to reduce Iran’s revenue from oil exports to zero by the beginning of the fresh round of sanctions in November; however, the US Secretary of State, Mike Pompeo, announced that eight countries would be granted waivers and can continue importing Iran’s oil for a limited period of time.
On November 5, Mike Pompeo and Steven Mnuchin, the US Treasury Secretary, attended a news conference to elaborate on the mechanics of the sanctions. It appears that the new sanctions are essentially similar to what the US used to impose on Iran before the signing of the nuclear deal in 2015.
During an earlier conference call, Mike Pompeo and Steven Mnuchin had threatened entities who violate the terms of the new sanctions with exclusion from the SWIFT system—which is essential for any electronic transfer of money between banks.
It was expected that China, India, Japan, and South Korea would be among the recipients of the temporary waivers, and this turned out to be the case. Although Mike Pompeo had previously pointed out that the EU would not receive any such exemption, two EU member states—Italy and Greece—have received these temporary exemptions. Turkey and Taiwan are two other countries which are allowed to carry on doing business with Iran for the time being.
The EU still respects the JCPOA, and there have been talks about a special channel of trade and monetary interaction between Iran and the EU. In practice, however, no steps have been taken so far.
Iran has remained composed in the face of the new sanctions. During a speech delivered on November 5, President Hassan Rouhani of Iran has said that Iran will proudly circumvent these unjust sanctions. At the same time, Iran’s traditional business partners such as China, Russia, and Turkey have expressed their dissatisfaction regarding the new US sanctions in recent days.