Trump’s Sanctions

• Arrived in two parts: 7th August and 5th November 2018. August targeted Iran’s acquisition of US bank notes; Iranian trade in precious metals; the sale to Iran of materials used in industrial processes; transactions relating to the Iran’s currency, the rial, Iran’s issuance of sovereign debt and activities in the automotive sector
• November sought to prevent third-party involvement in Iran’s energy, shipping, insurance and financial sectors.
• In May 2019, Trump imposed additional sanctions on Iran’s metal sectors: iron, steel, aluminium and copper meaning that the US now imposes sanctions on Iran’s three key exports: oil, petrochemicals, and metals.

Impacts:

Economy

• In December 2018, Iranian oil exports, projected to account for 35% of government revenue in 2019, reduced to approx. one million barrels per day, from 2.45m in 2018. Combined with the fall in oil prices since October, the impact is serious
• Iran has predicted a 28% decrease in oil revenue in 2019. Much of that revenue will remain in frozen accounts, only to be used for barter arrangements
• The US stated that by November 2018 over 100 foreign companies had withdrawn from Iran to avoid American fines. Foreign banks are increasingly unwilling to provide financial services
• The World Bank predicts that for 2018-19, the Iranian economy will contract by 1.5%
• Iran says that inflation was at 40% in December 2018 and that you the unemployment has risen to 27% this year. One million jobs have been lost, according to the Iranian government
• Industrial production is declining, notably in automotive manufacturing
• There are shortages of important consumer goods including nappies and medical supplies
• Key economic partners: Oil – China and India; Non-oil – the European Union

Politics

• Rouhani has been undermined, unable to fulfil his election promises. Significantly increasing trade with the EU is not attainable in the face of US pressure
• According to a report by IISS, the right-wing in Iran has been boosted by the sanctions, who can claim vindication in their declared mistrust of the US
• The popularity of the head of the Islamic Revolutionary Guard Corps Quds Force, General Qassem Soleimani, now easily outstrips Rouhani’s
• Despite popular dissatisfaction with the economy, protest is limited, and regime change is unlikely

Policies

• Washington’s demands on Tehran have so far not been obeyed: cease uranium enrichment; provide the International Atomic Energy Agency with unqualified access; end the proliferation of ballistic missiles and halt testing of nuclear-capable missiles; release all citizens of the US and its partners; end support for groups including Hizbullah; end military support for the Houthis in Yemen; withdraw all forces under Iranian command in Syria; end IRGC Quds Force support for Iranian military partners; and end threatening behaviour, cyber-attacks and threats against Israel, Saudi Arabia, the United Arab Emirates and international shipping
• Trump has claimed success in forcing policy changes, that Iran is a ‘much different country’, is withdrawing from Yemen and is ‘pulling [its] people out of Syria’ but there is little evidence of this
• Iranian officials say they have rejected at least nine US requests to talk over the past 18 months. Tehran’s engagement could be interpreted as a sign of weakness and as a validation of Trump’s approach, and so Trump’s bombast is decreasing the chances of any Iranian concessions and resolution

Prospects

• If Trump loses the 2021 Presidential election, things may change for Iran
• Hopes of an EU economic rescue remain wishful thinking
• In January, Rear Admiral Ali Shamkhani, secretary of Iran’s Supreme National Security Council, stated that the chance for Europe to save the Iran Deal had gone
• Pressure is growing on Rouhani to abandon the deal
• According to IISS, Ali Akbar Salehi, the head of Iran’s Atomic Energy Organization,claims that Iran is ready to increase its uranium-enrichment activities if a decision is made to do so
• The EU can impose sanctions over any clear violations of the Deal by Iran, tit-for-tat moves against US interests are more likely than a withdrawal
• IISS states that Iranian officials have indicated that they could pressure US forces in Iraq through Iranian-sponsored militias

Tactics’ View

The above facts have the potential to create a domestic crisis in Iran, with economic, political and humanitarian components. Severely limited in its options, the Iranian regime must rely on the steadfastness of the population and its international allies and hope that the Trump White House over-play their strong hand and provoke an international backlash from moderate states who value positive relations with Tehran. Iran can also respond using regional proxies and striking US interests in the Middle East.

President Trump’s sanctions regime can be considered a political failure, having secured no major changes in Iran’s regional policy. From being a potential economic, political and military partner for peace, Iran is now embattled.

Iranian capitulation seems an unlikely outcome. And while the tit-for-tat rhetoric intensifies it causes insecurity across the region and the globe, creating conditions in which war is more likely and the humanitarian conditions of ordinary Iranians worsen.