Strategy of Suffocation
Yassamine Mather reports on Tehran’s moves to counter US threats
There is no doubt that the strategy of the current US administration is to suffocate Iran’s economy through the imposition of new, unprecedented sanctions. Sanctions will be stepped up - this week the United States rejected appeals by a number of European companies to be exempted from US-imposed penalties on those doing business in Iran. On top of that Iran faces a reduction in the price of oil. Donald Trump basically ordered Saudi Arabia to ramp up production.
Trump’s close advisors have been very clear about the aim: regime change. On July 15, national security advisor John Bolton, speaking on ABC’s This week programme, said that the US will keep its troops in Syria until the “Iranian menace” is eliminated. And, according to Ha’aretz: “One person who recently spoke with senior White House officials on the subject summarised Bolton’s view in the words, ‘One little kick and they’re done’.”1
As always with the Trump administration, the position changes from one hour to the next. During his trip to Europe, the president claimed that economic pressures will force Iran to seek a deal, prompting this claim by Bahram Qassemi, Iran’s foreign ministry spokesperson: “I don’t know whether he was making a joke, but there is a greater chance that he will call Tehran and want to begin negotiations [than the other way around].” Qassemi went on to imply that some form of unofficial, secret contact had already been made.
On July 18 the office of Iranian president Hassan Rouhani claimed that Trump had made eight attempts to speak directly to him while he was in the US for the UN general assembly in 2017. And after the Trump-Putin summit there was speculation in the Middle Eastern media that Putin had offered his services as a go-between, helping to negotiate a US-Iran deal.
The Arab press is also reporting meetings (denied by Iran) between a representative of ayatollah Ali Khamenei, Iran’s supreme leader, and Israeli prime minister Binyamin Netanyahu, while they were both visiting Moscow last week. However, as unlikely as such a meeting seems, if it took place it would not be the first time that the Islamic republic has held secret negotiations with the US and Israel.
One thing is certain: the Tehran regime will have great difficulty remaining in power if the economic situation continues to deteriorate. Iran’s economy was just beginning to recover following the relaxation of some international sanctions after the nuclear deal of 2015. But, of course, Trump has torn-up that deal.
Since then, after every statement Trump makes about Iran, after every interview Bolton gives about regime change, after every warning by secretary of state Mike Pompeo that European banks and industrial companies should expect US penalties if they continue trading with Iran, millions of Iranians feel the consequences. The currency plummets, prices rise ... and yet again there are shortages of medicines, surgical equipment and even foodstuffs. As the intensity of the economic and political pressure grows - combined with threats of military attack be it by Israel or Saudi Arabia - we witness a further worsening of the situation. Unlike the last time the country faced severe sanctions (2010-15), it appears that now the state’s foreign reserves are very low. So there will no safeguards even for those sections of industry Tehran wants to keep alive most.
Of course, internal factors - including massive corruption and the contradictory economic policies of the rival factions of the current regime (such as the eagerness to follow the neoliberal model by sections of the government, as opposed to efforts to pacify the population through subsidies, religious and state charities) - have played a significant role in the near collapse of the economy.
Larger transnational owned plants are already facing closure, as the threat of US penalties has forced car manufacturers and petrochemical companies to leave. Major shipping companies, including the Danish conglomerate, Maersk, and container companies, such as CMA CGM France, are also cutting their ties.
The Iranian people have not been silent about all this. There are protests and demonstrations every day in almost every part of the country. They are so widespread that it is often difficult to keep up with them. Two weeks ago Trump’s attorney, Rudy Giuliani, claimed at a meeting organised by Mojahedin-e Khalq in Paris that it was the United States, working with people like those in the room, which was behind the protests, which “are not happening spontaneously”. They are happening thanks to the actions of “many of our people in Albania” (the country hosts an MEK compound).2
Nothing could be further from the truth. The audience was made up overwhelmingly by east Europeans paid to attend the event, as well as last-minute African recruits from the Paris suburbs!
The protests have nothing to do with idiots like Giuliani or the loony MEK cult he promotes. When people voted in large numbers for Rouhani last year - mainly to stop a more conservative candidate - they hoped he would be able to bring a degree of economic prosperity and an end to economic sanctions. This was based on the diplomatic successes of the last two years of his first term as president, when the Iran nuclear deal was signed. Now they feel betrayed and angry - not just with the economic situation (aspects of which are beyond Rouhani’s control), but with the fact that, contrary to his electoral promises, he has failed to make any progress on political or social liberalisation. There is no relaxation of the Islamic state’s medieval laws, and students, labour activists, etc are undergoing appalling treatment in jail. A number of prisoners have recently died in suspicious circumstances. Protestors against the forced wearing of the veil are treated like criminals. All these factors, combined with the disastrous economic situation, are why we are seeing so many protests in Iran.
Ten days ago Rouhani warned he would close down the Straits of Hormuz in retaliation against US threats. Of course, Iran is far too weak to confront the US navy. But Iran can create delays if it insists on inspecting oil tankers passing through these waters.
While Trump’s European visit, where he made some conciliatory noises in relation to Tehran, has helped boost morale in Iran, the government is proving to be completely incompetent. According to Bijan Khajepour, writing in Al Monitor:
Though one can identify many reasons for the current economic ills in the country, it is valid to argue that political instability and the consequent short-termism in economic decision-making are key problems. The push for quick gains and short-term economic cycles creates bubbles in the various markets and does not allow for medium- to long-term economic stability ... For example, the ministry of information and communications technology on June 24 announced the names of those entities that imported mobile phones at the official exchange rate, assuming that most of them sold their items at the unofficial free-market rate. It is this type of windfall that has financed a number of corrupt networks in Iran.
Furthermore, the regime as a whole has to stop its passivity and go after the corrupt interests.3
However, as far as oil is concerned, Tehran hopes China will continue buying Iranian crude. That despite extensive lobbying by the US to convince India, China, Japan and South Korea - which together account for 65% of Iran’s 2.7 million barrels daily - to end their purchases.4
It also appears that Iran has secured a $50 billion Russian investment in its oil industry. According to Ali Akbar Velayati, former foreign minister and now a close advisor of the supreme leader, the investment will cover crude oil exploration and production involving several energy companies.
The Russian government has also agreed to an ‘oil for goods’ programme. Russia’s energy minister, Alexander Novak, says Iran will need to spend half its oil revenue on Russian goods and, in exchange for this, Russia would help Iran sell its oil.