August 9, 2018

Trump’s reflexive impulse to reach for superlatives will doom his Iran sanctions regime

    Thursday, August 09, 2018   No comments


Trump’s inclination to invoke superlatives to demean persons he does not like and to praise himself or persons he likes is well documented. Almost all his short and long statements would include some superlatives.
His tweet announcing the start of the Iran sanctions is no exception.


The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!

Logically, if these are “the most biting sanctions ever imposed”, how can they be even more so in November? Logical consistency aside, let’s assume that this round of sanctions is “very biting” and the next round will make them “the most biting” sanctions ever. The stated goal of the administration is to reduce Iran’s energy export (oil and gas) to zero. Of course, reducing the sales of something the Iranian government depends on to zero will be unprecedented, and will deserve the superlative descriptor should it be achieved. However, we already know that that will not happen because three of the top energy buyers, China, India, and Turkey have stated publicly that the sanctions are outside the UNSC and as such they are unilateral, they were imposed in contravention to a deal endorsed by the UNSC and signed by the P5+1, and they encroach on national sovereignty of other nations, and as such these states will not abide by the new and re-instated US sanctions. In other words, they will continue to purchase Iranian oil and natural gas, not to do Iran a favor, but to protect their own national interests.

As to sanctions related to other services and products (auto parts, banking, and gold, etc…), that, too, may not achieve the sated goals. In fact, it may backfire.


On the day the first round of sanctions took effect, EU Foreign Policy chief Federica Mogherini, after having spoken to Iranian officials, said the following: 



"We are encouraging small and medium enterprises in particular to increase business with and in Iran as part of something that for us is a security priority.”


This is very important. Aware that US secondary sanctions (sanctioning companies that deal with Iran) would discourage large companies with complex and large operations in the US from doing business with Iran, EU leaders are willing to offer added incentives to small and midsize companies to do business with and in Iran. This means that smaller companies that do not have no economic ties to the US or have no significant operations and investments in the US would be encouraged (through economic, financial, and legal incentives) to do business in and with Iran. Moreover, the EU leaders also threatened EU companies with sanctions if they abandon deals with Iran.

Should these sanctions last longer than the current term of the US president, the EU measure could offer larger companies the loophole they need to evade US sanctions. They could sell their interests and investments in Iran to these companies, or they could spinoff some operational divisions to avoid EU sanctions. 

Iran does not seem to have any interest in the US market or in US companies. Their priorities is to remain connected to the global market. The EU legal and economic measures such as increasing small companies (and privately held ones) to do business with Iran will allow the latter to remain connected to the global market, which would allow them to focus on their more reliable partners like China, Russia, India, and the Koreas. 


As Harley-Davidson, Inc. reminded us when it announced it was moving some production out of the US and into the EU to sidestep paying high tariff, large business companies have a responsibility to their shareholders not to politicians. They are, by nature, multi-national. In other words, they will seek profit wherever they can find it and move all or some of their operations to any country that would maximize their profit. 


In this particular dispute, it would seem that the world community's interest in global security (limiting nuclear proliferation) favors upholding the Iranian deal. Given its track record thus far, this administration is motivated, in part, by undoing the legacy of its predecessor. That is not a basis for building and preserving international alliances and credibility. None of the signatories to the deal said that the Iran Deal was perfect, as are all other negotiated multilateral deals. Some Iranian leaders, too, were not happy with some of the terms of the deal. But this US administration is victim of its own quest for superlative goals. That may be a good business strategy. But it is not a practical political strategy. 


In the end, the all-or-nothing approach to Iran may lead to the only logical result: nothing. Because in politics, the domain of compromise, the quest for superlatives is a liability, not an asset.



_______
Ref. Iran Deal

Ed Isr

About Ed Isr

Islamic Societies Review Editors

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