There is an economic war brewing between the United States and Iran that shows no signs of abating anytime soon.
Tehran has been under sanctions in one form or another for the last 40 years. Iran, however, has never experienced as much pressure as they are now. The Trump administration has used the full weight of the U.S. financial system to come down on the Iranian economy like a ton of bricks. With every sanctions action taken by the U.S. Treasury Department, Tehran’s finances are placed in an even tighter vase. Washington’s termination of oil import waivers has forced countries like South Korea, China, India, and Italy to either severely limit their purchase of Iranian crude or end those imports altogether. Estimates of Iranian crude exports for this month are 400,000 barrels per day, less than half of April’s rate and a figment of the 2 million barrels per day in the summer months of 2016.
The Trump administration isn’t done yet. Bloomberg has reported that Washington sent a letter to the body set up by the European Union to expedite EU-Iran trade, warning its operators that any entity involved in the mechanism could be slapped with sanctions. “Engaging in activities that run afoul of U.S. sanctions can result in severe consequences, including a loss of access to the U.S. financial system,” Treasury official Sigal Mandelker commented. It was as clear a signal as Washington could deliver: if we find you are engaging in the Iranian market, you can kiss your business in the U.S. goodbye.
[Also read: War Drums: 64% back US military action if Iran attacks]
Nobody can dispute that the maximum pressure campaign is having a financial impact. The Iranians stand to lose a good chunk of change by the end of the year; State Department envoy Brian Hook has already bragged that the sanctions have cost Iran $10 billion in oil export losses, a higher inflation rate, a dip in the rial’s value, and rising discontent from the masses.
The sanctions, however, are not meant to just hit Tehran’s wallet. The objective goes beyond far that. At its core, Washington is trying to bleed the Iranians into changing its behavior and becoming what Secretary of State Mike Pompeo calls “a normal country.” On that score, the administration’s Iran policy is failing to have the desired effect.
Iran shows no signs of buckling under the pressure. Iranian military officers and high-ranking politicians, from the hardline Islamic Revolutionary Guard Corps to the moderates in President Hassan Rouhani’s office, are vowing to defy what they regard as bullying tactics from a hostile aggressor looking to destroy the Islamic Republic and replace it with a regime that would take orders from Washington. American officials would roll their eyes at such innuendo, but for the Iranian elite these sentiments are real. No sovereign nation, especially one as proudly nationalistic as Iran, would find it acceptable to capitulate to an adversary. Indeed, doing so is a demonstration of weakness, inviting only more pressure in the future.
President Trump may be open to a deal with the Iranians. He is, after all, a man who is used to the boardroom. I’m reasonably confident that Trump, who was elected in part on preventing another dumb war of choice in the Middle East, doesn’t court a conflict with Tehran. He is banking on the fact that when the money starts drying up, Supreme Leader Ali Khamenei will have no option but to come crawling to the table on his hands and knees, ready to give away the store for a taste of relief.
Trump is not asking for a negotiation, but rather demanding complete capitulation from a regime that has rejected surrender during times that were far darker. The president wouldn’t consider surrender when he was sitting in his Trump Tower office dealing with contractors. We shouldn’t expect Iran to consider it either.
Daniel DePetris (@DanDePetris) is a contributor to the Washington Examiner’s Beltway Confidential blog. His opinions are his own.
