Muammar Faysal Khouli *
In line with the policy of withdrawal from international agreements, US President Donald Trump announced on May 8 that the United States would withdraw from the nuclear deal with Iran and intended to impose severe sanctions on it. Trump said in a speech at the White House that the agreement with Iran did not bring peace even if it fully committed to it and will remain on the brink of acquiring nuclear weapons. One of the most important things Trump said was that he knew that “the Iranian regime is the world’s leading sponsor of terrorism.” “It exports dangerous missiles, ignites conflicts in the Middle East and supports terrorist organizations and militias such as Hezbollah, Hamas, Taliban and al Qaeda. Over the past years, Iran’s agents have blown up US embassies and military bases, killing hundreds of American soldiers, kidnapping, imprisoning and torturing US citizens. “Trump’s administration, unlike Barack Obama’s administration, knows that the problem with Iran is not limited to the nuclear issue. Limiting the problem with the Iranian nuclear file was a circumvention of logic and truth and nothing else. The problem is in the Iranian behavior in the region and in a project that depends first and foremost on stirring sectarian instincts. If not, how can Hezbollah’s provocations be explained to the people of Beirut (the Sunni), especially on the day after the elections?
Trump’s administration has shown it is serious in dealing with Iran. There is a careful follow-up to this subject. After the speech last October, a restructuring of the administration took place. The process involved Mike Pompio’s appointment at the State Department to replace Rex Tillerson, and John Bolton to replace Herbert McMaster as national security adviser. This was accompanied by a process of containing North Korea, which chose to abandon at some point its nuclear arsenal and to establish itself as a natural state amid an environment in which t countries with a giant economy , they are China, Japan and South Korea. The significance of Trump’s move toward North Korea is not only that he has contained its threat, but that North Korea also exports missile technology to Iran and non-Iran, and to rogue regimes like the Syrian regime.
Trump’s perceptions come from two parallel creeds, both internal and external.
Internally, Trump believes that whenever he takes a wider distance away from Obama and his legacy, the more votes he gets from his supporters. With the approaching mid-term elections to congress in November, the abolition of nuclear deal with Iran, seen as Obama’s foreign policy footprint, was a pre-emptive blow to Democrats who hope to win back the majority from the Republicans in the election.
At the external level, the culture of successive withdrawals is that Trump does not want to sit with a unified entity with common understandings such as the European Union, NATO, the Group of Southeast Asian Nations or the 5 + 1 group that signed the nuclear deal with Iran. Trump is more inclined to isolate each country, France, North Korea, Iran or Japan, to negotiate separately, thus guaranteeing the economic, military and strategic superiority of the United States, which will use this advantage to achieve its interests from any negotiating process. For his part, Khamenei attacked the US president after the withdrawal from the nuclear agreement, saying that “the US withdrawal does not restrict the line of Iranian revolutionary policy in the face of American arrogance.” Khamenei added that “the US problem with Iran is not the nuclear program, but the existence of the regime because the Iranian regime is the only regime in the world facing America and Israel.” “We will continue the nuclear agreement with the three European countries, although we do not trust these three countries. Since the first day of the agreement, I have said repeatedly; do not trust the United States. I told the Iranian diplomats if you want to get the deal and get the guarantees, you have to add one condition that the US president’s signature on the nuclear agreement. “The Iranian government issued a statement in response to the withdrawal of the United States of America stated “Trump’s absurd talk against the great people of Iran is based on his ignorance and his irrational and baseless accusations against the Islamic Republic of Iran. It is regrettable that someone like him rules the civilized United States of America. The statement went on saying ” “What the President of the United States has done is not limited to the nuclear agreement, but is part of a policy of reversing the treaties and violations of the United States treaties of this period, including the coming out of the Convention on Climate Change and the Pacific Convention. “But the conformity, the global consensus and the internal rigidity of the nuclear deal made the announcement of the US withdrawal from the nuclear deal lasting for 16 months.” President Trump’s move received enthusiastic and sincere support from Israeli Prime Minister Benjamin Netanyahu, while opposition of all the other governments forming part of the agreement. In March of 2015, before both houses of Congress, Netanyahu said: “We were told that the absence of a deal is better than having a bad deal .Well, this is a bad deal. It’s a very bad deal. We will be better off without it. “This withdrawal raises many questions, including: What does America’s withdrawal from the nuclear agreement mean?
Apparently, the withdrawal of the United States from the Iranian nuclear agreement is the withdrawal of only one of the six parties that signed this agreement, which later became international after the adoption of the UN Security Council, but the fact that the withdrawal of Washington from it in the opinion of many experts to issue a death certificate to it . The Europeans are trying to absorb the shock left by the withdrawal of President Donald Trump from this agreement and insist that it has not died. Tehran has also avoided immediate withdrawal from it and has given its other partners an opportunity that does not exceed “weeks” to save what can be saved from the deal according to European official. However, the data and facts confirm – according to many analysts and observers – that the exit of the United States means full collapse of it , where the US control of more than 90% of the sanctions on Iran, and controls the global financial system and through it can impose sanctions feared by all parties.
In this context, we wonder about the impact of the Trump decision on the Iranian economy? The Iranian economy is facing difficulties despite the easing of sanctions in 2016. The average unemployment rate is 12%, and rises to nearly 30% among young people, who make up more than 30% of Iran’s 80 million population. After lifting these sanctions , Iran opened the doors of its economic sectors for European and American companies and these companies were able to hold many deals with the Iranian side and the United States has written off its 400 black lists of individuals, companies and entities accused of violating US legislation on sanctions related to the nuclear program. Sanctions have also been lifted for foreigners who are banned from dealing with Iranians in various economic sectors including banks, insurance, oil, Petrochemicals, shipping, ports and gold and auto trading. According to the new resolution, these sanctions will not only be restored which are lifted under the previous agreement, but new sanctions may also be imposed if the administration deems it necessary to do so. The return of sanctions against the Iranian regime is a nightmare that worries the Iranian people.
The US Treasury said , after the announcement of Trump’s withdrawal from the agreement, the United States would re-impose a wide range of sanctions on Iran but it would not impose it immediately and at once , however, there would also be a period of easing of sanctions ranging from 90 to 180 days. After the end of this period in next November, licenses will be cancelled allowing US companies to negotiate on business deals with Iran, according to US Treasury statement. Iran says it may face troubles within a month or two months of the entry into force of new US sanctions, but eventually, it will be able to adapt itself with them as it has previously adapted. The expected sanctions are focusing on Iran’s central bank, and will affect areas and various sectors including aircraft exports to Iran and metals trade and any efforts by Tehran to obtain US dollars.
Two days after US President Donald Trump’s announcement of his country’s withdrawal from the nuclear deal signed between Tehran and the six countries, Washington imposed sanctions on individuals and entities accused of financing the Iranian Revolutionary Guards, which considered the United States and Europe “one front” and see that the resistance is the only way to confront the enemies ». The sanctions imposed by the US Treasury Department targeted six individuals and three entities accused of working within the framework of “a large foreign exchange network that has transferred millions of dollars to the Quds Force of the Revolutionary Guards. ” “The Iranian regime and its central bank have used access to entities” in a Middle Eastern country to get US dollars to finance the “evil activities” of the Quds Force, including the “funding and arming of its proxy regional groups,” Treasury Secretary Stephen Manuchen said.
As a result of the withdrawal, fears are growing in the Iranian street of the economic consequences of the decision of the United States of America to withdraw from the nuclear agreement signed with Tehran and the major powers. An atmosphere of pessimism surrounds Iranian citizens who fear increasing economic pressure on their daily lives and on the cost of living. “Iranian experts say that the Iranian regime will face political and economic crises in the wake of US President Donald Trump’s decision to withdraw Washington from the Iranian nuclear agreement” , indicating that the failed performance of successive governments in Iran, Iranian terrorism at home and abroad, and repressive policies towards non-Persian peoples , thefts, economic and administrative corruption, the deterioration of infrastructure, theft of oil and water , all are factors led to hit the economy and then the fall of the Iranian currency. They anticipated in a statement released to ” AL-Watan” the increase of US pressures on Iran so the Iranian regime will face economic and political crises that will lead to unrest against the regime, therefore, the US government will exploit the unrest to confront the Iranian regime after the failure of the regime to deal with the nuclear agreement that was signed with Major countries “5 + 1” in July 2015 “. The US withdrawal from the nuclear deal with Iran deepened Tehran’s economic wounds and heightened fears of widespread protests against it, especially as the recent protests were mainly based on economic reasons. Pressures on the Iranian government will be increased when US sanctions reduce oil exports – the engine of Iran’s economy – opening the door to further unrest.
The Iranian currency suffered historic losses after the decision of the United States of America to withdraw from the nuclear agreement, where the value of the Iranian riyal against the dollar as well as gold and coins are fallen , where the exchange rate of Iran’s currency 80 thousand against one dollar, it is a historic collapse, and the price of the Iranian gold coin reached 21 million and 300 thousand riyals, which saw an immediate increase of 300 thousand riyals. The price of gold rose to two million and 750 thousand, an increase of 180 thousand riyals. The head of the Central Bank of Iran, Waliullah Saif, submitted his resignation Tuesday, a few days after recording the second collapse of the currency within weeks, where the exchange rate of the Iranian riyal 63 thousand against USD. And the decline of the Iranian riyal ahead of the announcement of Washington’s position on the nuclear agreement, while the head of the Central Bank of Iran, said that the US withdrawal from the nuclear agreement will not have a significant impact on the Iranian economy, which did not happen completely after the historic collapse of the currency against the dollar with the withdrawal of America from the agreement Nuclear. Re-imposing sanctions on Iran will certainly affect Iran’s ability to make economic deals with other countries, leading the deteriorated economic situation from bad to worse . But it will also raise the level of tensions in the Middle East, deepen the conflict between Israel and Iran, and even influence a possible agreement with North Korea, which may consider the United States an unreliable partner and incapable to be abide by its promises.
The question is: What is the fate of the economic agreements signed by Tehran with companies and institutions in the capitals of the major countries?
Since the agreement with Iran was signed in 2015, many large companies have begun to set up businesses in Iran, and any new sanctions by the United States will make matters more difficult. Any new sanctions will force their allies to choose between doing business with Iran or with United States of America. Iran has begun to reintegrate into the global economy since last year and has developed useful trade links with large companies resident in the countries that have concluded the nuclear deal with Iran. For example, this summer Iran signed a $ 5 billion agreement with French Total company , the China National Petroleum Corporation( CNPC) , to develop the South Pars gas field. The EU has already taken steps to protect its business from any US response, and European officials are looking at measures taken in the 1990s to protect companies and individuals from secondary US sanctions. US sanctions may have facilitated European companies competing in Iran.
Robert Luttawak, a member of the US National Security Council under former US President Bill Clinton, an expert in international security at the Woodrow Wilson Center, told CNBC that withdrawing the United States from the nuclear agreement would not necessarily end the agreement. And what will happen is that it will not be a partner again, and that the Europeans will not return to sanctions quickly. If the withdrawal allows Airbus to beat Boeing in the competition with Iran, they will be happy. In addition to the sanctions that Washington will impose on various vital areas in Iran, Trump’s decision is expected to have great effects: at the level of Iran, its already exhausted economy is expected to face great troubles; no one knows what it will lead. The European, Russian, Chinese and even American companies will lose hundreds of billions of dollars in projects and deals made available by the nuclear deal. At the political level, analysts expect the US decision to deepen the gap between the Europeans and the Trump administration, as well as increase the likelihood of an explosion of the situation in the Middle East and increase the pace of the nuclear race. But in reciprocal, it will strengthen ties between Israel and an Arab axis that is moving on the Saudi, UAE and Bahrain routes, countries which have greatly welcomed Trump’s decision. The question arises in this context: How will the Iranian regime respond to the withdrawal of the United States of America from the nuclear agreement?
Iran has agreed to curb its nuclear program in return for lifting some sanctions, but a US withdrawal will likely lead to the collapse of the deal. If that happens, Iran can respond to harm the interests of Washington and its allies in the Middle East.
Some possible scenarios are as follows:
When ISIS organization seized control of large areas of Iraq in 2014, Iran hastened to stand by the Iraqi government. Since then, Tehran has helped to arm and train thousands of Shiite fighters in Iraq, and these popular mobilization forces have become a force of great political weight as well. If the deal breaks down, Iran could encourage the factions of al-Hashed al-Shaabi that want the US to leave Iraq to step up its criticism and possibly launch military attacks on US forces. This may include rocket attacks, mortars or roadside bombs that are not directly linked to a specific Shiite faction, which will allow Iran to deny that it has changed its position of avoiding direct conflict with US forces in Iraq. And what will increase the Iranian pressure on Iraq is the possession of intelligence and religious influence and has a military presence of supporters and the doctrine of Vilayat al-Faqih . Economically, Iran may press on the Iraqi economy to take advantage of the US dollar, where it will be dumped with cheap Iranian goods to get the dollar, which requires the Iraqi bank CBI to perform a strict control on the sale of leading currency. Iran is now trying to influence the results of the Iraqi parliamentary elections to serve its allies in Iraq and serve it as well; Iraq will be one of the future negotiating papers with the US administration.
Iran and its non-state allies, such as Hezbollah, have been involved in the Syrian war since 2012. Iran has armed and trained thousands of Shiite fighters to support Syrian President Bashar al-Assad amd to enhance Iran’s presence in Syria, Tehran has been in direct conflict with Israel for the first time through a serious of major clashes over the past few days and months . Israeli officials say they will never allow Iran or Hezbollah to establish a permanent military presence next to it in Syria. If the nuclear deal collapses, Iran will not find little incentive to prevent its allies of the armed Shiite factions in Syria from launching attacks on Israel .Iran and the forces under its control in Syria may raise troubles as well for about 2,000 US troops deployed in northern and eastern Syria to support fighters led by Kurds .
In 2006, Hezbollah fought a war with Israel in 34 days of fighting and ended in a dead end. Israeli and US officials say Iran is now helping Hezbollah to build precision-guided missile factories or provide longer range missiles with precision guidance systems. Israeli forces have repeatedly attacked Hezbollah in Syria, where the group leads many Iranian Shi’ite factions. The tone of talk between Israel and Iran has intensified in recent weeks. Although Hezbollah and Israel say they are not interested in entering into a conflict, but the tension can easily develop into another Lebanese war.
Hezbollah said last year that any war launched by Israel against Syria and Lebanon could draw thousands of fighters from countries including Iran and Iraq, in a sign that Shiite militant factions could come to Lebanon to help Hezbollah. Hezbollah is also a key political force in Lebanon, and his position could be bolstered in elections scheduled for May 6. Currently, the group is cooperating with its political foes, especially Prime Minister Saad Hariri, backed by Western governments. But if the nuclear deal collapses, Iran might press Hizbollah to isolate its opponents, a development experts believe could destabilize Lebanon. “Hezbollah literally controls Lebanese political life,” said Hilal Khashan, professor of political studies at the American University of Beirut. “If they (Hezbollah) do that, it will be very worrying,” he added.
Iran has never acknowledged direct military involvement in the conflict in Yemen. But US and Saudi officials say Iran supply Houthi fighters with rockets and other weapons. The Houthis fired rockets at Riyadh and Saudi oil facilities, saying they were responding to air raids in Yemen. Iran and Saudi Arabia are fighting in a struggle for influence in the region. Supporters of the nuclear deal say it prevents the conflict from turning into open war. If the deal collapses, Iran may increase support for the Houthis, while provoking a military response from Saudi Arabia and its Gulf allies, including the United Arab Emirates.
Fifth : Nuclear Agreement
Iran also has options related to the nuclear program. Iranian officials said one of the options they were considering was a complete withdrawal from the nuclear Non-Proliferation Treaty (NPT) designed to halt the spread of nuclear weapons. Iran’s supreme leader Ayatollah Ali Khamenei says the country is not interested in developing nuclear weapons. But ” if Iran withdraws from the Treaty l , this will sound the alarm globally . This will be a disastrous course for the Islamic Republic because it will find itself isolated,” said Ali Alfonne, a senior fellow at the Atlantic Council.
Even if Iran does not withdraw from the agreement, it has indicated it will probably intensify its uranium enrichment activities, which the agreement has severely limited it to help easing concerns about its use to make nuclear bomb components. Under the nuclear deal, Iran must comply with uranium enrichment rates of 3.6 percent. Iran stopped enriching uranium by 20 percent and abandoned most of its stockpiles under the 2015 agreement.
The uranium enriched by 20 percent of the purity of the fission exceeds the required percentage in the fuel of civilian nuclear power reactors, which is five percent, but much less than the required purity of a nuclear bomb of between 80 and 90 percent. Ali Akbar Salehi, head of Iran’s Atomic Energy Organization said this week Iran has been able to enrich uranium at higher rates than before the nuclear deal was concluded. Analysts say Iran’s reaction will be affected by how other signatory states will respond to a possible US withdrawal. This will depend on the insistence of France, Germany and Britain that their companies can continue to work with Iran under an international agreement unanimously ratified by the UN Security Council and the level of diplomatic support that Iran will receive from Russia, its partner in Syria. It will also depend on China’s desire to link Iran to the initiative of the belt and the road of foreign trade and investment. It would be a test of wills if the Trump administration reinstated sanctions and threatened those who oppose it by preventing them from dealing with the American banking system. China, Iran’s biggest oil buyer, is alone among the other signatories to the deal, which could ease the impact of re-imposing sanctions on Iran.
The state of waiting in the Arab, regional and international environment has ended when US President Donald Trump decided to withdraw from the nuclear agreement and this environment in that situation perhaps is waiting the Iranian and European response to it. The question arises in this context: Will the agreement survive even with the withdrawal of the United States of America or is its withdrawal a death certificate?
Iranian Studies Unit
Rawabet Center for Research and Strategic Studies