Iran and US Sanctions: Proactive Actions and Possible Options

Iran and US Sanctions: Proactive Actions and Possible Options

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Dr.Salim M.Al Zanoon

On August 7, the United States of America re-imposed the first package of sanctions on Iran to go into effect targeting the financial, commercial and industrial sectors. The second package is expected to begin on November 4, targeting the oil sector, which Is the nerve of the Iranian economy. This paper highlights Iran’s proactive actions and possible options in the face of US sanctions.

First: proactive measures to fortify the home front
1.Operating room to face economic war
2.To secure vital goods
3.Mitigating foreign exchange pressures
a.Money smuggling networks
b.Fake Companies
c.Complex banking networks
d.Issuing an electronic currency

Second :Proactive Actions in building a secure regional belt
3. Afghanistan
4.Caspian States Azerbaijan , Turkmenistan
Third : Proactive measures in building an international supporting belt
2. China
3. North Korea
Fourth: Iriranian potential options ( its proxies rather than direct)
1. strait of Bab al-Mandab instead of Strait of Hormuz
2. Preemptive strikes of Iranian Kurds directly
3. Targeting US interests in Syria and Iraq
4. Targeting US interests in Afghanistan

Executive Summary

Iran has began to implement a series of proactive measures to counter the repercussions of the US sanctions , especially after the implementation of the first package of sanctions in August and pending the implementation of the second package in November . The most important measures are three levels: proactive measures to fortify the home front, proactive actions in building regional safe belt, proactive Actions in building a supportive international belt. If these measures do not succeed in enhancing their ability to contain the consequences of sanctions, their historical experience indicates their preference for proxy war. in this context, we will test 4 options through its agents rather than direct confrontation except launching preemptive strikes against Iranian Kurds, and it will work through its agents to create problems in the Bab –al Mandab StraIt in stead of closing the straits of Hormuz and striking US interests in Syria and Iraq and supporting Taliban elements to strike US interests in Afghanistan

First : Preemptive measures to fortify the home front :
Iran began implementing a series of proactive measures to fortify the home front. The most important proactive measures are : the formation of an operations room to confront the economic war , the securing of vita goods , and the easing of pressure on foreign exchange
1.Operating room to cope with the economic war , Tehran is working to benefit from its experience in the war with Iraq in the eighties of the last century , thus ,following this , al- Murshed (supreme leader ) ordered in a meeting with the officials of the three authorities on April 28 to form a room of operations for the management of economic War ( economic coordination Counsel ) consisting of Secretary of the counsel , General Secretariat , Vice-president in economic affairs , whose task is to take appropriate decisions to address the economic sanctions and to take all measures to resist the US sanctions .
2. To secure vital goods , the ministry of industry and trade banned the importation of 1339 commodities that could be produced inside the country , I n July , the ministry of energy banned the export of electricity and water to the neighboring countries of Pakistan, Afghanistan , Iraq and other countries which resumed in August . The Customs directorate also banned the export of 8 agricultural products abroad, namely are flour, rice, wheat maize and barley.
3. Mitigating foreign exchange pressures: to follow a series of secret measures to provide foreign exchange and circumvent sanctions
-money smuggling networks : the Afghan central Bank spokesman said on September15l 2018 that Iran smuggled daily from Afghanistan worth 12 Million dollars , including 5 Million smuggled across the Iranian border and 7 Million from airports and other borders
Fake companies ; Iran has a previous experience to establish fake companies to get the foreign exchange and to circumvent sanctions , noting in 2013 the US Treasury listed 37 fake companies supporting Iranian regime and it seems that Tehran returned to the establishment of such companies . On May 24, 2018, the ministry rated 9 entities linked to the provision of services to six Iranian airlines involved in inciting the military activities of Iran in the region.
Banking networks: In the past, Tehran used a complex network of financial and banking transactions, where Iraqi exchange and banking companies used to make money transfers under commercial cover and appeared to have reintroduced it. On March 31 , 2018 the US authorities arrested an Iranian national who runs Pilatus Bank in Malta , and owns Strautos company , he has been accused if using them to circumvent US sanctions .

Issuing Electronic currency : Minister of Communications and Information Technology of Iran announced on April 28, 2018 , that the ministry has developed a model for the experience of electronic currency , it will put in the banks of the country to conduct financial transactions with the international markets , in addition that Tehran is doing business transactions in local currencies and on this subject, it was agreed with China and being negotiated with Turkey and Russia .

Second: Preemptive measures in building regional safe belt
Tehran has strengthened its relations with Turkey , Azerbaijan , Afghanistan , Turkmenistan , and Pakistan in addition to Iraq in a bid to establish a secure and supportive regional belt to create a new political situation in support of it to confront Washington ‘s pressures . The US wants to bridge all the loopholes Tehran has used in the past to deal with sanctions, so these measures do not seem to enhance Iran’s ability to contain US sanctions.
Relationship with Turkey: Both sides supported each other’s positions in the face of US sanctions . In this context, the Turkish ministry of energy announced on 8 August 2018 that it continued to import Iranian gas and oil. The Iranian foreign minister visited Ankara on August 29 and held a meeting with Erdogan and Turkish officials. Before the trilateral summit between Erdogan and Rohani and Putin on September 7, US sanctions are a common file between the three countries, and focused on the debate on how to face sanctions,, but Iran’s attempts to invest tension between Washington and Ankara facing the obstacle differences between the two sides on the situation in Idlib , especially after the agreement between Moscow and Ankara on Idlib without the participation of Tehran .
Relationship with Pakistan : Tehran welcomed the arrival of Omar Khan to the premiership , and the foreign minister visited Islamabad on 30 AUGUST FOR TALKS WITH Pakistani officials , focused on containing the consequences of US sanctions , discussed banking transactions and projects to transport oil and gas to Pakistan and the development of ports , relying on the Pakistani government’s position with limited options in light of the problems facing the Pakistani economy , and the rapprochement between Islamabad and Washington over the security and political developments in Afghanistan , and the Pakistani government will be under strong US pressure for not to support Iranian efforts to face sanctions .
Relationship with Afghanistan: Since 2015, there has been a major shift in the relationship between Shiite Iran and the Sunni Taliban, reflecting the strained historical relationship between them, as part of this, Tehran has cooperated closely with the Taliban to establish a buffer zone along its borders with Afghanistan in anticipation of potential threats from ISIS. It has provided financial support and weapons and training for Taliban elemens in Iranian military academies.
Relationship with the Caspian States : Iran attended the five-nation Summit of the Caspian sea states ( Russia, Kazakhstan, Azerbaijan, Turkmenistan and Iran )held in Kazakhstan on August 12, 2018 , during which it signed a new agreement on the legal status of exploitation of the Caspian sea resources . Eventually its share of Caspian riches reuced from 50% toto only 13% . Thus, Iran has a belt of ties with Turkey, Afghanistan, Pakistan, Azerbaijan and Turkmenistan .

Third : Preemptive measures in building international supportive belt:
Tehran has began to strengthen and enhance its economic and political ties with Russia , China , and North Korea to create an international front to help it cope with the consequences of US sanctions , especially in oil marketing when the second package of sanctions is implemented next November . The four countries are facing commom US threats and working to compete the US on areas of influence and seeks to restructure the international system .
Strengthening the relationship with Russia: The director of the National Iranian Oil Company to conduct consultations with Moscow to ensure the continued access of oil exports to international markets through Russia under the oil-for goods deal in the framework of a deal in 2014 worth 20 Billion dollars. it has not been implemented and the consultant of khamenei confirms after his meeting with Putin that Moscow is ready to invest up to $50 billion in the oil and gas sector .
Strengthening ties with China: A senior executive official in the Chinese oil sector said on August 20 , 2018 that at the request of both sides , China has begun to use Iranian oil tankers for its purchases of Iranian crude in an effort to circumvent US sanctions , In this context, Chinese buyers of Iranian oil began to divert their cargoes to oil tankers owned by the Iranian National Oil Company .
Strengthening ties with North Korea : Both countries are facing similar problems under the US sanctions and the agreed to resist all international measures against them anf in this context, North Korea’s foreign Minister visited Iran on August 7, 2018 . the two sides are trying to work together to establish a united front on the issue, coordinate movements and minimize losses in the common assets of missiles and nuclear file . North Korea may transfer some of the military assets and technologies to Iran that are supposed to be dismantled in the framework of talks with US , rather than to recognize for uts existence ,and thus force them to destroy them.

Fourth: Iran’s potential options : the growing US pressure on Tehran will prompt it to adopt tougher options in the face of external pressures . However , Iran’s historical experience indicates its preference for proxy war . In this context , it will test four options through its proxies rather than directly . With the exception of direct pre-emptive strikes against Iranian Kurds , it will work through its agents to create problems in the Bab al-Mandab Strait in stead of closing the Strait of Hormuz , and to strike US interests in Syria and Iraq and support elements of Taliban to strike US interests in Afghanistan .
1.Create problems in Bab al-Madab strait in stead of closing Hormuz strait , Tehran a wares that its threat to close the strait of Hormuz is unattainable as it will create an international standstill that would lead to military action. The historical experience confirms that the closure of the strategic straits lead to war , and the closure of Hormuz strait will deprive it of its ability to export in general and especially the oil the affecting its economy under strict sanctions .
In a view of this , the option of closing the strait of Hormuz could be replaced by the option of creating problems in the Bab al- Mandab Strait as a low-risk alternative and could deny its responsibility for any attack , where its Houthi agents could intercept oil shipments at Bab al-Mandab ‘s port . They attacked the Saudi oil tankers and a UAE relief ship.

2.Preemptive strikes for Iranian Kurds : the Iranian Kurds represent about 10 % of the population of Iran and about 9 Million people and are concentrated in the border areas with Iraq and Turkey and Tehran fears from Washington to help them like the Kurds of Syria and Iraq for the establishment of a Kurdish state especially since the Iranian Kurds established an independent state in 1946 , called Republic of Mahabad and included Iraqi Kurds .
According to this perspective , Tehran Will preemptively attack Iranian Kurds , especially the Kurdistan Democratic Party ( KDP) , with the aim of creating a state of deterrence to prevent them from dealing with Washington . In this context, the first strikes were carried out on 9 September against the Iranian Kurdistan Democratic Party in the north of Iraq and the commander of the Revolutionary Guards said the next strikes would be stronger.

3.Targeting US interests in Syria and Iraq : As the Syrian regime and its allies regain almost complete control over Syria and the organization of ISIS and the armed opposition retreat , Tehran may be moving its arms to attack US forces on the ground . The prospect increases as US pressure mounts on Tehran, and pro- Iran militias announced in April 2018 about the beginning of attack US forces, this declaration was not isolated from Tehran and its guidance.
In this framework , hundred of members of the Iranian backed Shiite militias surrounded a US airbase west of Baghdad after the triple attack on Syrian regime sites on April 14 , and a number of mortars were fallen on September 9 to the US Embassy in the Green zone in Baghdad after the first package of US sanctions on Tehran .
4. Targeting US interests in Afghanistan : in the light of the development of the relationship between Iran and Taliban , within which Tehran provided financial support , weapons and training for the Taliban in the Iranian military academies , Tehran could push Taliban elements to attack US interests in Afghanistan . In this context , political adviser to the Shura Council of the Taliban movement in Quetta in Pakistan said that the offer of training provided by the Iranians came with two conditions : the first is to increase the focus on attacking the interests of US and NATO in Afghanistan and to devote more troops to fight ISIS organization.

Rawabet Center for Researches and Strategic Studies