US President Donald Trump’s anti-Iran stance has grown dangerous since he abandoned the JCPOA (Joint Comprehensive Plan of Action), or the nuclear deal, in May 2018. The consecutive sanctions imposed since, have seriously hurt Iran’s economy. Though the JCPOA was a multiparty deal and its other signatories, namely Russia, China, the UK, France, Germany along with Iran, are still party to it, Trump’s decision left it practically ineffective in many ways as shown by the number of non-American foreign firms swiftly departing from the Iranian market.

Iran’s economic indicators have been steadily deteriorating for months, and it is very difficult to see light at the end of the tunnel at the moment. Since Trump appeared as a presidential candidate he was no fan of the Islamic Republic, and he was particularly against the nuclear deal which he called “the worst deal in history”. After coming to power in January 2017, he never missed a single opportunity to criticize and even insult Iran which he condemned as “a religious dictatorship” and “a sponsor of terrorism” and was impatient to tear the deal up.

The December 2017 protests in Iran further whetted his appetite. The protests first broke out of simple economic concerns in some Iranian cities but then turned violent in a number of locations giving Trump a most viable moment to denounce the Islamic Republic as a repressive regime. Thus, came the US sanctions against Iran in two rounds. The first of which started in August 2018 and the second  six months later in November 2018. They targeted every strategic component of Iran’s economy including the oil industry as its backbone. This is how Trump’s “maximum pressure policy” against Iran unfolded.

The rationale behind Trump’s Iran policy was simple: Iran was economically fragile, socially unstable and regionally isolated and would simply not stand against “the strongest sanctions in history” which Mike Pompeo, Trump’s Secretary of State, vowed the US was to implement. The declared aim of the pressure was put into 12 tough demands by Pompeo, which required Iran: To, inter alia, permanently and verifiably abandon every single military dimensions of Iran’s nuclear program; to cease “proliferation of ballistic missiles and halt further launching or development of nuclear-capable missile systems”; to quite “its support to Middle East “terrorist” groups, including Hezbollah, Hamas and Islamic Jihad”; to withdraw “all forces under Iran’s command throughout the entirety of Syria”; to terminate “the Islamic Revolutionary Guard corps-linked Quds Force’s support for “terrorists” and “militant” partners around the world; and to end “its threatening behavior against its neighbors, many of whom are US allies, including its threats to destroy Israel and its firing of missiles at Saudi Arabia and the United Arab Emirates, and threats to international shipping and destructive cyberattacks”.

Unsurprisingly, Iran refused to concede to the US’ threats forthwith which was met by the US’s new waves of sanctions. However, Trump’s ultimate goal from the maximum pressure policy still remains a pressing question. The overly extensive demands virtually put the Islamic Republic in a “rouge state” position and would rip it off its decades-old foreign policy instruments and the US President knew it. He was, therefore, well-aware that “dragging” Iran to the negotiation table under the terms laid down by his administration was an impossibility at least in the short-run. That’s why he said days after announcing the demands: “Iran at some point will call me and ask for a deal, and we’ll make a deal. […] They are feeling a lot of pain right now.” So, if this was the long-term objective of his maximum pressure policy, what did he expect in the short-run?

Though the JCPOA was a multiparty deal and its signatories are still party to it, Trump’s decision left it practically ineffective as shown by the number of non-American foreign firms departing from the Iranian market.

To answer the question, it is best to begin with a catch up of the post-November 2018 events when the US sanctions came into force in its entirety. Shortly after, in December Iran’s president Hassan Rouhani vowed: “If one day they want to prevent the export of Iran’s oil, then no oil will be exported from the Persian Gulf.” The US hit back by cautioning Iran not to threaten them. In early May 2019, the temporary waivers granted in November to eight major importers of Iran’s oil, which included Turkey, were ended for the declared intention of bringing “Iran’s oil exports to zero, denying the regime its principal source of revenue,” White House Press Secretary Sarah Sanders said in a statement following the decision. Thus, the situation in the Persian Gulf heated up as well.

In April 2019, the US designated Iran’s elite Revolutionary Guards a terror group to which Iran reciprocated by designating all US troops in the Middle East as terrorists. As Iran further reinforced its presence in the Persian Gulf, the US deployed a bomber task force and the Abraham Lincoln carrier strike group to the Middle East in response to “a credible threat” from Iranian forces. Regarding the move, White House National Security Adviser John Bolton said: “The United States is not seeking war with the Iranian regime, but we are fully prepared to respond to any attack, whether by proxy, the Islamic Revolutionary Guard Corps, or regular Iranian forces.” On 14 May, Ayatollah Ali Khamenei, Iran’s Supreme Leader, declared that: “Neither a war will happen; nor will we negotiate.” As the US-Iran skirmish grew more serious, the Iranian leadership blamed the EU for not fulfilling their part of the responsibilities guaranteed by the deal and said they would compromise from theirs too. On May 7, the EU warned Iran against a breach of the deal and declared that “it will re-impose sanctions if Tehran abandons parts of the agreement signed in 2015”. Iran did not step back and announced on May 8 a partial withdrawal from the deal. In the meanwhile, Iran’s oil exports have fallen well below the critical one million barrels a day level. Then the tanker crisis broke out.

On May 12, four ships, including three oil tankers, were damaged by “sabotage attacks” in the Gulf of Oman. Bolton said on May 30 that Iran was “almost certainly” behind the attacks. Iran denied the allegations. On May 14 Yemen’s Houthi rebels launched drone attacks on Saudi Arabia. Then on June 9 the rebels carried another drone attack on the Saudi Abha International Airport near the Yemeni border, but Iranian authorities said they were not involved in the incidents. On June 13, the day Japanese Prime Minister Shinzo Abe meet Khamenei in Tehran, a Norwegian and a Japanese tanker came under attack again the Gulf of Oman. Iran was again held responsible, but Tehran denied any involvement. On July 4, the British Royal Marines, police and customs agents in Gibraltar stopped Iran’s oil tanker which allegedly was carrying Iranian crude to Syria in breach of European Union sanctions. Tehran condemned London and in response seized two oil tankers – one registered in the UK, the other in Liberia – in the strait of Hormuz on July 19 which added to the worsening standoff in the Gulf that was to further escalate when Iran announced, the next day, that it shot down an “intruding American spy drone” after it entered into the country’s territory. Finally, on 31 July the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) took action against Iran Foreign Minister, Mohammad Javad Zarif, who was called “the regime’s primary spokesperson around the World”. By the sanction, “the United States is sending a clear message to the Iranian regime that its recent behavior is completely unacceptable,” said Treasury Secretary Steven T. Mnuchin.

In view of this short timeline of recent events, the Trump administration is apparently set to isolate Iran globally as well as regionally by at the same time putting its economy under increasing pressure. Accordingly, Iran’s “aggressive” behavior would result in its further isolation. Iran turned its face to China, and partly Russia, for support in the face of the economic challenges. But the recent reports indicate to a sharp decline in China’s oil imports from the Islamic Republic. The Trump administration will certainly increase its pressure on Iran as is proved by growing list of sanctions. Yet, Iran is an important regional power and a major oil exporter. Besides, due to its presence in Yemen and especially Syria it has to be part of the solution to the existing regional crises as well. So, Trump’s maximum pressure policy is working but apparently not to the advantage of regional and global peace and stability. Although sustainable regional peace is a distant dream under the present circumstances, the de-escalation of the current crises can serve as a promising starting point.

On July 14, 2015, Iran agreed a long-term deal on its nuclear program with a group of world powers known as the P5+1 – the U.S., UK, France, China, Russia and Germany. The agreement was signed after a long period of negotiations and tensions over Iran’s alleged efforts to develop nuclear bombs and missiles. Under the Joint Comprehensive Plan of Action (JCPOA), Iran agreed to limit its nuclear activities and allow IAEA to achieve international inspections in return for the suspension of deactivated economic sanctions.

Under the JCPOA, Iran’s 20,000 centrifuges were limited to installing no more than 5,060 of the oldest and least efficient centrifuges at Natanz until 2026. Iran’s uranium stockpile was also reduced by 98% to 300kg – a figure that must not be surpassed until 2031. Iran was also ordered to keep the stockpile’s level of enrichment at 3.67%. More, Iran will not be permitted to build additional heavy-water reactors or accumulate any excess heavy water until 2031.

Sanctions imposed on Iran before the deal by the UN, U.S. and EU, in an attempt to force Iran to halt uranium enrichment crippled the country’s economy, costing the country more than $160 billion in oil revenue from 2012 to 2016. However, under the deal, Iran gained access to more than $100bn in assets frozen overseas and was able to resume selling oil in the international market by using the global financial system for trade.

After two years of stable relations among the parties, relations went sour between the U.S. and Iran as a result of the U.S. withdrawing from the so-called “Iran Deal.” The withdrawal came under the Trump Administration after President Trump announced that the nuclear deal is “defective at its core.”

The first round of renewed U.S. sanctions imposed on Iran as part of Washington’s strategy to apply “maximum pressure” on Tehran over its alleged malign activity came into force on 7 August, 2018. These sanctions prohibited Iran’s purchase of U.S. dollars and precious metals as an attempt to cut the country off from the international financial system. Broad sanctions on Iran’s industry, ranging from carpets to health care and to the automotive and aviation sectors were also re-imposed.

A second chain of U.S. sanctions on Iran’s oil and gas sector was imposed on 5 November. More than 700 Iranian individuals, entities, vessels and aircraft was put on the sanctions list, including major banks, oil exporters and shipping companies. More than 100 big international companies had withdrawn from Iran due to the sanctions, which further escalated tensions between the two countries.

On 8 May, 2019 – the anniversary of the U.S. withdrawal – Iran gave a 60-day deadline to the remaining parties of the deal – China, France, Germany, Russia and the UK – to protect it from U.S. sanctions. Especially Tehran urgently demanded the E3 -France, Germany and the UK- to fully activate the INSTEX, which was founded after the U.S. withdrawal and the re-activation of the sanctions to continue trade with Iran, and to maintain their Iranian crude imports without constraint.

However, the point here is that although E3 announced that the INSTEX is now operational from July 1, 2019, Tehran is still not content with it since the scope of the mechanism is limited to humanitarian goods like food and medicine, does not have any effect on Tehran’s oil trade, which is the most revenue generator sector of its GDP.

Iran had suspended commitments it made under the terms of the 2015 nuclear deal, and Rouhani declared that Tehran would hang on to its stocks of excess enriched uranium and heavy water instead of exporting them. He also threatened to resume enriching uranium in 60 days, above its limit in case the remaining signatories do not make promises to shield the oil and baking sector from further sanctions.

At the end of the 60 days Iran set as a period for the remaining parties of the nuclear deal to make progress on the relief of sanctions, Iran declared it resumed enriching uranium above a concentration of 3.67% and threatened to keep reducing its commitments every 60 days until other parties to the deal could protect Tehran from the sanctions.

After Iran announced that it will break a limit set on uranium enrichment, in breach of the limit set on the 2015 nuclear deal, already existing tensions between Iran and the U.S. escalated to a new high.

On 8 July 2019, Tehran threatened major powers that they will not be able to negotiate a better deal than the landmark 2015 nuclear deal. Iran also threatened to restart deactivated centrifuges and ramp up its enrichment of uranium to 20 percent purity, which will constitute its following potential big moves away from the deal that Washington abandoned last year.On July 8, President Trump warned Iran that it “better be careful,” responding to Iran’s announcement that Tehran has breached the uranium enrichment limit set in the international nuclear accord.

Mike Pompeo also reacted on Twitter: “Iran’s latest expansion of its nuclear program will lead to further isolation and sanctions. Nations should restore the longstanding standard of no enrichment for Iran’s nuclear program. Iran’s regime, armed with nuclear weapons, would pose an even greater danger to the world.”

Javad Zarif, Iran’s foreign minister, asserted that the steps were “reversible” if European states carried their commitments. Zarif also stated that expecting Iran to reduce its uranium enrichment level to “zero” is a “delusion.”

More, White House National Security Adviser John Bolton said on Monday that the U.S. will keep increasing pressure on Iran until it abandons its pursuit of nuclear weapons and ceases its “violent activities in the Middle East.”

New sanctions were about to be imposed on Iranian bureaucrats, especially foreign minister Zarif, after the U.S. Treasury Department sanctioned the Iranian Supreme Leader Rouhani’s office in June. İt was said that any further sanction against Iran might put an end to the diplomatic doors between the two countries. However, The United States made a decision, on 11th of July, to hold off the sanctions imposed on the Iranian Foreign Minister Mr. Zarif, which constitutes a positive step towards opening the diplomatic door again amongst the 2 countries.

*Written by Rahma Elfeky

With U.S. President Donald Trump’s unilateral withdrawal from the nuclear deal signed between Iran and the P5+1 countries in May 2018, Iran’s nuclear activities have moved to the top of the international agenda again. While the two-stage sanctions imposed by the United States began to be implemented in November and targeted the country’s economic infrastructure, some countries were granted a six-month exemption, especially on oil sales. The six-month exemption granted to Iran’s major oil importers such as China, India and Turkey ended in May this year. Negotiations between the countries that were granted exemptions and the U.S. did not reach any conclusion. Thus, these countries subsequently made statements that they had stopped purchasing oil from Iran.

Trump’s unilateral withdrawal from the multilateral agreement, which had a tremendous impact in the international community and had been approved by the UN Security Council, was met with great reactions by many countries. In the statements made after Trump’s withdrawal, EU countries in particular emphasized the importance of the agreement and indicated that they were behind it. However, pressure exerted on different actors by the U.S. in the past year has yielded desirable results for the Trump administration. For instance, the INSTEX mechanism, which was expected to allow European countries to eliminate Iran’s commercial concerns and allow for money transfer without encountering U.S. sanctions, was born dead after one year of effort. On the other hand, in the one year period that passed, almost all large European companies withdrew from Iran and there was a 80% decrease in the trade volume between the continent and Iran. Therefore, even if the aforementioned mechanism had worked, it would not have been functioning effectively since there were not many companies pursuing business with Iran.

In one year, almost all large European companies withdrew from Iran and there was a 80% decrease in the trade volume between the continent and Iran.

Iran sanctions and Turkey

Just like other countries with close political and economic relations with Iran, Turkey stated that the U.S.’ unilateral withdrawal from the Nuclear Deal was not right and that sanctions imposed on Iran were unacceptable. In this respect, it can be indicated that Turkey’s Iran policies in the last year have been overlapping with Ankara’s policies with other important actors such as the EU, Russia and China. This can be summarized as giving theoretical support to Iran but not taking steps against the Trump administration in sanction areas such as oil export or money transfer, which the U.S. is sensitive against. For this reason, Iranian Deputy Foreign Minister Abbas Araghchi, who failed to find the support he expected during his visit to Europe, stated that Tehran expected concrete steps to be taken rather than political support during his visit to Turkey. An important factor that should not be disregarded in Turkey’s cease of oil purchases from Iran is that the country’s biggest client, Tüpraş, is a private company and makes decisions in line with its own strategy rather than the government’s political stance – just like many other European and even Russian companies.

However, there are also other factors to take into account in order to understand Turkey’s frustration on the Iran sanctions. Bilateral relations between Turkey and the U.S. hit bottom low with the failed July 15, 2016, coup attempt, which was implicitly supported by the Obama administration. Relations between the two countries have not yet reached the desired level despite the remedial steps taken. Trump’s own demands such as withdrawing from Syria and minimizing relations with the YPG were stuck in the security bureaucracy around him. These bureaucrats are known to hold negative views on Turkey.

Turkey has many problematic policy areas with the U.S. and the country did not want the issue of Iran sanctions to be added to these.

Crises such as the Halkbank case and the S-400/F35 issue, which have been ongoing since the Obama period, have been the main obstacles in transforming Ankara’s principal attitude towards Iran into practice. To be clearer, Turkey, which has many problematic policy areas with the U.S., did not want the issue of Iran sanctions to be added to these. Considering the disputes on military equipment purchases and the Israeli plan of expansion, also known as “Deal of the Century” will increase current tensions between the U.S. and Turkey, the Turkish government’s pursuit of a flexible policy on the issue of Iran is a very understandable attitude.

The peak in tension between the U.S. and Iran

Hassan Rouhani’s statement in May where he announced Iran’s counter-measures and stated that they would resume sensitive nuclear activities, particularly uranium enrichment, two months later if the economic expectations of Iran were not met, increased tension in relations between the two countries. However, the real alarming development was the attacks on the important oil facilities and tankers in Saudi Arabia and the UAE, in a way that reminded of the threats made by Iranian officials on the lines of “If we cannot sell oil from the Gulf, nobody can.” These attacks on the most important supporters of Trump’s anti-Iran policies and the simultaneous mortar attacks near the U.S. embassy in the secure Green Zone in Baghdad showed that the political tension could turn into a military conflict.

As a result of the regional visits made by U.S. officials, sending additional troops to the region and mediation attempts made by Iraqi officials, the tension has been settled to a great extent. More, criticisms made against National Security Advisor John Bolton, who is known as the architect of the hawkish anti-Iran policies, before the cameras, eased tension for now. Yet, there is still curiosity regarding whether Japanese Prime Minister Shinzo Abe’s visit to Tehran (who had been visited by Trump recently), will lead to a conciliation. If a positive result does not find ground from the prospective visit, and if Iran resumes nuclear activities in July, tension may escalate again.

In fact, the main problem in bilateral relations was the gap between the expectations of the parties rather than the lack of mediation attempts. After Trump left the deal, Secretary of State Mike Pompeo’s setting out of the “conditions for normalization,” which targeted Iran’s regional and defense policies, tools and non-state allies, the designation of the Revolutionary Guard Corps – Iran’s most important security agency – as a foreign terrorist organization, and sanctions imposed on several state officials were effective in terms of Iranians reaching to a consensus about who the real target was. As a matter of fact, even President Rouhani, who is known as a moderate in Iran and who has made his willingness to negotiate with the U.S. explicit on various occasions albeit indirectly within the last process, has emphasized in his statements that the ultimate goal of the Trump administration has been a regime change in Iran.

The political tension between Iran and the U.S. can turn into a military conflict.

Accordingly, statements made by Trump, such as, “We just don’t want them to have nuclear weapons; it’s not too much to ask” or “Iran has a chance to be a great country with the same leadership” did not have much reflection in Iran. On the other hand, if Trump is serious in his statements, Iranian officials demand practical steps to be taken – such as extending exemptions in oil sales, the U.S. to return to the nuclear deal, or Bolton’s dismissal from office. In the absence of such a concrete step, it can be predicted that Iranians will maintain the risky strategy that they call “maximum resistance.”

In case the differences of expectation between the parties cannot be overcome in a short time by the influence of mediators, it can be predicted that the tension will escalate quickly. One of the main steps that Iran will take before an economic destruction like Venezuela is to put pressure on the U.S. by rapidly resuming its nuclear activities and secondly, by increasing its retaliatory attacks against the U.S. or, more likely, against its regional partners, in order to show that it does not refrain from the escalation of regional tensions. In this respect, the months ahead will be decisive. Yet, according to the commonly accepted view that is shared by many analysts, the Iranian economy is in a state that cannot resist in the face of zero oil exports. The financial crisis has already begun to influence the fighting capacity of its regional proxies. As a matter of fact, according to some Iranian commentators, Trump’s statement, “I don’t want war,” or his attitude of ignoring the sabotages in the Gulf is a tactical approach that aims to save time and prevent a military loss by making Iran kneel down on its knees.

Turkey’s stance towards Iran

Turkey maintains its stance that prioritizes Iran’s political and economic stability and keeps its distance from the regional polarization against Iran. Ankara has argued that the problems between Iran and the United States should be resolved through diplomatic negotiations and that heavy economic sanctions will not only affect the people of the country, but will also have an effect on regional peace and stability. As a matter of fact, suffering from great economic loss in the energy, tourism and export sectors, there has been an increase in the wave of migrants coming to Turkey from Afghanistan and Iran. 

Turkey maintains its stance that prioritizes Iran’s political and economic stability and keeps its distance from the regional polarization against Iran.

Turkey, which has experienced how the Iraq and Syria crisis opened space for the PKK terrorist organization, continues dialogue with all parties in order to prevent the Iran crisis from reaching a similar stage. It is therefore trying to closely watch the mobility in the field. The statement made by the Iranian branch of the PKK, PJAK, “We are ready to fight with Iran,” and the attack on the IRGC forces where one Iranian soldier was killed in the Chaldoran region and on the zero-point of the border, shows that the organization has an intention to maintain its legionary status regarding Iran. Due to this, it wants to turn itself into a more important position and permanent partner in the eyes of the U.S. and its regional allies. The organization has started to disrupt balance in U.S.-Iran relations, which until now, has been to the detriment of Iran. This is clearly an act of positioning.

Whether the Trump administration continues its policies of dragging Iran into economic bankruptcy or whether the tension between the two countries turns into a military encounter, it will undoubtedly become of the most important points on the agenda concerning all of the Middle East region. It is fair to state that this issue will also remain as a high priority foreign policy concern for Turkey.

In May 2018, President Donald Trump announced that he will withdraw the U.S. from the JCPOA, which is also known as the Iran Nuclear Deal. During his campaign, he continuously repeated that this was the “worst agreement in the history of the U.S.” and that as soon as he was to become president, the U.S. would no longer be part of it.

On May 8, 2018, as the 45th President of the United States, Trump kept his word and withdrew from the Deal. It became more apparent that the administration would further push Tehran harder when Secretary of State Mike Pompeo declared his famous “12 Demands,” which covers issues from nuclear enrichment to support for terrorist activities. Needless to say, this was also a clear demonstration that Pompeo became one of the leading figures of the current administration’s Iran policy. From that time on, the Trump administration began to pursue a strategy that it thought Iran would follow.

As part of the country’s withdrawal from the deal, the first round of sanctions on some key sectors in Iran – such as automobiles, aviation, and banking transactions – was restored on August 6, 2018. Unsurprisingly, this resulted in the depreciation of the Iranian rial, but this alone was not enough for the Trump administration, which merely aimed to devastate the Iranian economy.

Exactly after a second 90-day period, on November 5, 2018, the most revenue-generating sector of Iran – the oil industry – was placed on the spot. The U.S. Treasury Department began to re-implement sanctions against almost all legal entities operating in the country’s oil trade. Although the State Department had repeatedly said the opposite during the second 90-days, it provided a 180-days waiver to Iran’s eight largest customers– China, India, Turkey, South Korea, Japan, Taiwan, Italy and Greece – of crude oil to important up to a limited amount. While the Trump administration had sworn to devastate the Iranian economy by cutting its oil exports, as a newly occurring net oil exporter, it also needed to think about the U.S. oil industry and U.S. economy as well.

The amount of crude oil imported from Libya, the U.S., Kuwait, Iraq, the UAE, and Russia in 2018 increased by more than 50 percent compared to the previous year due to Iran sanctions.

As expected, China, India, Turkey, South Korea and Japan continued to import Iranian crude during the 180-days waiver period. As of November 5, China – the largest importer of Iranian crude – sustained its orders. Nevertheless, a change has been observed in the amount of crude imported from many suppliers due to the increase in oil demand by approximately 50 percent compared to the previous year. In 2018, the amount of crude oil imported from Libya, the U.S., Kuwait, Iraq, the UAE, and Russia, increased by more than 50 percent compared to the previous year due to Iran sanctions. According to the latest data, in April, the largest amount of crude oil imports from Iran had been made since 2018, a significant portion of which has been imported by China’s state refineries.

As the second largest importer, India also sustained its orders from November onwards. What’s worth considering is that the oil industry in India is more fragile than the one in China; it is more difficult to find alternative supplies in case it stops importing Iranian crude, since Iran has long been among the top 3 oil suppliers of India.

Unsurprisingly, Japan, the loyal ally in the Pacific, and South Korea, remained close to the U.S. and laid off their Iranian crude imports until January 2019 despite the waivers. The last time tankers carrying Iranian crude delivered to Japan was in March and to South Korea in April.

Following the waivers, the Trump administration announced that three anonymous states ceased to import crude from Iran. According to the tanker trackers’ data and statements from Iranian officials, the two of these countries are EU member states Italy and Greece. The two have halted crude purchases from Iran since October 2018 despite their waivers and calls for participation in ISTEX, which was established by Germany, France and the UK in order to maintain trade relations with Iran. Thus, it is known that the EU is criticized by Iran. The Rouhani administration has always expressed that although the EU promises to remain loyal to the Iran Deal and indoctrinates Iran to do the same, the European bloc is not helping Tehran. This has led to relations between the EU and Iran deteriorate since May 2018.

There are serious rumors that the top five customers – China, India, Turkey, Japan and South Korea – have stopped importing oil from Iran.

Similar to the two European countries, the third country that terminated its crude imports from Iran is Taiwan. It was before the second-round of sanctions, October 2018, when Taiwan had last received crude from Iran.

The situation in Turkey was quite complicated. As is known, Iran has long been a significant exporter for Turkey’s oil industry; it was the number 1 supplier of the Turkish refinery industry in 2017. The administration had always insisted on continuing crude imports from Iran. TURPAS, which is run by a private company in Turkey, was the sole refinery owner in the country until October 2018 and it began to decrease the amount of Iranian crude after the U.S. withdrawal from the Deal and suspended its imports in November. However, purchases started again in December and continued until the waivers expired. Moreover, despite the decreased amounts, Iran remained a significant supplier for Turkey in 2018. Since May, the amount of crude oil imported from Iraq evidently increased, making the country the largest supplier and leaving Iran in second place. Purchases from Russia, Saudi Arabia and Azerbaijan were also increased in order to replace Iranian crude. Countries that were permitted waivers and the ones that continued to import crude from Iran decreased their amounts compared to pre-sanctions times.

As of May 2, 2019, the 180-days expired and the Trump administration decided not to extend the waivers. Before the waivers expired, the U.S. had already declared the Iranian Revolutionary Guard Corps as a foreign terrorist organization. Consequently, the situation worsened when countries that continued to import crude from Iran were threatened with secondary sanctions.

The Trump administration’s aim is to isolate Iran from the international market, and it is just around the corner from fulfilling this objective.

The demands made by Pompeo have not yet been met and while the Trump administration argues otherwise, Iran claims that it has been loyal to the Deal. Contrarily, the Supreme National Security Council of Iran declared that the country will re-start its nuclear enrichment activities in 90 days unless the remaining signatories would help Iran to continue its trade and stabilize its economy.

In addition, while there is no initial proof, the country was accused of sabotaging Saudi and UAE oil tankers and facilities. However, it is commonly accepted that such behavior would be predictable and a natural outcome of the Trump administration’s maximum pressure policy against Tehran. The remaining signatories have already acknowledged that the U.S. was the one responsible for Iranian aggression.

There is no doubt that economic pressure will seriously serve the efforts to collapse the Iranian economy not only in the short-term but also in the long-run. Although we do not have clear data yet, there are serious rumors that the top five customers – China, India, Turkey, Japan and South Korea – have stopped importing oil from Iran. The Trump administration’s aim is to isolate Iran from the international market, and it is just around the corner from fulfilling this objective. It is fair to state that hard times are waiting not only for the Iranian people, but for the region.

In early May, Iran announced a 60-day deadline after which the country would start enriching uranium of higher levels than currently allowed under the JCPOA unless some sanctions relief were provided. The U.S. had already withdrawn from the agreement and European allies have been trying to keep the deal alive. Under the pressure of increasing sanctions against oil as well as non-oil exports, the question of how long Iran would continue to honor the deal has been a pressing one. Iranian President Rouhani’s announcement of a partial departure from the agreement is a sign that the JCPOA might just crumble this summer. If that happens, tensions between the U.S. and Iran will keep rising, coming dangerously close to a military confrontation.

President Trump does not seem to want an actual war with Iran. After all, he was elected on a platform that heavily criticized America’s foreign military interventions and promised an “America First” agenda. It is likely that Trump wants to get a JCPOA 2.0 on his own terms, which may resemble Obama’s agreement in content but it will nevertheless be Trump’s deal. For Trump to “get a deal” with Iran, however, it is almost certain that it would have to wait for his potential second term. Trump has been quite an anti-Obama president, as he has sought to reverse Obama’s policies while trying to rebrand any perceived achievements as his own. This might just end up being the case with Iran, where a second term Trump get a deal and claim victory no matter how much it might resemble the original JCPOA. This is pretty much what happened with the renegotiation of NAFTA that ended up creating a NAFTA 2.0 in the form of the USMCA.

It is likely that Trump wants to get a JCPOA 2.0 on his own terms, which may resemble Obama’s agreement in content but it will nevertheless be Trump’s deal.

Trump appears all too happy using strong (and sometimes extreme) rhetoric against countries like Mexico, China, North Korea and Iran. So far, his rhetoric turned out to be a simple tactic of “raising the hand” to get a better deal. It has arguably worked with Mexico and, to some extent, with China but it remains to be seen whether it would work with North Korea and Iran. North Korea has been content with reaping the benefits of international diplomatic recognition without a full commitment to denuclearization. Trump seems interested in a deal with Iran despite his “maximum pressure” campaign. He reportedly tried to meet with Iranian President Rouhani on the sidelines of the UN General Assembly in New York but reverted to the full pressure campaign once the meeting did not materialize. This indicates that the road ahead with Iran may not be as clear.

For one thing, Iran has resisted U.S. pressure campaigns before and despite domestic opposition in addition to the devastating impact of sanctions. Granted that the difference this time is that the Trump administration seems determined to apply an all-out economic pressure campaign as long as necessary. It also cooperates with the Gulf nations plus Israel to push back against Iran’s regional influence. Hawks within the Trump administration are accused of pushing for war although Trump himself said he was only interested in ensuring a no nuclear Iran, which shows he would like a deal of his own with Iran eventually.

Trump appears all too happy using strong rhetoric against countries like Mexico, China, North Korea and Iran. So far, this has turned out to be a simple tactic of “raising the hand”.

The question, of course, is whether a period of mutual escalation may prove uncontrollable and a conflict becomes unavoidable. In the most recent round of escalation, Trump used the danger of Iran to sell Saudi Arabia more weapons systems despite Congress’ opposition. Gaining an economic benefit out of this escalation may have been his main preoccupation to begin with. News reports indicated that Trump authorized the deployment of 1,500 American soldiers to the region although the hawks in the administration and generals on the ground expected more troops. Again, this is another indication that Trump is happy with a “controlled escalation” with Iran that allows him to look tough and brand any inch given by Iran (if at all) as his own achievement.

A military conflict is always a distinct possibility as escalation can certainly get out of control. However, neither side has much to gain from a military conflict. Thus, Trump will likely continue the pressure campaign until Iran gets to the table ready to make serious concessions, which is not very likely any time soon ahead of the 2020 U.S. presidential elections. Until then, the region will have to contend with increased tensions and escalatory moves. How long this state of affairs can be kept under wraps without provoking a military conflict is anyone’s guess. In the short and medium term, the interplay between Trump’s need for a deal on his own terms and Iran’s capacity to sustain the economic and political fallout from the U.S. maximum pressure campaign will determine the nature of the standoff. 

Following the U.S. administration’s announcement of its withdrawal from the Joint Comprehensive Plan of Action (JCPOA) and decision to re-impose sanctions against Iran, the six-month waivers the U.S. granted to eight countries that buy Iranian oil, including Turkey, has expired. Everyone has so far wondered whether this six-month period would be extended or not. A possible extension decision was significant both for the Iranian economy, the global oil market and for the supply of oil to these eight countries. Finally, the Trump administration announced a few days ago that they will no longer grant exemption to any country in terms of importing oil from Iran within the goal of putting Iran’s oil sales to zero. This decision means that the countries in question might face sanctions if they continue buying oil from Iran as of May 2.

Many countries, especially China, the biggest buyer of Iranian oil, have reacted to this announcement. Some countries declared that they will not abide by the decision, while some others seek to obtain new exemptions by building closer ties with Washington before the period of waivers expires. If they abide by the decision, they will confront serious issues in the oil supply and refinery chain and become the leading countries mostly affected by the increase in oil prices. As expected, Iran, the main target of this decision, has harshly responded. Iranian Foreign Minister Javad Zarif said that the increasing economic terrorism against Iran only shows the U.S.’ incapability, whereas Oil Minister Bijen Zengene said the decision will fail and Iran will continue exporting oil.

The ideological stance represented by hawkish politicians and bureaucrats in Washington now outweighs President Trump’s pragmatic approach that prioritizes U.S. economic interests.

Now, let’s take a look at how the Trump administration’s decision of not extending the exemptions was taken, what this decision means in terms of international law, its social impacts and possible consequences regarding international security. First of all, the U.S. administration’s negative decision that goes against the extension expectations of some countries must be read as a sign of the influence that hawkish politicians and bureaucrats have in Washington on the subject of Iran. The ideological stance represented by these bureaucrats and politicians, who are in close cooperation with the lobbies that target putting an end to the activities that disturb Israel and other U.S. allies in the Middle East and toppling the Mullah regime in Tehran as a result of putting Iran in a tight corner economically, outweighs the President Trump’s pragmatic approach that prioritizes the U.S. economic interests.

As for the meaning of this decision in terms of international law, it is seen that we confront yet another step by Washington aiming to replace international law with U.S. law. In the recent period, the Trump administration has issued many statements that go against the decisions taken under the umbrella of the United Nations Security Council (UNSC), especially with regard to Israel. With this approach and sanction policy, the Trump administration contravenes international law and the UN system and openly breaches international law. Imposing its one-sided sanction decisions against countries like Iran, Russia and Venezuela with decisions based on U.S. national laws, the American administration imposes financial and penal sanctions on the companies and citizens of third countries unless they abide by these decisions.

In this framework, American institutions threaten companies based in countries like Germany, China and Turkey to impose sanctions, forcing them to act in compliance with its own policy on sanctioned countries. Obviously, this policy of the U.S. administration contradicts most principles of international law. Along with international law principles that regulate intergovernmental relations including the principle of non-interference in domestic affairs, it also violates the rules of the World Trade Organization that regulate free trade. The country imposes its domestic laws on other countries as if they were universal laws in order to protect its own interests, which shows that it has stopped abiding by international law and turned to power politics.

The U.S. sanctions policy targeting buyers of Iranian oil contradicts most principles of international law and violates the rules of the World Trade Organization, which regulate free trade.

When it comes to the economic impacts of the U.S. sanctions against Iran, the rapid increase in oil prices after the announcement of the decision can be seen as a considerable indicator. Although U.S. Secretary of State Mike Pompeo stated that the supply shortage in the global market after the withdrawal of Iranian oil would be met by Saudi Arabia and the United Arab Emirates, this does not seem very possible due to various technical and political reasons. Saudi Arabia, which wants to keep oil prices above 80 dollars per barrel and pressures OPEC for this, is predicted to act reluctantly in compensating this shortage in oil supply and wants to keep prices high by seizing this opportunity. This will surely disturb President Trump, who does not want to see a sharp increase in oil prices in the U.S. domestic market and therefore the hawkish names in his team might question the harsh Iranian policy. So, it is argued that Trump might extend the exemption of some countries to import oil from Iran even before the deadline of the waivers since he fears this effect.

The first thing that can be said about the economic effects of the decision on countries like China, India, South Korea and Turkey, the leading buyers of Iranian oil, is that they will surely be affected in a very negative way due to the rises in oil prices since they are all foreign-dependent in terms of energy. For instance, with rising oil prices, the inflation and exchange rate problems in Turkey will deepen as the country has already been experiencing some economic problems due to the tensions it has with the Washington administration in other areas. Besides, given that a considerable extent of the refinery capacities of the countries like Turkey and China is built according to the features of Iranian oil, importing oil from other countries will lead to a refinery problem in these countries. The countries in question are also concerned about the fact that the U.S. administration is increasingly using economic sanctions as an instrument of power politics. They consider reacting against this pressure a requisite since they have been subjected to economic pressure by Washington in the recent period.

If the oil prices rise due to U.S. sanctions on Iran, Turkey’s inflation and exchange rate problems would deepen as the country has already been facing some economic problems.

It must be noted that the U.S. administration’s decision to impose sanctions on Iranian oil might lead to very grave consequences in terms of international security. It is evident that the new sanctions of the U.S., which has harshened its Tehran policy despite the JCPOA signed in 2015 under the influence of some lobbies, especially the Israel lobby, mainly targets Iran’s regional policies and armament activities rather than the country’s nuclear activities. Israel’s wish to maintain its fight against Iran by the means of the U.S. and its policy to gradually harshen this fight will affect the security of the Middle East to a great extent. The success of this policy devised by the Israel lobby might put Iran in a tight corner and ultimately cause the collapse of the country’s economy and regime; or the country might survive by growing more aggressive.  

Considering Iran’s ideological ties with non-state actors in many Middle Eastern countries, the country has the capacity to harshly respond to any attack that might come from the Israel-U.S.-Saudi Arabia bloc, which means that extreme pressures on Iran might cause conflicts in different locations of the Middle East. On the other hand, the collapse of the Iranian economy and regime might stir a greater chaos than the case of Iraq. Remembering how the civil war that erupted in Iraq after the breakdown of the Saddam Hussein regime drifted the Middle East to a state of profound instability, the actors in Washington, Tel Aviv and Riyadh must be more careful while developing similar plots for Iran.

Since the beginning of Trump’s presidency, the U.S. has put enormous effort to contain Iran in both political and economic terms. During his election campaign, Trump pledged to tear the nuclear deal (JCPOA) and his anti-Iran tone was pretty harsh. After his election, he started to realize his election promises one-by-one. His attitude towards international acts and agreements was uncompromising. The U.S. withdrew from the Paris Climate Agreement, Trans-Pacific Partnership (TPP), and UNESCO in 2017. JCPOA, which was formalized in 2015 by P5+1 countries and which began to be implemented in early 2016, was a target too. JCPOA was also binding in terms of international law since it was ratified as a UN Security Council resolution.

Trump’s general policy choice reflects a radical rupture from the priorities of the Obama era, and this is not an exception in the case of the Middle East. The president’s Middle East policy centers around various crucial themes. The most significant of them is containing Iran. For Trump, Iran has expanded its regional influenced during the Obama era thanks to the “worst deal ever made,” also known as the nuclear deal. According to Trump, by giving Iran lifeline support, JCPOA has paved the way for Iran’s “terrorist activities” along the region. Therefore, this should be stopped.

With the Trump administration, the U.S. government has launched a regime change discourse against Iran. The president has employed numerous anti-Iran figures in his team such as Mike Pompeo, John Bolton, Rudy Giuliani, and others.

The U.S. President’s policy is a pillar for other policies related to the Middle East. Saudi Arabia and other anti-Iran Gulf countries desperately seek Trump’s support in their endeavor to confront Iran. In this direction, the U.S. makes billion dollar arms deals with Saudi Arabia and supports every action against Iran in the region. Saudi Arabia’s Qatar move, which was directly against Iran and Turkey, also received U.S. support. The coordinated efforts of Israel and the U.S. function to undermine Iran’s political and economic power. Accordingly, I argue that Trump’s Iran policy has two dimensions – both politic and economic.

The nuclear deal and economic war against Iran

On May 8, Donald Trump announced that the United States has pulled out of the nuclear deal. He also announced that sanctions will be re-imposed by the U.S. soon. The first round of U.S. sanctions came into effect on July 7. These sanctions were primarily targeting Iran’s trade with precious metals, its import of auto parts, and commercial passenger aircrafts. But the most striking sanctions were imposed on November 5. The aim of these sanctions was to cut all oil exports from Iran and devastate the country’s economy. In addition to that, 700 individuals and companies were put on the sanctions list. In order to avoid serious backlash, the U.S. granted waivers to 8 countries, including Turkey. However, these countries will also be expected to cut their oil trade with Iran in a short period of time.

Trump was not alone in his campaign against Iran. Benjamin Netanyahu, the Prime Minister of Israel, also fully supported his decision of exiting the JCPOA. More, prior to Trump’s decision, he tried to persuade the international community that “Iran has lied” about its nuclear activities and that it “cheated.” Netanyahu, in his televised public performance a week before Trump’s announcement of U.S. withdrawal from the deal, claimed that Iran had lied when it said that it never chased after a nuclear weapon. He added that, “Even after the deal was made, Iran continued to preserve and expand its nuclear know-how for use at a later date.” His claim was based on an alleged secret operation conducted by MOSSAD to acquire “atomic archive documents” in a secret warehouse in Tehran. Netanyahu’s efforts were not limited to this performance. Again in September, when he stepped to address the UN General Assembly, he claimed that Israel had discovered another secret nuclear facility in Tehran and that he had proof of it. According to Netanyahu, Iran had equipment for developing a nuclear bomb in this facility.

Regime change discourse, Arab NATO, and the Warsaw Summit

With the Trump administration, the U.S. government has launched a regime change discourse against Iran. The president has employed numerous anti-Iran figures in his team, such as Mike Pompeo, John Bolton, Rudy Giuliani, and others. The State Department’s and Secretary Pompeo’s Twitter accounts work vigorously to disseminate regime change discourse among Iranians, be it diaspora or those living in the homeland. In addition to that, in 2011, the U.S. had launched its first Farsi language Twitter account in order to address Farsi-speaking Iranians directly. Pompeo and his team began to use this account to promulgate their position against Iran. All these efforts are signs of a public relation campaign to create a dominant discourse, which would produce an intended change in the Iranian government’s behavior.

Iranian women took off their hijabs and hang them on a stick during their protests in Tehran. Some Iranian diaspora, however, questioned the authenticity of these protests and the integrity of Masih Alinejad for having ties with U.S. neo-cons.

In this endeavor, the U.S. government takes any opportunity it can. U.S. Secretary of State Mike Pompeo met with Masih Alinejad, a famous Iranian-American social media activist. Alinejad runs the #whitewednesday campaign, which encourages women to take off their hijabs in Iran on Wednesdays and record it with a camera. Women share these videos on social media and Alinejad also promotes them on her own Twitter account. These videos go viral and show how Iranian women resist imposed dress codes. During the protests in January 2018, the Iranian women that took off their hijabs and hang them on a stick began to be called the “daughters of Revolution Street,” since their protests occurred on the revolution street of Tehran. However, some of the Iranian diaspora have questioned the authenticity of these protests and the integrity of Masih Alinejad for having ties with U.S. neo-cons. Pompeo’s meeting with Alinejad empowered the arguments of their critics. This move apparently shows how Alinejad’s campaign functions in a certain way in the regime change rhetoric of the U.S. administration.

Another policy that the Trump administration has adopted is trying to pull other countries on their sides against Iran. In that vein, the U.S. and Israel organized an anti-Iran summit in Warsaw on February 14. 60 countries were represented at the Summit. However, EU states sent their low-level diplomats and it disrupted the summit’s intended anti-Iran character. Robert Giuliani, former New York Mayor and one of Trump’s lawyers, said that he was representing Mujahedin-e Khalq Organization (MEK) at the summit. MEK is designated as a terrorist organization by Iran. It was once listed as a terrorist organization by the U.S. in 1997, but was then de-listed in 2012. In the recent years, Trump’s team has been coordinating with MEK members and their presence was so visible in so many occasions, including during the Warsaw Summit.

Robert Giuliani, former New York Mayor and one of Trump’s lawyers, said that he was representing Mujahedin-e Khalq Organization (MEK) at the anti-Iran summit in February in Warsaw. MEK is designated as a terrorist organization by Iran.

One of the functions of the Warsaw Summit was to create a base for a new regional security alliance against Iran. This has been articulated as the “Arab NATO” by some U.S. officials. Officially known as the Middle East Strategic Alliance (MESA), this planned organization would contain Iran militarily through six Gulf countries plus Egypt and Jordan. Netanyahu especially took the chance to bolster his anti-Iran position and convince other Arab countries “to advance the common interest of the war with Iran.” According to Mike Pence, along with Netanyahu, they “broke bread with leaders from Bahrain and Saudi Arabia.” Given the diplomatic gap between Israel and other Arab countries (it only has formal diplomatic ties with Egypt and Jordan), Netanyahu’s efforts were reflecting a significant re-orientation towards Arab countries in order to confront Iran.

Turkey’s stance

Turkey’s approach to the U.S. policy on Iran has not been changed from the very beginning. President Erdogan repetitively emphasized that Turkey needs Iranian oil and gas and that there are no alternatives for Turkey. Erdogan also condemned the re-imposed sanctions on the ground that they are against international law. The president’s remarks have been reiterated by a number of senior figures in the government. Despite the fact that the U.S. and Israel will increase their pressure on Iran, Turkey is likely to preserve its position.

On November 5, the United States announced a new wave of economic sanctions targeting Iran’s economy, including key sectors such as oil trade, banking, shipping, and air traffic. While sanctions focus on damaging Iran’s economy, they will also have an impact on countries having business with Tehran. The United Arab Emirates is among these countries that will be most affected by the economic sanctions imposed on Iran.The UAE, which has recently been in close cooperation with the U.S., will not be able to protect its current level of trade with Iran. The U.S. decision not to include the UAE among the countries the Trump administration issued a waiver to is an indication of the fact that trade relations between Abu Dhabi and Tehran will deteriorate, despite the long historical ties between the two countries.

Despite political differences and different approaches on regional issues, trade relations between the UAE and Iran have always been strong, mainly because of political dynamics such as geography, expatriates, and cultural similarities. While trade between the two countries decreased during the international sanctions imposed on Iran in 2010, it rapidly increased following the JCPOA agreement in 2015. In recent years, the UAE has become Iran’s most important commercial partner after China. In 2017, 29% of Iran’s imports came from the UAE. As Iran’s most important non-oil importer, the UAE exports products such as electronics, food, textile, construction materials, automotive and industrial tools. In 2013, 96% of exports from the Gulf Cooperation Council countries to Iran were carried out by the UAE, while the figure for imports stood around 62%.

The U.S. decision not to include the UAE among the countries the Trump administration issued a waiver to is an indication of the fact that trade relations between Abu Dhabi and Tehran will deteriorate.

However, with Washington’s sanctions on Tehran, we will witness a significant negative impact on trade between Iran and the UAE. This is particularly observed in the following period of U.S. sanctions on Iran that began in August 2018. In 2017, the UAE’s non-oil exports to Iran were $17 billion, compared to $6 billion in the first 8 months of 2018. As a result of this decrease, Iranian businessmen have started to turn to alternative markets such as Europe, Qatar, and Turkey.

As one of the most prosperous emirates in the UAE, Dubai has been the biggest trade partner of Iran. Around 3,000 ships and boats carry goods between Dubai and Iranian ports via the Persian Gulf. The 150-km long distance is the most important driving factor that allows for Iran to export from Dubai, which is a regional hub for global trade. The Jabal Ali Port is the main point of departure for the goods that are exported to Iran. In addition to that, the majority of Iranian citizens living in the UAE reside and work in Dubai. It is estimated that there are around 10,000 Iranian companies operating in the field of bilateral trade between Iran and Dubai.

In 2017, the UAE’s non-oil exports to Iran were $17 billion, compared to $6 billion in the first 8 months of 2018.

Dubai also plays an important role in the oil trade between Iran and the UAE. However, it is expected for Dubai’s imports of 140 thousand barrels of oil per day to be reduced gradually reduced to the U.S. sanctions on Tehran. Emirati officials announced that oil trade between the two countries will reduce to a mere zero by the end of November. Thus, as one of the biggest importers of Iranian condensate in the UAE, Dubai will be the most affected emirate due to U.S. sanctions. In order to find other alternative markets for condensate imports, the UAE has been in contact with the U.S., Australia, and Equatorial Guinea, other important exporters of that product.

It should also be noted that there is some level of disagreement between the Abu Dhabi emirate, which is the most influential in foreign policy in the UAE, and Dubai, particularly with regards to the UAE’s policies towards Iran. In this context it can be stated that Dubai, which has a high volume of trade with Iran, is not comfortable of the aggressive policies pursued by Crown Prince of Abu Dhabi Muhammad bin Zayed Al-Nahyan against Tehran. In 2014, the Emir of Dubai and the UAE’s Vice President Sheikh Mohammed bin Rashid al-Maktoum called for the international community to end sanctions imposed on Iran. Emir Al-Maktoum argued that these sanctions will not only damage Iran’s economy, but will also hurt global trade.

Dubai, which has a high volume of trade with Iran, is not comfortable of the aggressive policies pursued by Crown Prince of Abu Dhabi Muhammad bin Zayed Al-Nahyan against Tehran.

Despite Dubai’s stance, the overall Emirati policy against Iran has been deteriorating as the country has joined the Saudi Arabia-U.S.-Israel alliance, which aims to prevent Iranian expansion in the region. As a result, unlike the eight countries that the U.S. granted waivers to, the UAE preferred not to be included within this group. The Emirati leadership particularly emphasized that it will join the U.S. in implementing the sanctions on Iran.

Sanctions imposed on Iran by the U.S. will seriously affect the UAE – the most important trade partner of the country in the Gulf region. In particular, the UAE emirates of Dubai and Sharjah are concerned by the loss of an important export market. Therefore, while U.S. sanctions will have negative consequences for Tehran, they will also impact neighbouring countries that have strong trade relations with the country, especially those in the Gulf region.

The international arena is experiencing a turbulent period in which the effects of political, economic, and commercial decisions taken by President Donald Trump are clearly being felt. During his election campaign, Trump influenced the agenda with his statements on the actions he will take on issues closely related to the global political and economic system. Using the motto “America First,” the U.S. President made it clear to the whole world that his ultimate goal is to protect the interests of the American nation. Thus, he first decided to withdraw from the Paris Climate Agreement, which he believed was in contradiction with the country’s interests. Then, again arguing to protect the interests of the American people, he began to implement trade sanctions on many actors such as China, Russia, the EU, and Turkey. However, these sanctions not only affected the targeted states but also hit global trade.

Lastly, on May 2018, Trump unilaterally withdrew the United States from the Joint Comprehensive Plan of Action (JCPOA), which is also known as the Iran nuclear deal, although the other signatories of the deal, P5+1 countries, strictly opposed the decision. He charged the Tehran regime with supporting terrorist actions and organizations widening the chaos in the Middle East, producing ballistic missiles, and continuing its nuclear program despite the JCPOA. The withdrawal of the country followed Trump’s announcement on the re-implementation of the sanctions that had been suspended after the nuclear deal. In order to increase the pressure of sanctions and to further isolate Iran, Trump also threatened other states and corporations: “Anyone doing business with Iran will NOT be doing business with the United States!”

Trump’s “America First” motto and his withdrawal from the JCPOA has not only affected targeted states, but has also hit global trade.

The new round of U.S. sanctions

The first round of the two-phase sanctions began to be imposed on August 6, and from that time on, Iran has been unilaterally blocked to have or access the U.S. dollar and precious metals like gold and silver, and so on. The automotive and aviation industries are also being isolated from the international system. The second round targeting Iran’s petroleum, the largest income source of the government revenues, and shipping industries and port operators to diminish the country’s petroleum and petrochemical products exports to zero began to be re-imposed on November 5. On the same day Washington granted temporary waivers to 8 states – China, India, South Korea, Japan, Taiwan, Italy, Greece and Turkey. The U.S. administration claims that it is trying to cut off Iranian oil exports since the Tehran regime uses the revenues obtained from the petroleum industry to fund terrorist organizations and conduct terrorism in different parts of the world.

Leading by the remaining P5+1 countries, China, France, Russia, the United Kingdom and Germany, the EU and Turkey have expressed their opposition to Trump’s decision many times and intend to maintain their trade relations with Iran. Especially the position of China and India is crucial for Iran as these two countries are its largest crude oil importers. They all have searched for new types of payment systems to avoid U.S. interruption while doing business with Iran. The EU has begun to implement “blocking statute” to enable EU companies to continue their commercial relations with Iran and compensate the damages that may arise from the sanctions. Later on, the EU, China and Russia also agreed on founding a special purpose vehicle that could channel new payment mechanisms alternative to using U.S. dollars. The two biggest buyers of Iranian crude, China and India, reached a deal with the Tehran regime on using their national currencies. Turkey has been evaluating whether to use Turkish Lira and/or establishing a barter system that could facilitate exporting its goods and services to Iran in response to its crude oil imports.

The two biggest buyers of Iranian crude, China and Iran, have reached a deal with the Tehran regime on using their national currencies during business. Now, Turkey is evaluating whether to do the same.

What are the effects of sanctions on Turkey-Iran energy relations?

Turkey, as a growing economy, imports approximately 90 percent of its oil and 95% gas and Iran has been one of its primary suppliers. In 2017, the country imported about 45 percent of crude oil and 17 percent of natural gas it consumed from Iran. In other words, Iran was the largest crude oil and the second largest natural gas supplier of Turkey.

As the new round of sanctions does not cover Iran’s natural gas sector, contrary to the previous ones, it’s expected that Turkey’s natural gas supply from Iran will not be affected and the country will not be subjected to U.S. sanctions. However, the amount of Iranian crude oil in total crude oil imports of Turkey has begun to decline as Trump decided to re-impose the Iran sanctions on May 2018. Turkey’s biggest crude oil importer TUPRAS began to gradually reduce the amount of oil supplied from Iran in order to balance the internal market. According to Turkey’s Energy Market Regulatory Authority (EPDK), in April 2018, the amount of Iranian crude oil was 67 percent of the total crude oil imports, which decreased to 51% in May. A sharp drop was experienced in June as it fell to 15 percent. However, the amount increased in July and August, reaching respectively to 38 and 31 percent.

At that point, it should be highlighted that Turkey did not stop importing crude oil from Iran even during the internationalized sanctions throughout 2010-2015. This signals that Turkey will continue to import Iranian oil during the unilaterally imposed U.S. sanctions. In addition, Iran’s 38 percent share in total crude oil imports of January 2018 is also remarkable. This could be interpreted as a sign that import amounts may vary from time to time. Moreover, Iran has been one of the two countries where Turkey imports most of its crude oil since 2011. Accordingly, TUPRAS, supporting President Erdogan’s statements, has announced that Turkey will continue to import crude oil from Iran.

Following the Trump administration’s sanctions on Iran, growing economies that are highly dependent on imported energy resources are in need of tight cooperation more than ever.

What’s next for the waivers?

As the exception granted by the Trump administration will last for only 180 days, the 8 waivers, including Turkey, now need to plan how to manage their relations with Washington and Tehran. Japan and South Korea are expected to cut their Iranian crude imports completely while China, India and Turkey seem decisive to pursue their imports. However, as the shares of Greece, Italy and Taiwan are rather low and, contrary to other waivers, they did not make a clear statement on unilaterally imposed sanctions, their future positions are unclear. Besides, since the waiver is limited to 1.1 million barrels of Iranian oil per day, the waivers also need to collaborate on how to allocate this amount.

It is expected that during the 180-day exception period, China, India and Turkey will investigate alternative ways and conduct intensive diplomatic efforts engaging at political and financial levels to maintain their oil trade with Iran. It would also be beneficial for both the three-waivers and Russia and the EU to create a counter-block to convince the Trump administration to reconsider its unilaterally imposed sanctions. Growing economies that are highly dependent on imported energy resources are in need of tight cooperation more than ever.

On August 6, 2018, U.S. President Donald Trump signed a new Executive Order named “New Iran E.O.” in order to re-impose sanctions. On the day the U.S. announced its withdrawal from the JCPOA, the U.S. Department of the Treasury determined two different ‘wind-down’ periods to indicate that the sanctions will gradually enter into force. Offering only one piece of the sanctions, the Executive Order aims to target companies that do business in different sectors that are central for Iranian business, such as the automotive sector. The other portion of the sanctions will come into effect on November 4, 2018 – the end of the 180-day wind-down period.

It is fair to state that the Trump administration is desirous of punishing the Iranian regime. However, the administration’s tough stance is, in fact, twofold. By framing a ‘zero’ policy, the U.S. administration not only intends to strain the financial capacity of the Iranian government, but also demands other countries to reduce their exports from Iran to zero. At this point, it is significant to differentiate sanctions as primary and secondary, of which the latter will indirectly and potentially treat U.S. allies as suspects of violating the sanctions.

When U.S. National Security Adviser John Bolton said that the administration intends to “say no waivers” in order to go beyond “where the sanctions were in 2015,” the administration apparently set the bar relatively higher than previous international sanctions. However, this zero policy can bring certain paradoxical consequences. If this policy will be a genuinely zero policy in the sense that the goal of the U.S. administration is to give irreparable economic harm to the regime, it needs to avoid using waivers to specific countries. Otherwise, the financial structure of the regime will be able to take a breath through the payments made by these countries that are awarded these waivers. In this first scenario, the collapse of the government, if very much desired by the administration, hardly appears in the short term. Therefore, the tough stance on the Iranian administration becomes questionable.

While the zero policy might appear as the only option for Trump, who is keen on bringing the Iranian government empty-handed to the negotiation table, the legal, political, and economic aspects of this policy are troublesome. Especially, in the global trade of crude oil, experts argue that the zero policy can force a significant amount of oil out of the market, leading to a drastic price change because of the high global demand for oil. In order to seek for a plausible way to minimize market disruptions to augment production, President Trump has approached  other allies such as Saudi Arabia. It remains difficult to assess to what extent juggling the production capacities of partners remains an effective plan. On the other hand, President Trump bemoaned the so-called “OPEC Monopoly” for raising oil prices. This implies that he can easily find a way to remove his guilt for the long-term high market price of oil.

When viewed from the legal and political angles of the policy, the picture is the same. The Department of Treasury, working with the Department of State and Department of Energy, will be the ‘guardian’ of the implementation of the sanction law. Transactions in U.S. dollars would suffice for the Department of the Treasury to claim extraterritorial jurisdiction to fine the individuals or entities having business ties with different Iranian sectors, such as energy and automotive sectors. It’s not a big hurdle for the Department of Treasury to impose fines or add individuals to the list of Specifically Designated Nations (SDN) based on evidence collected by intelligence or other means.

The more difficult challenge is related to the political outcomes of the decision to impose sanctions against countries. For instance, many major oil exporters from Iran are EU countries, Turkey, India, China, South Korea, and Japan. Unless they change their oil trade routes, they can be caught by secondary sanctions. The potential effect of the sanctions can be far-reaching, reaching U.S. allies, great powers, or developing countries. Furthermore, Iran’s geopolitical position, integrating the Middle East and Central Asia, will complicate the attempts made by neighboring countries such as Turkey to cut trade with Iran. This might obstruct the implementation of the zero policy if these neighboring countries prioritize their own economic and commercial interests in trading with Iran, rather than following the Trump administration’s demand to cutting all imports of Iranian oil.

The new Executive Order leaves many questions unanswered. The prime one is whether the U.S. would issue waivers from the sanctions if requested by its allies, which are unwilling to jeopardize or deteriorate their bilateral relationships with the U.S. Brian Hook, a senior State Department official, told reporters that the administration would consider waivers based on “case-by-case.” While this revives the hopes for many countries, it also brings to question the intended harsh effect on the Iranian regime.

The paradoxical situation is unlikely to be clarified in the future due to the fact that, just like the process in 2015, the current process is not clear. Unlike the current procedure, during the 2015 process, P5+1 countries sat at a table with Iran and the sanctions that were to be lifted were predictable. Nevertheless, receiving a waiver will be contingent on the negotiations to be held between the U.S. and its allies such as Turkey. For this reason, it would be beneficial for the two countries to solve existing problems rapidly and expediently in order to condense all of their focus on the future of sanctions that will come into full effect as of November 4.

Upon the request from Iran, on July 6, 2018, the remaining parties of the Joint Comprehensive Plan of Action (JCPOA) gathered to discuss the future of the agreement at the Joint Commission. The officials and leaders of Iran, China, Russia, the U.K., France, Germany, and European Union leaders had initiated bilateral talks in order to underline their commitments to the agreement. However, the remaining countries of the agreement have held this multilateral meeting for the first time since President Trump announced to withdraw from the Iran Nuclear deal. Chaired by the EU High Representative Federica Mogherini, foreign ministers from the countries that remained in the JCPOA attended the meeting to discuss the ability to export gas and oil from Iran.

The diplomatic language in the statement released after the meeting appears to be promising for the future of the agreement.  As stated in the bilateral meetings, attendants of this meeting were not reluctant to mention that they “reconfirmed their commitment to the full and effective implementation” of the agreement. The remaining JCPOA countries intend to keep themselves motivated when considering the list of objectives attached in the statement. According to the list, parties aim to, among others, increase the economic and sectorial cooperation. Most importantly, they added the objective of protecting “companies from the exterritorial effects of U.S. sanctions,” which has been the most severe legal impediment to implement the JCPOA effectively. In other words, the extraterritoriality of the upcoming sanctions imposed by the U.S. authorities will hamper the ability of the remaining parties to comply with the obligations arising from the nuclear deal.

In regards to the withdrawal of the U.S., the remaining parties began to formulate several means to tackle with the U.S. sanctions against Iran. As included in the statement, one of these means includes the adoption of the “Blocking Statute” which aims to protect European companies operating in Iran against the U.S. sanctions by preventing a judgment of a court located outside the EU to be enforced.

The question arises as to what extent the EU will effectively address this by adopting a blocking statute, regarding the fact that several European companies have already decided to terminate their business in Iran. This was worrisome when considering the lengthy legislative process and the structural changes in the EU. It was unlikely that the immediate reaction coming from EU leaders in the political arena or at the bilateral level did facilitate the complexities in the language of the legislation drafted in 1996. Since 1996, the EU has passed tremendous changes, adopted three main treaties that have altered the primary structure of the EU. These changes include the ones in the realm of EU financial institutions, which are mainly “reliant on access to U.S. markets and the U.S. dollar.”

In the meeting on July 6, 2018, the participants shortly noted that the blocking regulations were now in the process of updating. This procedure could be summarized as follows:  On May 16, 2018, the President of the EU Commission, Jean-Claude Juncker, along with the High Representative Mogherini, presented the proposal to update the blocking statute. The proposal includes four comprehensive measures to be taken. First, the list of U.S. sanctions on Iran will be updated in order to determine the scope of secondary sanctions that could potentially be imposed against European companies. Second, the proposal will aim to eliminate the impediments for the European Investment Bank by guaranteeing financial activities in Iran. However, it was also noted that by adopting this proposal, the EIB was not intended actually to support projects in Iran. Third, the proposal will focus on sectorial cooperation with Iran, especially in the energy sector. Fourth, the EU Commission will encourage Member States of the EU to find out the options of one-off bank transfers to the Central Bank of Iran in order to transfer oil-related revenues.

Last month, on June 6, 2018, the EU Commission adopted the proposal, and it will enter into force in 2 months unless other institutions, namely the European Parliament and the Council of the European Union object to the proposal. Recently, on July 4, an attempt to object to this proposal was made by the far-right political group EFDD but it failed with only 93 votes for, 573 against and 11 abstentions. As to the Council of the EU, formed by the ministers from the Members States, can, in principle, raise their objections but they are expected to follow their leaders who agreed to stand with the proposal. It is likely that the EU will adopt the blocking statutes in order to cope with U.S. secondary sanctions, albeit the capacity to cope with the U.S. sanctions remains unclear.

In addition to the legislation procedure in the realm of the EU, the meeting held on July 6 gives several significant indications for the future of the Iran deal. Most importantly, as experts argue, the statement released after the meeting does not specify “any concrete means” to achieve the abovementioned goals. This two-page statement with ten clauses does not declare a clear roadmap for Iran and other remaining countries in the deal as expected.

While the EU’s grand effort to keep the JCPOA alive seems to fail in the future, unlike the U.S., the participant countries have shown that they still maintain the channel of communication with the government of Iran. In order to maintain peace in the region, states that remain in the agreement took a more difficult challenge than just withdrawing.

President Trump delivered a major campaign promise by pulling out of the Joint Comprehensive Plan of Action (JCPOA) and left everyone wondering what the new Iran policy would be. Last week, Secretary of State Mike Pompeo attempted to answer that question with a major policy speech at the Heritage Foundation. Pompeo criticized the JCPOA for its “fatal flaws,” including the sunset provisions, weak inspection and verification mechanisms, failure to address Iran’s ballistic and cruise missiles, and inadvertently providing finance for Iran’s destabilizing activities in the Middle East.

The new Iran strategy, he announced, would impose “unprecedented financial pressure,” deter “Iranian aggression” in the region, and advocate for the Iranian people by standing with them against the regime. The administration, he declared, would be open to a completely new deal that would definitively guarantee Iran not to have nuclear weapons and gives up on its “malign” activities in the Middle East.

The newly announced policy, which at times came quite close to calling for a regime change in Tehran, essentially promises a return to a policy of pressure and isolation of Iran. The kind of sweeping change in behavior it asks of Tehran is almost impossible for it would essentially require the regime to drop its main claims to legitimacy in the region. This is why those who argue that Pompeo’s speech essentially calls for a regime change have a point.

Regardless, we are entering a period of heightened tensions in the region especially if the U.S. does not contend itself with sanctions alone but undertakes a serious effort to push back against Iranian proxies throughout the region. In all likelihood, Iran would try to play the long game by resisting the financial pressures while trying to create frictions between the U.S. and its European and regional allies.

The new Iran strategy seeks to mount an unprecedented pressure campaign to bring the regime to its knees. It does point to a way out but it sounds a lot like the U.S. is seeking the regime’s total surrender or economic collapse. The U.S. will need both its European and regional allies to implement the kind of overwhelming pressure it promises. The Europeans will be a lot less willing than the last time in coordinating a new round of sanctions. Regional allies the U.S. is counting on will be either ineffective or unwilling to confront Iran and its proxies in the region.

Furthermore, it is highly doubtful whether the U.S. can bring Russia and China on board, as their cooperation in the JCPOA was crucially important. The administration’s unilateral declaration of a new Iran policy carries all the risks and deficiencies associated with acting alone and without a strategy to bring about an international coalition supporting it. Non-European powers will be less than willing to isolate Iran or requiring a high price tag to cooperate with the U.S., which will be hard pressed to convince others that it will stick to its word this time round.

If the Trump administration does not succeed in forging a broad coalition willing to isolate Iran, a handful of European allies and Israel, Saudi Arabia, the United Arab Emirates, and Egypt in the region, as part of an anti-Iran front, will only support its new Iran strategy. Each of these allies will have a different priority vis-a-vis Iran, which will be difficult to reconcile and produce an effective policy.

Part of the problem with Obama’s Iran policy was that it lacked a buy in from “traditional” regional allies and failed to assuage their concerns. Now, the Trump administration seems to side with them in a big way, but without a comprehensive policy that addresses their concerns and brings Iran to the negotiating table. The Trump administration’s new Iran strategy promises to bring the regime to its knees through sanctions and isolation but lacks a broad international coalition determined to achieve it.