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

On June 13, 2019, two tankers in the Oman Sea carrying crude oil were the target of attacks. Located between the United Arab Emirates and Iran, the two tankers were just about to leave the Persian Gulf. It is not yet known who is responsible for the attack. However, this is not the first one and it seems like it will not be the last.

Following the Trump Administration’s decision not to extend the waivers of the Iran sanctions, Tehran once again threatened the U.S. to close the Strait of Hormuz, which is of great strategic and economic importance with oil and recently LNG tankers. These tankers carry almost one third of the global oil shipment passing through it. “If Iran cannot export oil from the Gulf, no one else can either,” President Rouhani said. Energy exports constitute around 50 percent of Iran’s revenue and almost 20 percent of its GDP.

On November 5, 2018, the U.S. granted waivers to the top buyers of Iranian crude, when the second-round of sanctions imposed on Iran affected the most revenue-generating sector. Between November 5, 2018, and May 2, 2019, China, India, Turkey, South Korea, Japan, Taiwan, Italy, and Greece were allowed to import crude from Iran up to a limited amount. 5 of the 8 countries sustained their imports, mostly China, India, and Turkey, while helping Iran to generate revenue. However, this did not help the Tehran government save its economy, as the country began to experience difficulties in trading other goods as well. High inflation accompanied by rising unemployment, the extremely fragile banking sector and stagnant economic growth caused Tehran to become more aggressive.

The attack on two tankers in the Oman Sea carrying crude oil was not the first and won’t be the last. 

As part of a “maximum-pressure policy” against Iran, on May 2, 2019, the U.S. declared that waivers granted to the eight countries will not be renewed. China, India, and Turkey criticized the decision at first and intended to pursue their imports. However, the private entities importing crude oil in these countries could not take the risk to face secondary sanctions from the U.S. and terminated importing crude from Iran. Tehran tried hard to sustain its oil trade as Zarif visited India, Japan and China in an attempt to persuade these countries to continue their oil trade. However, according to the available data, these efforts have seemed to fail.

The expiration of the waivers was followed by a series of events that threatened the global oil trade and brought the world’s attention to the Gulf. First, on May 12, 4 oil tankers – whose banners were not announced – were sabotaged. Although no serious damage occurred, it caused concerns. Then on May 13, tankers, of which one belonged to Saudi Arabia and was carrying Saudi oil, were sabotaged and the tankers were seriously damaged but no oil spill occurred. Though there is no clear evidence as to who was responsible for these two attacks, the U.S. and its allies in the region blamed Iran, which had already been threatening to close the Strait of Hormuz. On May 14, a drone attack was carried out against Saudi oil production facilities and a pipeline. This time however, Iran was directly targeted and it was asserted that the attacks were carried out by Iran-backed Houthis in Yemen.

The latest attack on two tankers took place in the Oman Sea after the U.S.’ latest sanction decision against Iran’s largest and most profitable petrochemical holding group, Persian Petrochemical Industries Company, for providing financial support to the Islamic Revolutionary Guard Corps. The IRGC was designed as a foreign terrorist organization by the U.S. State Department. However, the attack has more importance in terms of timing and targeted vessels. The attack took place during Japanese Prime Minister Abe’s visit to Iran and one of the tankers belonged to Japan. Shortly afterwards, U.S. Secretary of State Mike Pompeo held a press conference, announcing that according to U.S. military intelligence services, Iran had carried out the attack. Israel, Saudi Arabia, the United Arab Emirates and the UK supported these claims. Many other countries have expressed their concern about oil supply security.

Iran denied the accusations immediately after the attacks and government officials announced that a team had been assigned to rescue about 40 crew members in the tankers. Nevertheless, the U.S. claimed that explosives of Iranian origin were used in the attack and that the mentioned team was working to conceal the evidence revealing Iran, not for rescuing purposes. In this case, one can count a couple of conspiracy theories. First, U.S. claims are correct and Iran carried out these attacks to menace the Trump Administration from conducting a maximum pressure policy. Second, Tehran did not commend the attacks but some extremists in the IRCG carried them out. Third, the U.S. ordered the attacks in order to break negotiating activities between Iran and Japan. Last but not least, a third party organized these attacks to place Iran as a target in order to further worsen relations between the U.S and Iran and to further isolate Tehran.

There are four conspiracy theories that can be negated about the tanker attacks in the Oman Sea. First, it was Iran. Second, it was the Islamic Revolutionary Guard Corps. Third, it was the U.S. And finally, that they were conducted by a third party to benefit from the insecure environment. 

Many questions can be asked about the first scenario. It is quite contradictory for Iran to attack a Japanese tanker when Prime Minister Abe was in Iran and was acting as a mediator – especially at a time when Tehran is in need of all kinds of cooperation. Why would Iran want to humiliate Abe with such an act?

In regards to the second theory, many experts, especially in the last few years, have argued that the IRCG has considerably increased its military and technological capacity and that it is highly probable for the IRCG to have carried out these attacks in order to defend Iran and its interests.

There are a number of impulsions in the third scenario. It is an accepted fact that there are contradictory ideas within the Trump Administration; the president is not in favor of military confrontation with Iran, whereas individuals like John Bolton and Mike Pompeo are keen to bring Iran to its knees with maximum pressure – even using military intervention if necessary. While President Trump has put aside his harsh language against Iran in the period before the attack and said that he was open to negotiations, Pompeo and Bolton have insisted on maximum pressure, illustrating the clashes among the administration in terms of what to do with Iran. Moreover, some pro-Israeli also support Bolton and Pompeo’s idea of military intervention in order to limit Iran in the region and to increase Israeli influence. This would be possible if the world believes Iran is an absolute aggressor and poses a threat, and needs to be controlled by any means.

In the fourth scenario, any third party producing oil could have organized the attack in order to benefit from increased oil prices. It is known that the world is experiencing interesting times when there are sanctions against oil producers, supply disruptions as a result of different geopolitical affairs, increased summertime demand and also a glut of oil supply at the same time, which lowers prices and is hurting oil producers.

These scenarios and possibilities can be further duplicated. However, there is an indisputable fact: The U.S. is already at an economic war with Iran, which is damaging both the liberal world order and the lives of millions of innocent Iranian people.

Under the moderation of Professor Kemal Inat, the SETA Foundation organized a panel on the broader question of how the U.S. sanctions on Iran and Russia will affect Turkey. Speakers were Neyire Akpinarli, Assistant Professor at the Faculty of Law at Social Sciences University Ankara; Mustafa Caner, Research Assistant at Sakarya University Middle East Institute; and Yunus Furuncu, Researcher in Energy Studies at SETA Istanbul.

Kemal Inat began the panel by highlighting how one of the most important factors of the Iran sanctions is petrol. Providing figures, Inat underlined how in 2019 January, February and March, there has been around a 12% decrease of oil imports from Iran to Turkey in comparison to the same time last year. According to Inat, one implication for Turkey is the payment method for oil imported from Iran, as this was a listed problem among the sanctions applied.

Kemal İnat: “The U.S. sanctions on Iran also punish Turkey.”

According to Inat, one of the major problems for Turkey in the scope of the Iran sanctions is Turkey’s exports and imports to Iran. There are two reasons for this. After the Iran sanctions, the Iranian currency dropped against the dollar and life in Iran was affected. The second reason for this is how the banking system in Iran was pushed out of the global system and how investment in Iran became discouraged due to the sanctions applied. By providing figures, Inat underlined how major sectors were affected and how there has been a major decrease in Turkey’s exports to Iran. Inat stated, “This illustrates that the U.S. sanctions on Iran are also designed to punish Turkey.”

Iran sanctions breach international law

Neyire Akpinarli provided a presentation on the legal implications of the U.S. sanctions applied on Iran. At the very beginning of her presentation, Akpinarli drew attention to the fact that we need to know what the term ‘sanction’ means as terms can be the constituent of a particular context. She also highlighted the fact that the term ‘sanction’ is criticized in international law.

Akpinarli also highlighted how the U.S. has driven its foreign policy interests above international law and how there is a gap in international law, which does not fiercely state the extent that a sovereign state can go in trying to preserve and act in its own interests.

Neyire Akpinarli: “The U.S. has driven its foreign policy interests above international law and acts as if a judge in its own case” 

“No-one should be a judge in his own case,” this principle of natural justice is according to Akpinarli the most important barrier in the U.S. sanctions imposed on Iran, as in this particular case, the U.S. is acting as if a judge in its own case. She further stated that it was the first time that such sanctions had surpassed international law for the first time. The U.S. has gone against international law as the current sanctions go against the sovereignty of states, freedom of foreign interference in domestic affairs and the freedom of fair-trade rights.

Following the presentation, Inat re-emphasized that the U.S. assumes its own domestic law and politics to account for international law.

What are the political, economic and social effects of the Iran sanctions?

Speaking after Akpinarli, Mustafa Caner discussed how the sanctions affected Iran in particular. When talking about the effects that the sanctions have had on Iran, he designated 3 sub-titles. The first, economic affects and the second, political– Caner mentioned how there is a strong relationship between these two due to the fact that the Trump Administration intends to apply economic pressure in order to topple the Iranian government. Therefore, both economic and political aspects of sanctions go hand-in-hand and in parallel to each other. The third area that was discussed were the social implications of the Iran sanctions.

Highlighting figures from Iran, Caner stated how there has been mass increase in youth unemployment, which has reached around 30% and how inflation is nearly 130%. The value of Iranian currency has dropped against the U.S. dollar and many important companies have withdrawn from Iran and all investments have stopped. The main aim of this is not to “embarrass” the Iranian people, but according to Caner, Trump has his own agreement in mind. Therefore, he’s using sanctions as “blackmail.”

Mustafa Caner: “Trump has his own agreement in mind. But he’s using sanctions against Iran as blackmail”

In addition to these economic sanctions, the Trump Administration are pursuing “containment policies.” While economic sanctions are part of this, there are also political tools that have been used. Caner gave the example of how the Islamic Revolutionary Guard Corps were listed as a foreign terrorist organization by the U.S. State Department. Caner highlighted how this recognition covers all IRGC affiliated peoples and companies. Military tensions heightened after Iran recognized CENTCOM as a terrorist group. 

The Guard Corps are very influential not only within Iranian politics but also for the country’s economy. Therefore, Caner stated how many companies and people that try to work with Iran may be listed as aiding terrorism under the U.S. recognition, which is the reason why major companies are withdrawing from Iran. 

This also has a military implication due to the fact that any collusion between CENTCOM and the IRGC is an open risk. Caner highlighted how the possibility of such a collusion will be used by both sides in order to gain their bargains on the negotiating table.

In addition to these implications, Caner also specifically pointed out how the current environment caused by Iran sanctions has led to the decrease of Rouhani’s popularity and his inability to provide the modern reforms that he promised. “The Rouhani administration has had to force itself into a more conservative direction due to the sanctions imposed.” This is important as Caner highlighted the fact that Rouhani promised a softer tone in foreign policy and his biggest project was the nuclear deal – all of this has been toppled by the Trump Administration.

In terms of the social affects, there are surveys conducted by municipalities in Iran that illustrate how a majority of people living in Tehran would prefer to live somewhere else. Caner highlighted how there is a “uncomfortable fraction of society” in Iran who are “angry” but no one knows how this will be directed and controlled. He also emphasized how this tone among the public is likely to increase in the near future.

Sanctions on Russia

In terms of sanctions applied on Russia, which Inat described as coming about due to Russia’s annexation of Crimea, Yunus Furuncu discussed the extent to which these have had an effect on Turkey.

Furuncu emphasized how sanctions applied on Russia are not discussed as much as sanctions applied on Iran and how the debate on any kind of sanctions around Turkey has been contextualized in the purchase of S-400s.

Yunus Furuncu: “The EUis unable to process sanctions against Russia on natural gas, because Russia provides 40% of the EU’s gas needs”

Providing a list of events where the U.S. and Russia were left face-to-face in international politics, for instance in issues around Russian involvement in U.S. elections, the murder of two Russian agents in the UK and the annexation of Crimea. Crimea was the reason why sanctions began in 2014.

Furuncu stated that it is possible to describe U.S. sanctions on Russia as an attempt to “decrease the economic power of Russia and affect its ability to dominate the energy market.” He also highlighted how the U.S. is not able to process sanctions on natural gas due to the fact that Russia provides 40% of the U.S.’ gas needs.

Sixteen years after the Iraq war, the U.S. seems to prepare a large-scale military intervention against Iran. The military presence of the U.S. is increasing in the region while the officials talk more about the possibility of war. On the other hand, some reports are suggesting that Iran is also making military preparations for a direct or proxy war. This advancement comes after a series of developments which pit two countries against each other. On April 8, U.S. Secretary of State Mike Pompeo announced that the State Department designated the Iranian Revolutionary Guards Corps as a terrorist entity. Iranian authorities immediately responded to the decision by listing CENTCOM as a terrorist organization. These reciprocal moves opened room for military escalation in different parts of the Middle East where the two forces can confront each other head to head.  

Additionally, as of May 2, the U.S. removed its waivers on 8 countries buying oil from Iran. The Iranian side has also not been inactive. Exactly one year after Trump’s withdrawal from the nuclear deal, Iranian President Hassan Rouhani expressed their dissatisfaction with the EU’s performance regarding the JCPOA. Rouhani announced that Iran has temporarily suspended some of its commitments under the JCPOA, and the EU has 60 days ahead of it to take necessary steps. The EU responded with discontent and declared that they reject the 60 days ultimatum. Therefore, Iran was deprived of EU support against the U.S.

The more the tension between Iran and the U.S. increases, the more military preparations gain momentum.

The more the tension between Iran and the U.S. increases, the more military preparations gain momentum. As a military precaution against Iran’s potential moves, USS Abraham Lincoln aircraft carrier strike group has been sent to the Gulf along with four B-52 bombers, amphibious warship USS Arlington (LPD-24) and a patriot missile battery. White House Security Adviser John Bolton explained the rationale behind this move as “to send a clear and unmistakable message to the Iranian regime that any attack on United States interests or on those of our allies will be met with unrelenting force.” Furthermore, the New York Times reported that the U.S. has the intention of sending 120,000 troops to the Gulf. This large number of military personnel reminds us of the 2003 Iraq invasion disconcertingly. The report then was denied by Trump himself. He said he would have done that if they had planned to do so. Nonetheless, the denial speaks for itself, showing that senior officials have seriously considered these kinds of plans.

When the atmosphere is tense enough, it takes a simple mistake or an accident to start a war. On May 12, two Saudi owned oil tankers were attacked near the port of the Fujairah in the UAE. “An attack on two Saudi oil tankers is an attack on all Americans,” said Bolton after the Fujairah attack. This quote shows Bolton’s clear intention to extract a legitimate justification for any military engagement against Iran from this incident. Trump also commented on the attack and said, “It’s going to be a bad problem for Iran if something happens, I can tell you that. They’re not going to be happy.” However, it is not clear yet who was behind the attack. While an anonymous U.S. official says first findings indicate Iran as responsible, Iranian Foreign Ministry Spokesman Abbas Mousavi said that the Fujairah incident should not be used as an excuse for “adventurism by foreign agents.”

U.S. activities against Iran and reports that the Trump administration sent 120,000 troops to the Gulf reminds us of the 2003 Iraq invasion.

Two days after the tanker attack, Yemen’s Houthi rebels performed a drone strike on Saudi Arabia’s oil pipelines and caused severe damage. According to Saudi sources, two of the oil pumping stations suffered from the attack. As a result, the Saudi owned Aramco stopped pumping oil temporarily. Although this attack was part of an ongoing war between the Saudi forces and Houthi rebels, recent developments in the region help hawks to put Iran in the context. Iran’s support for Houthi rebels also facilitates the possibility to associate the attack with Iran. Moreover, Iran’s threats of closing the Hormuz Strait gives a useful pretext for belligerent actors since both the Fujairah port and the attacked Saudi oil facility offer alternative sources for Iranian oil.

The possibility of a US-Iran war

Trump’s warmongers are pressing harder for a military conflict between the U.S. and Iran. U.S. officials have increasingly articulated the possibility of war. For instance, U.S. Senator for Arkansas Tom Cotton stated, they would win with “two strikes,” if they fought Iran, “the first strike, and the last strike.” However, there must be a distinction between Trump’s businessman mentality and his hawkish teams’ aspirations towards war. Yet, some reports indicate that Trump is not happy with Pompeo and Bolton’s efforts to start a war. He is not convinced with the reasons why the U.S. should attack Iran and is not convinced as to whether it will work out well – if it happens.

Yet, some reports indicate that Trump is not happy with Pompeo and Bolton’s efforts to start a war with Iran.

Given that Trump’s Iran strategy is based on increasing pressure on Iran, the country will see no way out other than re-negotiating with the U.S. This pressure would compel Iran to content with another deal favoring the U.S. more than the previous one. Trump does not hide his intention of new negotiations with Iran. However, a war with Iran would cost Trump heavily. It rules out any possibility for a new deal. In addition to that, fighting Iran would be different than with Iraq in terms of economic burden, human costs, duration, and political outcomes.

The U.S. public has already started a “no war with Iran” campaign and Democrats will surely use this campaign as leverage in the upcoming presidential elections. Fearing of losing its electorate in the 2020 elections, Trump can prevent Pompeo and Bolton from instigating a war with Iran.

Israel, Saudi Arabia, and the UAE are trying to goad the U.S. to “punish” Iran for its “aggressiveness and expansionist policy” in the region. However, war with Iran also contradicts with Trump’s policy that Middle East countries should take care of themselves and his decision to withdraw from Syria.

Rather than a direct military conflict between the US and Iran, a proxy war is more probable. Iraq can be the starting point of that kind of armed conflict.

Rather than a direct military conflict between the two countries, a proxy war is more probable. Iraq can be the starting point of that kind of armed conflict. Iran has a lot of proxy groups operating in Iraq. Hashd al-Shaabi is prominent among them. Hashd al-Shaabi is an umbrella organization which brings together various Shia militia groups. Iran’s Quds Force commander Qasem Soleimani has a considerable influence on the commanders of these groups. There are reports claiming that Iranian military figures told Hashd al-Shaabi to be ready for a proxy war. The Department of State released a travel warning to Iraq on May 15, and it also requested non-emergency U.S. officials to leave the country. In a similar vein, the UK also raised the threat level for its personnel in Iraq on following day.

Nonetheless, there is no guarantee that a small scale proxy war will not turn into a full-fledged war. Even though leaders of both sides are saying that they are not seeking war, the two countries have geared up for military preparations because of the security sensitivity. As long as attacks in the Gulf continue, military escalation will be much higher, and war drums will be heard more clearly.

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.

On April 8, the U.S. put the Iranian Revolutionary Guard Corps (IRGC) on the foreign terrorist organization (FTO) list. This is the first time in modern history that a country has designated a sovereign state’s official army as a terrorist entity. For this reason, it is a case of first impression in terms of international law. Given the Trump administration’s “maximum pressure” policy on Iran, it is no surprise at all. As a predictable reprisal, Iran identified the U.S. Central Command (CENTCOM) as a terrorist group. Therefore, the following question arises: How will these reciprocal acts affect U.S.-Iran relations and what consequences will it bring for Iran with regards to its internal and regional politics?

What is Iranian Revolutionary Guard Corps?

IRGC was formed right after the Iranian Revolution in 1979 on the purpose of preserving the Islamic Revolution and Khomeini’s Velayet-e Faqih doctrine. It earned a reputation for its role in the Iran-Iraq War (1980-1988). Initially, IRGC was only a military organization and the idea behind it was that the regular army was not trustworthy since it was a remainder from the Shah’s era. However, over time it increased its political and economic power, especially during the presidency of Ahmadinejad.

Today, IRGC is a critical element of Iran’s regional military operations as well as its domestic political balances. The IRGC coordinated proxy wars and conflicts in Syria, Iraq, Yemen, and Lebanon. An elite unit called Quds Force, which is commanded by the famous Qassem Soleimani, has especially played an essential role in maintaining Iran’s regional influence.

The Basij forces, which are a paramilitary organization that operate under the IRGC, are very instrumental in suppressing public protests within the domestic context. It owns banks, billion-dollar corporations, media platforms (websites, newspapers, news agencies), universities, and cultural institutions. It also has close ties with some airline companies such as the U.S.-sanctioned Mahan Air. By this way, its rich social capital places it beyond a mere military organization. The IRGC is only accountable to the Supreme Leader of Iran, Ayatollah Ali Khamenei. This fact provides it with political impunity.

U.S.-Iran relations after the IRGC decision

IRGC itself or the people and entities affiliated with it had already been sanctioned by the U.S. Department of the Treasury before. Starting from 2007, IRGC had been sanctioned for various reasons including support for terrorism, Iran’s nuclear and ballistic missile program, and violation of human rights. According to the State Department’s factsheet, in 2007, the U.S. Secretary of the Treasury designated the Quds Force as a terrorist supporting organization.

In 2017, the same authority designated IRGC as a Specially Designated Global Terrorist for its connection with the Quds Force. However, the FTO designation is an unprecedented move. Unlike the previous designations, the State Department listed IRGC as a terrorist entity as a whole. This act brings military action to the table. Therefore, more than producing adverse economic outcomes, this new designation will rather generate severe political and military consequences.

Since listing the Iranian Revolutionary Guard Corps as a foreign terrorist organization, IRGC forces in Syria and Iraq have now become military targets for the U.S. military.

The possibility of a military confrontation in the region is particularly tangible. U.S. military personnel can be attacked by the Iranian military and Shia fighters coordinated by IRGC in Syria and Iraq. Accordingly, on April 9, the General Staff of Iran’s Armed Forces stated that they would “spare no effort” in fighting against “terrorist CENTCOM.” Likewise, IRGC forces in Syria and Iraq have now become military targets for the U.S. military. This escalation could spark a broader incalculable regional conflict.

Iran nuclear deal in total jeopardy

One of the primary issues strictly engaged with this designation is the destiny of the nuclear deal. Trump announced that the U.S. pulled out of the nuclear deal on May 8, 2018. After this withdrawal, sanctions began to be re-imposed on Iran. Other contracting parties have been working with Iran to save the deal since. However, without U.S. assurance to other countries, it is impossible to carry out the deal.

The FTO designation holds other countries, entities, or people, who supply “material support” to IRGC, to account differently from previous designations. Since the IRGC is a fundamental part of the Iranian economy, countries that conduct business with Iran will reconsider their business carefully as it is highly likely for their activities to be interpreted as material support to a foreign terrorist organization. Consequently, the odds that Iran will become more isolated after Trump’s decision is very high.

Since IRGC is Iran’s official army branch, this move could trigger an existential conflict between the U.S. and Iran. More, this means that thousands of Iranian people who are completing their mandatory military duty under the IRGC will be conceptualized as terrorists. Apart from the conscription problem, IRGC has other branches that operate on various domains of the country – namely media, banking, finance, construction, transportation, social aid networks, and education.

All these people connected with these branches could be labeled as terrorists. For these reasons, there is no doubt that FTO designation will help IRGC consolidate public support. This move will undermine all attempts taken by U.S. governments to push the Iranian people to turn their backs on their government.

Trump’s decision to list the IRGC as a foreign terrorist organization will help the IRGC consolidate public support.

When it comes to internal power balances in Iran, one thing is certain that reformist forces will lose power and hardliners will gain the upper hand after the decision in concern. On April 9, various Iranian lawmakers went to the parliament wearing IRGC uniforms to show their rage against the U.S. Tehran’s reformist MP, Mahmoud Sadeghi, was one of them. Similarly, Abdollah Ramezanzadeh, spokesman of the reformist Khatami government (2001-2005), said that despite all the differences of opinion inside, they are united against “the enemy” by supporting the Iranian armed forces. It is reasonably foreseeable that Iranians from all walks of life will be united behind the IRGC.

Returning to the question posed at the beginning of this piece, it is possible to conclude that relations between the U.S. and Iran are now far from the prospect of détente. Trump’s decision has also reiterated that the U.S. has no clear strategic vision to contain Iran. The rationale behind the decision will produce unwanted consequences that will contrast with the intended outcome.

Iranians are famous for their unconditional support for their government in extraordinary situations. This is why the Mujahedeen-e-Khalq (MEK) organization has no material base in Iran. Since they sided with Saddam Hussein against their own country during the Iran-Iraq War, Iranians hate them no matter which political stance they take before the Islamic Republic.

Showing the same strategic deficiency, this never prevents the U.S. government from supporting the MEK on various platforms. Likewise, regardless of their political backgrounds, a substantial amount of Iranians will back the IRGC. Hence, the IRGC will become more powerful, instead of declining in strength. Hardliners in Iran will enlarge their influence on different institutions and domains so that change from within will be improbable.

In the middle of a number of major uncertainties regarding Iran’s foreign relations, foreign minister Javad Zarif made a sudden resignation decision on February 25. The decision came at the day of Beshar al-Assad’s surprise visit to Tehran, where he met the Supreme Leader Ali Khamenei and President Hassan Rouhani. The visit was organized by Qassem Soleimani, the commander of Iran’s Revolutionary Guards’ elite Quds Force, and Zarif was indignant about having been excluded from the high-level meetings where Soleimani was present: “The ministry of foreign affairs did not have information at any level (about the trip) and this lack of information was maintained until the end of the trip,” said Bahram Qassemi, foreign ministry spokesman. The decision was made, Zarif wrote on his midnight Instagram post, “to defend the integrity” of the ministry.

President Rouhani rejected the resignation almost forthwith and stated that “as the Supreme Leader has described you a ‘trustworthy, brave and religious’ person in the forefront of resistance against widespread US pressures, I consider accepting your resignation against national interests and reject it.” Consequently, Zarif participated in the welcoming ceremony of the Armenian Prime Minister Nikol Pashinyan on February 27. Being under fire from all sides, particularly the hardliners, is not a novelty for Zarif. Also, the presidency’s failure to notify him about the trip should not be the only motivation for the resignation since, according to some reports, even Rouhani was not properly informed about it in advance. So, in all likelihood, tension is on the rise in factional struggles in Tehran and the crisis is, at the best, delayed only to haunt Iran in the coming months too. In any case, the brief arm-wrestling in Tehran brought to the light, once again, two main facts.

First, it is no secret that the fragmented nature of Iran’s power structure has been increasingly going beyond the basic constitutional limits in favor of the Supreme Leadership Office (bayt -e rahbari) and at the expense of the executive branch currently controlled by Rouhani. The crucial point here is that unlike the past years, is it not entirely about Khamenei’s personality anymore. To the contrary, a sort of a post-Khamenei power struggle is underway among Iranian political and military elites, while he is still alive. For the Revolutionary Guards, institutionalizing the defacto powers they have been building for almost three decades is a vital issue. They are sensitive in maintaining their grip over the country’s foreign policy, particularly on the Middle East and Iran’s neighbors, and its economy in the post-Khamenei period too. They spend every effort to make sure that Khamenei’s successor is a similar figure with an identical political mind while others, most notably reformists, call for change.

Tension is on the rise in factional struggles in Tehran and the crisis is, at the best, delayed only to haunt Iran is the coming months. 

Second, Iran’s conservatives, including the hardliners, grasp the seriousness of the U.S. effort to pressurize their country. Ali Akbar Valayati, chief foreign policy advisor to Khamenei, and Soleimani, are certainly key actors in Iran’s foreign policy but they lack the means and the credibility to find audience especially in the West. This is exactly what Zarif, who has become a globally familiar face for the last six years, does the best. Zarif is a fluent English speaker who knows American society, and much so that during the negotiations over the nuclear deal, his hardline adversaries in Tehran called him “Zarif the American.” But there is more to the man. Zarif owns substantial credibility in Western circles as the former Ambassador and Permanent Representative of Iran to the UN between 2002 and 2007 and the country’s current FM and became known for his “smiling diplomacy.”

Iranian officials insist that the resignation crisis should not be exaggerated and that the tension is over. Although such political tensions are, in fact, almost a universal phenomenon, Zarif’s reaction against the power struggle in Iran cannot be underestimated either. And here is why. It is obvious that if Zarif’s resignation was accepted, many of his like-minded colleagues, including some of his ministry’s high-ranking employees and a number of ambassadors, would follow suit to spark a real crisis in Tehran. Besides, although unlike his predecessor Barrack Obama, President Trump would, in all probability, prefer to negotiate with Iran’s hardliners, as this runs against Iran’s national interests for three reasons.

If Zarif’s resignation was accepted, many of his like-minded colleagues, including some of his ministry’s high-ranking employees and a number of ambassadors, would follow suit to spark a real crisis in Tehran. 

First, the international community, at least in the West, is more receptive towards the rhetoric and the attitude of Iran’s reformists and moderates – as shown in the transition from former President Ahmadinejad to Rouhani. Second, Iran’s hardliners may not in fact be so hard in their foreign policy calculations as long as they stay as the real and supervising power behind the curtain and do not lose their honor, or abru, or take the actual risk. Iran’s fragmented power structure, one can say, was most instrumental in playing this good-cop bad-cop game over the last four decades. The international community is used to it too. A less credible successor to Zarif could cost Iran at least some of its European allies. Third, despite the everlasting tension among different political factions in Tehran, Iran has, since the American invasion of Afghanistan in 2001, built a carefully-architectured, and notably fragile, foreign policy strategy over the regions most critical for its national security. This strategic equation has many layers and all sides, conservatives and reformists alike, play their own roles in it. Although Zarif is only one part of the equation, Iran’s strategy is currently under increasing challenge, especially by the U.S. and its Middle Eastern allies, and he is still a critical actor.

Al-Assad’s Tehran visit, which was followed by the Israeli Prime Minister Netanyahu’s Moscow visit two days later, is a clear sign of deteriorating relations between Iran and Russia. Iran is critical of Russia’s engagement with Israel over Syria, while Russia believes that the Syrian crisis cannot be ended, and Syria’s reconstruction cannot start with Iran’s extensive presence in the country. Also, the unilateral U.S. sanctions hurt Iran’s economy badly and the U.S. is determined to further isolate Iran regionally and globally. Moreover, Europe has so far failed to step in to remedy the consequences of U.S. policy towards Iran. According to the last reports, trade volume between Iran and China, one of Iran’s key economic partners, is in visible decline. Zarif’s resignation showed that there is a complex balance between Iran’s conservatives and the reformist-moderate camp and a government crisis is what Iran needs the least.

Oman has long been known for its efforts to pursue a politically neutral position in the Gulf region. Close cooperation between Iran and Oman dates back to the pre-1979 Revolution period. The uprising that took place in Dofar in the early 1970s and targeted Sultan Qaboos was suppressed with the help of the Iranian Shah. The friendly relationship between the two countries has continued since then. Due to this close cooperation, the Omani leadership has tried to stay out of the existing political formation against Tehran.

This situation has been endangered in recent years due to the increasing competition between Saudi Arabia, the most powerful member of the Gulf Cooperation Council of which Oman is a member, and Iran. Tehran’s continuing expansionist policies in the region are considered as a threat for Saudi Arabia and its allies in the Gulf. In this regard, Riyadh has also put pressure on Oman to reconsider its relations with Tehran. Oman, however, is disturbed by this attitude of Saudi Arabia and did not want to be a party to political conflicts between these actors.

One recent aspect of Saudi Arabia’s pressure on Iran is the support of the Trump administration in the U.S. Recently, Trump announced his new package of sanctions, which are intended to further pressure Tehran. Washington is expecting Muscat to support these policies. It is important to mention that due to its strategic position in the Strait of Hormuz, Washington has attached importance to establish strong relations with Oman. The U.S. administration has signed a military cooperation and a free trade agreement with Muscat in order to deepen its relationship with this country.

Tehran’s continuing expansionist policies in the region are considered as a threat for Saudi Arabia and its allies in the Gulf. In this regard, Riyadh has also put pressure on Oman to reconsider its relations with Tehran.

The relationship between the two countries were so close that Oman played a role in mediating the crisis between the U.S. and Iran during the past decade. The Muscat administration has also taken action recently to find a solution to the crisis between Tehran and Washington. Omani Foreign Minister Yusuf bin Alavi bin Abdullah met with U.S. officials during his visit to Washington in July, where he made some efforts to prevent the deepening of the crisis between Washington and Tehran.

The recent visit of Israeli Prime Minister Benyamin Netanyahu to Oman is another sign of pressure that the anti-Iran alliance has been putting on Muscat. Israel is also one of the most eager supporters of the sanctions on Iran. When Netanyahu’s unscheduled visit to Oman is considered in this regard, it can be argued that Tel-Aviv also put pressure on the Omani leadership to comply with the U.S. sanctions.

However, the close cooperation between Oman and Iran leaves the Muscat administration in a dilemma for taking a serious stand against Tehran. One of the main reasons for this is the positive conclusion of the negotiations, which lasted about 10 years, for the natural gas pipeline project that is planned to be built between Iran and Oman through the Strait of Hormuz. The pipeline, which is planned to start from the port of Kuhmobarak in southern Iran and costs 1.2 billion dollars, will enable the transfer of 28 million cubic meters of natural gas per day from Iran to Oman. While Oman plans to use natural gas from Iran for its own needs, it aims to become an LNG exporter as well. Muscat also aims to diversify its economic activities and therefore the gas pipeline is of crucial important for this long-term projection.

The close cooperation between Oman and Iran leaves the Muscat administration in a dilemma for taking a serious stand against Tehran. 

All in all, there are three major dynamics that the Omani leadership had to consider when it comes to responding to the U.S. sanctions on Iran. First of all, the commercial, historical, and cultural relations between Oman and Iran are deeply rooted. Secondly, Oman’s close relationship with Saudi Arabia is of crucial importance and should not be damaged. Finally, Oman’s international allies such as the U.S. and Israel want Muscat to join them in their policies against Tehran. Considering these dynamics, the Omani leadership had to find a way to successfully respond to the rising tension between Iran and other regional and international actors. With its years of experience in neutral policies, one would consider that Oman would find a way to respond to this crisis with minimum damage to its existing priorities.

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.