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Thursday, July 24, 2014
- The administration of President Barack Obama is waiving tough financial sanctions that would have taken effect Thursday against both China and Singapore because it said the two countries had made “significant reductions” in their crude oil purchases from Iran.
The announcement by Secretary of State Hillary Clinton brought to 20 the number of major importing countries that have been issued waivers from the sanctions in exchange for reducing their consumption of Iranian crude.
Among them are some of Tehran’s most important customers, notably India, South Korea, Turkey, Japan, as well as China and a number of European Union (EU) countries.
Under its own separate sanctions regime, the EU has set Jul. 1 as the date by which all of its member must cease buying Iranian oil to increase the pressure on Tehran to curb or abandon its nuclear programme.
Speaking of the countries that have reduced their purchases, Clinton, who is currently on a visit to the Baltic states, said, “Their cumulative actions are a clear demonstration to Iran’s government that Iran’s continued violation of its international nuclear obligations carries an enormous economic cost.
“We have been clear all along there is a path for Iran to fully re-join the global economy,” she stressed. “Iran’s leaders have the opportunity to address international concerns by engaging seriously and substantively in negotiations with the P5+1,” the six powers, including the five permanent members of the U.N. Security Council plus Germany, which have so far held three rounds of talks with Tehran on its nuclear programme since April.
While expected, the waiver for China appears certain to draw harsh complaints from neo-conservatives and other Iran hawks here who note that, after reducing its imports of Iranian oil during the first quarter of this year – possibly as a result of a contract dispute – Chinese imports rose sharply in May to nearly the same level as in May 2011.
“The administration likes to pat itself on the back for supposedly being strong on Iran sanctions,” said the Republican House Foreign Affairs Committee chair, Florida Rep. Ileana Ros-Lehtinen in response to Clinton’s announcement. “But actions speak louder than words, and today the administration has granted a free pass to Iran’s biggest enabler, China, which purchases more Iranian crude than any other country.
“If the administration is willing to give China, a country that has aided the Iranian regime’s efforts to acquire nuclear capabilities, a free pass, who is it willing to sanction?” she asked, adding that Congress will seek new legislation tightening sanctions, possibly by reducing or eliminating the administration’s waiver authority.
In spite of her complaints, the U.S.-led drive to reduce third-country purchases of Iranian oil appears to have made major progress over the past six months, as leading consumers have sought to compensate by buying more from Saudi Arabia, Iraq, Angola, and other major exporters.
The Paris-based International Energy Agency (IEA) has estimated that Tehran’s oil exports have fallen as much as 40 percent since the start of the year – from about 2.5 million barrels a day to some 1.5 million barrels a day – while Tehran itself this week pegged the decline at between 20 and 30 percent.
Those cuts have deprived Iran’s treasury of an estimated 16 billion dollars in oil revenue so far this year and are clearly making life more difficult for the country’s 74 million citizens. The reductions, as well as a number of previous sanctions, have resulted in a 40-percent drop in the rial’s value over the last few months and an inflation rate estimated at between 40 and 50 percent for many consumer goods.
Most analysts predict a worsening of the economic situation as additional sanctions take effect, including a Jul. 1 EU ban on insuring tankers carrying Iranian crude, as well as other measures designed to expand and tighten existing financial and energy-related sanctions that the U.S. Congress appears likely to enact later this summer barring an unexpected breakthrough in the P5+1 talks.
During the last round in Moscow last week, Iran reportedly offered to halt its production of 20-percent enriched uranium in exchange for formal recognition by the U.S. and its partners of Tehran’s right to enrich to up to five percent for its civil-nuclear programme under the Non-Proliferation Treaty and an indication that doing so would result in some easing or delay of sanctions.
Washington, however, reportedly retreated from earlier hints that it was prepared under the right circumstances to recognise Iran’s enrichment rights and instead insisted that, in addition to freezing 20-percent enrichment, Tehran had to agree to ship out its stockpile of 20-percent enrichment and close its underground Fordow enrichment facility before any meaningful sanctions relief or related steps could be discussed.
P5+1 will next meet with their Iranian counterparts next week in Istanbul, but the discussions will be confined to technical issues. No new talks at the political level have yet been scheduled.
Despite the escalating impact of sanctions on Iran’s economy, however, many analysts, notably neo-conservatives and other hawks who had led the drive for “crippling” sanctions, now believe that the strategy is not working and that the Iranian regime can withstand the pain the sanctions are inflicting.
In testimony last week, two members of a hawkish task force from the Bipartisan Policy Council (BPC) testified before Congress that Washington should be building up its military forces around Iran to make the threat of a military strike more credible, a position echoed in a letter sent by 44 senators to Obama on the eve of the Moscow talks.
At the same time, the neo-conservative Weekly Standard, a major promoter of the Iraq war, called for Congress to approve an “Authorisation of Military Force” to halt Iran’s nuclear programme, similar to the one approved by Congress five months before the Iraq invasion.
In a significant policy paper this week, Patrick Clawson of the influential Washington Institute for Near East Policy, a spin-off from the most important Israel lobby group, the American Israel Public Affairs Committee, argued that the Iranian regime does not see sanctions as a threat to its survival, particularly compared to earlier years of economic hardship and that changing that perception required “a profound shock of some sort, be it remarkably tough sanctions, more complete political isolation, or military action”.
A former senior George W. Bush national-security official, Robert McNally, also argued in an op-ed published by the Financial Times Thursday that both current and impending sanctions “are not tough enough” and urged the adoption of “intrusive sanctions”.
Under his scheme, Iran would face an ultimatum to comply fully with all Security Council resolutions or face a “quarantine …and, if necessary, a naval cordon”, which he acknowledged was “technically an act of war…”
*Jim Lobe’s blog on U.S. foreign policy can be read at http://www.lobelog.com.