The effects of US sanctions on the Iranian economy

By Syrializm Analytics

 

With the entry into force on May 2, the US ban on Iranian oil exports will begin.

Starting from that date, the value of Iranian oil exports will be zero, meaning that the United States aims to reset Iran’s oil imports.

The United States, in its confrontation with Iran, has determined the means and the objective, by isolating Iran internationally and politically, applying a military siege on each side and then starting to implement a severe economic blockade aimed at breaking Iran.

Forcing them to surrender and abandoning their state and regional policies.

According to the IMF report, which had predicted that the Iranian economy would maintain growth rates of 4 percent in 2018 to stay the same in 2019.

However, what followed the sanctions and the gradual tightening of the blockade since Trump’s decision last year to withdraw the United States from the nuclear deal with Iran and re-impose sanctions that had been mitigated after the signing of the nuclear agreement in 2016.

Iran’s economic growth rate in 2018 was 1.5 percent, a figure quite different from previous forecasts, indicating Iran’s entry into the tunnel of an economic disaster expected to worsen further this year as US economic sanctions weigh heavily on Iran.

The Iranian economy is going through a terrible recession, with inflation hitting 40% and expected to rise above 50%, not to mention the dire situation of the Iranian riyal, which lost 60% of its value against the US dollar.

All these figures show beyond a shadow of a doubt that the current state of the Iranian economy is very bad.

In its sanctions, the United States aims primarily at depriving the Iranian economy of its most important source of income – Iranian exports, mainly energy exports in general.

The United States withdrew from the nuclear deal in the summer of 2018 and set a six-month deadline, which began in June and ended in November, for the United States to impose sanctions on Iran and even tighten it one month before the end of 2018.

The United States has given an exception to the sanctions resolution for eight countries that have the right to import oil from Iran, which ended in May, followed by a complete ban, and any countries that violate the sanctions imposed on Iran would simply expose themselves to US sanctions.

The problem with the way the United States is using Iran by refining Iran’s oil exports to the world is that the countries that were initially excluded – China, India, Japan, South Korea and Turkey – as well as three countries have voluntarily stopped importing Iranian oil – Greece, Italy and Taiwan.

The commitment to the resolution puts those countries in an embarrassing and difficult position, which is to find an alternative to Iranian oil, which is very questionable in terms of capacity.

For example, China imports almost half of Iran’s oil, with about 40 percent of Iran’s oil and gas produced by China.

Turkey has also found itself in an unsatisfactory position as it imports oil from Iran as well. Iran is an ally and has many interests in common with it.

Such sanctions will cause damage to Turkey.

What is now clear is that the five countries will find it difficult to find an alternative.

Saudi Arabia and the United Arab Emirates have offered to replace Iran in securing oil exports from its own production.

Saudi Arabia and the United Arab Emirates have offered to compensate the market for the shortfall caused by the suspension of Iranian exports.

In fact, the offer of Saudi Arabia and the UAE shows stupidity, because it is impossible for Saudi Arabia and the UAE to provide solutions as an alternative to Iran and compensate for the shortage in the market without being affected by international oil prices.

The current commitments are working to keep the price of oil within a certain level.

Any increase in production To compensate for the shortfall resulting from the interruption of Iranian oil exports to world markets will result in chaos in the global oil market, and will be affected by the price of a barrel of oil world certainly, taking into account the situation of oil production and export instability in Libya and Venezuela, which suffer from political problems currently as well.

Thus, the oil market will suffer from instability in the quantity of supply in the event of irregular oil export or stop altogether in both Libya and Venezuela with the cessation of Iranian oil exports.

The offer of Saudi Arabia and the UAE to enter as an alternative to compensate for the shortfall is impossible to implement.

There is also another issue, as noted in a previous report that there are technical problems in the quality of oil produced by Iran, which would be the possibility of compensation of the same quality from Saudi Arabia and the UAE, as the Iranian oil is characterized as heavy oil type, and the crude oil produced in both Saudi Arabia and the UAE is a light crude, and that doesn’t replace that, as the end of the case.

We’ve to remember a very important matter, which is completely hidden or ignored by Mr. Trump’s mind:

The issues is that Iran is not a small country with no capabilities and no abilities.

On the contrary, Iran has the means and tools to overcome the problem.

They’re experts in dealing with sanctions, a state that has been under sanctions since the 1979, which is the date of Islamic revolution that brings the current leadership to power.

Thus, Iran has the ability to sell its points and circumvent sanctions through the sale of its oil through companies or brokers secretly in the markets or rely on the so-called black market of oil, or even resorting to various ways to disrupt oil production in other countries to create an atmosphere of chaos in the markets in order to pressure the US administration to force it to reverse its decision.

The latest threat from Iran to close the Strait of Hormuz is one of those roads, even if it is difficult, but it is capable of doing at least reduce the quantities of oil exported from the Gulf to the global markets, and had made such a movement during the war with Iraq, which lasted 8 Years (1980-1988).

Iran may also use many of its tools in the region, such as Hezbollah and the Houthis in Yemen, to carry out acts of sabotage aimed at disrupting the production or export of oil from the region without exploiting Iraq and Iranian influence there.

Iran may also resort to cyber warfare by launching cyber-attacks on oil fields in the Gulf states, disrupting production or causing confusion that will cause chaos and affect the production and export of oil to world markets.

We must remember that preventing Iran from exporting its oil is tantamount to a declaration of war, and therefore Iran reserves all its rights to do what it deems appropriate and capable of responding.

Therefore, there is no guarantee that the United States’ means of subjugating Iran may fulfill its demands so easily, which is certainly a flawed means and will not be easily achieved.

If achieved, Iran’s response will not be met despite its severe suffering, for the simple reason that the requests the United States demands from Iran and wants to comply with them are in fact neither Iran nor any other country.

The US demands or conditions that Iran must comply with and implement, according to US Secretary of State Mike Pompeo, have reached 12 requests, the most important being:

  1. Iran must abandons its plans and programs to develop its peaceful and military nuclear program fully.
  2. Iran must abandons its plans and programs to fully develop its missile arsenal, whether ballistic missiles equipped with conventional, biological or nuclear warheads.
  3. Respect the so-called policy of states and non-interference in the affairs of other countries, especially neighboring countries.
  4. Stop supporting what the United States considers terrorist organizations as companies such as Hezbollah and Hamas etc…
  5. Stop threatening Israel’s security.
  6. Stop supporting the Huthis and interfering in Yemen.
  7. The withdrawal of its forces and militias loyal to Syria.
  8. Non-interference and support for certain parties in Afghanistan.
  9. Not threatening the security of the gulf and its states
  10. Being neutral as it was the case in the Second World War, in other world not supporting the enemies of the United States in the world (countries such as China and Russia).
  11. Offering its abilities and resources to be invested under terms and conditions that suits mostly the US and its allies companies.
  12. Applying its interests in away the serve the US aspirations

Thus, all these requests are presented as impossible applications that Iran cannot implement or at least most of them.

As it’s well known, states usually exercise their right to implement their foreign policies to achieve their interests, which are the goals, ambitions, capabilities and capacities of the countries around them.

Therefore, it’s not possible for any country in the world to completely abandon its policy and abandon its interests and objectives and return them to its own borders of its own free will.

For example, Iran in Iraq, for example, should never intervene and there should be no Iranian role in Iraq.

Iran, which will respond that the United States, which is more than 10,000 kilometers away from Iraq, comes with all its armies in its quest to maintain its interests and enter Iraq, leaving 5,500 troops today, while preventing Iran from the country bordering Iraq, which has a border with Iran of 1500 kilometers, and has many links, with the most important link is the religious Shiite doctrine, to have any word or position or role in this country in order to maintain the interests of Iran in a neighboring country has such great importance and long history as Iraq.

Iran must allow the disarming of militias loyal to it in Iraq.

Most of these militias in Iraq now have legal and official status and are officially recognized by their Iraqi government.

Also, we must not forget that these militias played an important and decisive role in the war on Iraq to defeat the so called Islamic state and the liberation of vast areas of Iraq, the most important of them is the popular mobilization forces.

Iran cannot accept that, nor can Iran accept to stop dealing with the Taliban in Afghanistan while the United States negotiates with them is going on, and discuss issues of cooperation with the movement to bring peace and withdraw its forces and NATO forces, which is similar Of the Iraqi situation, where the United States warships in 2001 to Afghanistan with its troops cut the distance of 12,000 kilometers and to leave in this country the number of troops today to about 20000 soldiers, knowing that one of the goals of the United States of all these moves is simply besieged Iran militarily through the American presence in both Iraq and Afghanistan.

How can Iran be asked to comply with these demands?

If we assume that Iran followed the example of Japan, Iran’s strict adherence to conditions and demands would mean surrendering to the United States, and would be like Japan, which surrendered to the United States at the end of the Second World War after being attacked by two atomic bombs.

Even as I said if we assumed and agreed with Iran, there is no exchange for that.

The United States, for example, asks North Korea to stop developing its nuclear weapons in exchange for a large package of economic incentives and economic compensation.

While asking Iran to abandon its weapons, its nuclear program, its militias and its allies simply and without any compensation!

As you mentioned, even if Iran agrees, things will not end there, and the fate that Iran will face is exactly what happened in Libya.

Gaddafi abandoned his unconventional weapons, gave up his secret nuclear program, presented all his files and made full concessions under American conditions.

The result was to topple his regime, kill him, dismantle Libya and introduce it in an atmosphere of chaos, as is the case today.

The fate of Iran will be as it happens with Iraq as well.

To understand Iranian behavior, we must understand Iran’s fears and motives that support its behavior.

Iran sees itself as an empire, the heir to the ancient Persian Empire, and its Islamic religious zeal with its Shiite faith and Shi’ite culture.

Iran is a country that is more than 3000 years old and is an authentic and historic part of the region.

Today it has more than 80 million inhabitants.

It’s the guardian of the Shi’a sect in the world.

It has the right to influence, be part, decide and play a central role in the region and its neighboring countries.

It also has a fear of the idea of ​​a minority state, it’s a Persian state, although it’s a Muslim, in an Arab or different environment, and is associated with this ocean at an unhappy date from the Persian perspective.

They have no confidence in Arabs, Turks or others, and therefore must create a balance that will preserve their existence.

It knows that all these countries and even Western countries and neighboring countries have always been working on harming them.

They’ll not forget their history with the Arabs, neither in the past nor in the present, don’t forget the Iran war with Iraq, how the West supported Saddam Hussein and encouraged he to wage war Iran doesn’t forget the role of the Gulf states and their long struggle with them.

Throughout the Iran-Iraq war, the United States has been supporting Iraq, with one exception: the Iran-Contra scandal.

The role of the West in overthrowing the government of Mohammed Mossadegh in Iran after he nationalized Iranian oil in 1951 and how he ended up in the gallows after the United States and Britain supported the coup d’état, he was overthrown in 1959.

Nor do they didn’t forget that the British and the Soviet Union occupied Iran during the Second World War, and don’t forget what the United States and the West generally did after the success of the Islamic Revolution and the overthrow of the Shah of Iran Mohammad Riza Pahlavi, the West man in the region.

Iran has been working since the end of its war with Iraq to develop its military arsenal and develop its deterrent capability in various ways to maintain its interests and defend itself, because it remembers well its bitter experience during its war with Iraq how the Iraqi missiles launched by Saddam Hussein destroyed many Iranian cities.

Here, we see that Iran, like other countries in the world, has goals and fears.

It knows very well that if it responds to such demands and cannot be accepted by any country, the world has ruled itself to disappear and we have a list.

In a second case, the overthrow of the existing regime will be the next step and turn it into a pro-Western state as it was in the era of the Shah, which is the real goal behind American policies toward Iran, which is not a new thing.

It began with the success of the Islamic revolution in 1979, and was exacerbated by what happened at the US embassy in Tehran at the time, and the failure of the United States helicopters to liberate their hostages with a military operation in which a helicopter was downed carrying marines whom all were killed.

The goal of the United States is regime change in Iran, which was confirmed by US national security adviser John Bolton and secretary of State Mike Pompeo.

If the United States succeeded in bringing down the current regime in Iran, which is very difficult, as the United States has been working to achieve this objective for more than 40 years, while the United States failed to change many regimes in many countries in the world, even by military force, as it happened In Vietnam, North Korea, Cuba and even in both Syria and Venezuela so far.

Changing the current regime in Iran will reduce the troubles of the United States and Israel, but it will not change or even alleviate the troubles of the Arab Gulf states or even Iraq from Iran.

Simply put back in history before the Islamic Revolution and another regime, whether it was a new Iran or regime what is known as the group of the so called “Mujahidin Khalq” (Mariam Rajavi) will remain the Persian Iranian principle in their view of the region and that gave them the right and the final word in the Gulf region, which is called the Persian Gulf.

Think again and learn that we’re dealing with the Persian Empire, which has also become a Shiite Muslim, and that is why the Trump, Bolton, Pompeo, and even Mr. Bibi in Israel must realize this and understand.

As for Israel, it remains to be mentioned that Israel will have no problem with any new regime in place of the current regime in Iran, nor will it hesitate to cooperate with it at the expense of the Gulf states.

Relations with Israel and the coalition together for fear of Iran have no value.

The result will be the same in both cases, and I’ll not exaggerate to say that it would be much worse on the Gulf States than the current situation, therefore they have to fix and improve their relations with the current regime.

Without a doubt, the recent events that took place in the Gulf region shows us is, the entire situation prove that the real target behind all of that, is just to blackmail the gulf states by the United States with keeping them under the Imaginary threat of Iran to their security, however the fact is far from reality, so wake up!