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Iran

US to reimpose all sanctions on Iran – but China may have exemption to keep buying oil

  • Eight nations will be allowed to continue buying oil from Iran at reduced levels without breaching the US sanctions
  • They were not named by US Secretary of State Mike Pompeo but are expected to include South Korea, Japan, India and possibly China
PUBLISHED : Saturday, 03 November, 2018, 12:30am
UPDATED : Saturday, 03 November, 2018, 8:27pm

The Trump administration on Friday announced the reimposition of all US sanctions on Iran that had been lifted under the 2015 nuclear deal – but with an exemption for eight oil-buying nations that could include China.

The United States will also add 700 individuals and entities to its Iran blacklist and pressure the global SWIFT banking network to cut off Tehran when the sanctions are put back in place next week, US officials said.

Eight countries will be able to continue importing Iranian oil at lower levels in order to avoid upsetting global crude markets when the sanctions take effect on Monday, Secretary of State Mike Pompeo and the other US officials said.

Unusually, Pompeo did not name the eight, other than to say the European Union is not among them. South Korea, Japan and India are expected to get a reprieve, however, and possibly China.

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All are among Iran’s biggest oil customers, and they have argued that stopping their purchases immediately would cause oil prices to spike worldwide.

Six of the countries had agreed to “greatly reduced” levels of oil purchases, Pompeo said, and two said they would soon end their imports of Iranian oil.

“Some of these will take a few months to get to zero,” he told reporters in a conference call on the reimposition of sanctions. “We will give them a little longer to wind down. Weeks.”

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Pompeo said the countries agreed that the payments for the oil will go into offshore accounts that Iran will only be able to tap for “humanitarian trade, or bilateral trade in non-sanctioned goods and services”.

“Maximum pressure means maximum pressure,” Pompeo said.

The US aims to cripple the Iranian economy to pressure Tehran to halt its nuclear activities and what the US says is broad support for “terrorism” in the region, Pompeo said.

The reimposition of sanctions “is aimed at depriving the regime of the revenues it uses to spread death and destruction around the world,” Pompeo said.

“Our ultimate aim is to compel Iran to permanently abandon its well-documented outlaw activities and behave as a normal country.”

The sanctions come six months after US President Donald Trump withdrew from the 2015 nuclear deal struck between world powers and Iran.

At the time, he began reimposing sanctions that had been suspended or removed by his predecessor Barack Obama.

That process will be completed starting from midnight Sunday, US eastern time, when sanctions on the regime’s banks, shippers, shipbuilders and oil sector are imposed.

The impact remains in question as other countries, particularly Washington’s European allies, resist joining its effort to economically strangle the Tehran regime.

The European Union has gone so far as to protect businesses that operate in Iran.

It has announced plans for a legal framework through which firms can skirt US sanctions, although few major corporations have been eager to risk the wrath of penalties in the world’s largest economy.

“This is not 2012 when the world was united behind sanctions against Iran. This is the Trump administration trying to force the rest of the world to go along with a policy that most countries do not accept,” said Barbara Slavin, an Iran expert at the Washington-based Atlantic Council.

“The US has had some success in terms of frightening away major corporations. The sanctions hurt a lot. But Iran is still going to be able to sell oil,” especially to China, she said.

To punish Iranian banks, US Treasury Secretary Steven Mnuchin said the global financial network SWIFT – which enables secure bank-to-bank communications and transactions – will also be subject to US sanctions if it provides services to Iranian financial institutions on the US blacklist, which includes most major Iranian banks.

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That could make it very hard for Iran to do business with other countries.

“SWIFT is no different than any other entity,” Mnuchin said.

Justifying the action, Pompeo has issued a list of demands for Iran that go well beyond the nuclear program that was the focus of Obama’s deal.

He wants the Shiite clerical regime to withdraw from war-ravaged Syria, where it is a critical ally of President Bashar al-Assad, and to end long-standing support to regional militant movements Hezbollah and Hamas.

The US also wants Iran to stop backing Yemen’s Houthi rebels, who are facing a US-supported air campaign led by Saudi Arabia.

But experts don’t expect Iran’s leaders to immediately throw in the towel.

“It’s basically magical thinking. The Iranians have been able to continue their support to regional proxies and allies for 40 years despite economic pressure,” said Ali Vaez of the International Crisis Group.

He said the Trump administration believed that a constrained, struggling Iran would see its influence erode. But the final goal, he said, was unclear.

“I think the end-game depends on who you’re asking. The president himself is interested in having a broader, better deal with the Iranians, but I believe that most of his national security team are interested in either destabilising Iran or assuring a regime change in Tehran,” Vaez said.

Additional reporting by Associated Press and The Washington Post