Trump to Harness Russia, China, India for Tighter Sanctions on Iran

After threatening Iran with the worst sanctions in history, US President Donald Trump is not done, although the record collapse of the Iranian currency and inflation already had the effect of sparking rowdy street protests and strikes this week in Tehran. The shopkeepers of Tehran’s famous bazaar and crowds of protesters shouted slogans never before heard in the Revolutionary Islamic Republic: “No more Syria! No more Lebanon! What about us!” and “Death to Palestine!” The crowds’ ire was directly aimed at Iran’s investment in its proxies and allies for “exporting the Revolution” i.e., expansion, at the expense of its own people. By the end of the week, the turbulence had abated somewhat, but the protesters were only taking a breather for the next outburst since the economic crisis is getting worse.

As of now, since President Donald Trump announced the US withdrawal from the 2015 nuclear pact, the Iranian rial has slumped from 65,000 per dollar (42,890 at the end of 2017) to 90,000 this week. The Iranian authorities tried to stem the slide by unifying the official and black-market exchange rates but failed in the face of rising demand for hard currency.

Trump has more big plans for squeezing Iran. Before early August, when the next round of sanctions goes into effect, he plans to bring Russia, China and India aboard an even harsher sanctions cycle. This will be a key issue at Trump’s first real summit with President Vladimir Putin on July 16 in Helsinki. Trump will also seek a guarantee from Putin to refrain from providing Iran with an alternative sanctions-busting trading and financial network, as he did in the years between 2010 and 2014. The Russian leader will want some incentives as a quid pro quo for playing along, including possibly easing the sanctions imposed on his country over its annexation of Crimea.

Trump may gamble on Putin’s profit motive for supporting the ultimate US sanction on Iran, a plan to stop the world buying Iranian oil. This would increase the oil consumer countries’ dependence on Russia and Saudi Arabia, which last week put through a decision by OPEC to cut production, to boost prices.

Trump’s call for the G-7 group of rich industrial nations to reinstate Russia helped pave the way for the summit. His national security adviser John Bolton got the ball rolling for the Helsinki agenda during his talks in the Kremlin on Wednesday.

Trump’s notice to all countries to stop importing crude from Iran by Nov. 4 or face sanctions – sans any waivers – was addressed mainly to China and India,Iran’s biggest customers.

Tehran may have been over-optimistic in expecting China to come forward with investments and oil purchases to compensate for its losses from the West. Iran’s President Hassan Rouhani discovered this when he sat down with Chinese President Xi Jinping at the SCO Heads of State Council in Qingdao on June 10. Beijing may be involved in a trade war with the United States over Trump’s new tariffs, but Xi will not take the conflict to extremes for Iran’s sake. After all, China did cooperate with the US in imposing sanctions on North Korea.

As for India, Iran’s second major oil customer, its top officials, Foreign Minister Sushma Swaraj and Defense Minister Nirmala Sitharaman will put the subject of is oil imports from Iran on the table, when they meet their US counterparts James Mattis and Mike Pompeo at the 2+2 dialogue on July 6. Government sources in Delhi have said the US demand to stop buying Iranian oil is “impractical” and there is a big difference between “significant reductions” and “zero” trade. This leaves some wiggle room for a compromise.

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