Washington tightens sanctions to cut Iran oil exports to “zero”

By Bill Van Auken
23 April 2019

With the lifting of waivers that allowed five major countries to continue purchasing Iranian oil, Washington has launched another and far more dangerous phase of its illegal and unilateral economic sanctions against Iran.

The waivers were granted last November, when the Trump administration imposed a second round of punishing sanctions designed to choke off all Iranian energy exports and freeze Iran out of the world banking system, so as to crash its economy. They covered the countries of China, India, Turkey, Japan, South Korea, Greece and Italy, as well as the island of Taiwan. The waivers for the last three lapsed as they ended imports of Iranian oil. Now, the exceptions for the other five are to end on May 2, exposing them to penalties including fines and being frozen out of US markets.

Announcing the US action on Monday, US Secretary of State Mike Pompeo used the language of a gangster threatening retaliation against anyone daring to defy Washington’s dictates.

“We will no longer grant exemptions,” he said. “We’re going to zero. We’re going to zero across the board. We will continue to enforce sanctions and monitor compliance. Any nation or entity interacting with Iran should do its diligence and err on the side of caution. The risks are simply not going to be worth the benefits.”

The waivers were originally granted with a demand from Washington that the respective countries reduce their oil imports from Iran and find substitutes for Iranian crude. They were also aimed at preventing a sudden cutoff of all Iranian oil leading to a spike in global petroleum prices and possible political repercussions over a rise in the price paid at gasoline pumps in the US itself.

News of the US decision to yank the waivers sent global crude oil prices up 3 percent in trading early Monday, with futures climbing to more than $74 a barrel, the steepest increase in six months.

In the case of China, the amount of Iranian oil being imported has only risen over the past six months.

Even before Pompeo’s formal announcement, news of the impending US action led to a sharp rebuke from Beijing.

“China opposes the unilateral sanctions and so-called ‘long-arm jurisdictions’ imposed by the US,” the country’s foreign ministry spokesman said Monday. “Our cooperation with Iran is open, transparent, lawful and legitimate, thus it should be respected. Our government is committed to upholding the legitimate rights and interests of Chinese companies and will play a positive and constructive role in upholding the stability of the global energy market.”

The withdrawal of the waiver for Chinese importation of Iranian oil sets the stage for another confrontation between Washington and Beijing as the two powers are in the midst of negotiations supposedly aimed at heading off a full-blown trade war provoked by the Trump administration.

While government officials and energy industry sources have indicated that India, which is dependent upon imports for some 80 percent of its energy needs, has succeeded in finding alternatives to Iranian oil, the sudden lifting of the waivers poses problems for the ostensible US allies, Turkey, Japan and South Korea.

Turkey is the most heavily dependent upon oil imports with Iran, with which it shares a roughly 300-mile border. Ibrahim Kalin, a senior adviser to the president of Turkey, was in Washington last week pressing US officials to extend the waiver on Iranian oil imports to the country.

“In terms of oil, Iran is one of our main oil suppliers, and we made it clear that not only would we like to continue to buy oil from Iran, but also Iran is a neighboring country,” Mr. Kalin told the media after the talks. “We have a long border with Iran, we have cultural ties.”

Turkey’s Foreign Minister Mevlüt Çavuşoğlu posted a message on Twitter saying that “Turkey rejects unilateral sanctions and impositions on how to conduct relations with neighbors.”

Both Japan and South Korea rely on particular types of Iranian oil for their petrochemical industries and have not found ready substitutes.

Before the Trump administration unilaterally abrogated the 2015 Iran nuclear accord, known as the Joint Comprehensive Plan of Action (JCPOA), in May of last year and began the imposition of ever-tightening US sanctions, Iran exported some 2.5 million barrels per day (bpd). That amount, which has fallen to less than 1 million bpd, still accounts for 40 percent of the government’s revenues.

All the other signatories of the JCPOA accord—Russia, China, Britain, France, Germany and the European Union—insist that Iran has fulfilled all of its obligations to limit its nuclear program. This assessment has been verified by the International Atomic Energy Agency, the UN body charged with ensuring Iranian compliance.

The Trump administration’s actions have met with hostility from the major European powers, all of which saw the signing of the JCPOA as opening up Iran for investments by major European energy conglomerates and for increased trade.

The White House issued a statement saying that the decision on the waivers was aimed at “denying the [Iranian] regime its principal source of revenue.”

“The Trump administration and our allies are determined to sustain and expand the maximum economic pressure campaign against Iran to end the regime’s destabilizing activity threatening the United States, our partners and allies and security in the Middle East,” it said.

This policy, which the US administration has dubbed “maximum pressure” against Iran, also saw the Trump administration earlier this month take the unprecedented action of designating the Islamic Revolutionary Guard Corps (IRGC), an integral part of Iran’s military, as a foreign terrorist organization. The action was taken over objections from both the Pentagon and the CIA, which fear that it will provoke reciprocal treatment toward US military and intelligence personnel operating in the region.

The US attempt to cast Iran as the principal “destabilizing” force in the Middle East has been continuous under Democratic and Republican administrations alike ever since the 1979 Iranian Revolution that overthrew the US-backed monarchical dictatorship of the Shah, a pillar of imperialist domination in the Middle East.

This US narrative has only intensified as Washington has invaded and occupied Afghanistan and Iraq, both of which border Iran, and unleashed wars for regime change in Libya and Syria. The victims of these wars number in the millions.

Under the Trump administration, the axis of US Middle East policy has been the forging of an anti-Iranian alliance comprised of Israel, Saudi Arabia and the other reactionary Sunni Gulf Oil sheikdoms, with Washington supplying massive amounts of arms to Iran’s regional enemies.

The Trump administration is counting on its regional allies among the monarchical dictatorships, particularly Saudi Arabia and the United Arab Emirates, to increase oil production to offset any impact from the decrease in energy supplies created not only by the sanctions against Iran, but also by those imposed against Venezuela. Even further tightening of the market stems from the escalating civil war in Libya.

Such action, by the Sunni oil sheikdoms, however, is far from assured. The Saudi monarchy, which is on the verge of filing an initial public offering (IPO) for its giant state-owned oil company Saudi Aramco on the stock market, has ample reason to welcome a spike in oil prices.

Tehran issued a defiant response to the US announcement on the end of the waivers. “Given the illegal nature of these sanctions, the Islamic Republic of Iran has not considered and will not consider any value or credit for waivers granted [to customers of the Iranian oil] on [US] sanctions,” Iranian Foreign Ministry Spokesman Abbas Moussavi said on Monday.

Meanwhile, the commander of the Islamic Revolution Guards Corps (IRGC) Navy warned that Iran could close down the Strait of Hormuz, a key passageway for Middle East oil bound for Asia, if the US blockade prevented its own oil from passing through it.

“In case of any threat, we will not hesitate to support and defend Iran’s waters. We will defend our honor and will take reciprocal measures when it comes to protecting Iran’s rights,” IRGC Navy Commander Rear Admiral Alireza Tangsiri said.

The US drive to effect regime change in Iran by crashing its economy has exacerbated the country’s social and economic crisis, with the government of President Hassan Rouhani, representing the interests of the Iranian bourgeoisie, compelled to maneuver between the threats from an increasingly rapacious US imperialism and the movement from below by the working class in opposition to conditions of unemployment and austerity and the rolling back of the limited social concessions the mullahs made as they consolidated their power in the early 1980s.

The Trump administration’s criminal Iran agenda—its repudiation of the JCPOA and unleashing of economic war on Iran—has placed Washington and Tehran on a collision course, threatening to ignite a Mideast-wide war that could draw in all of the major nuclear-armed powers.

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