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Abu Dhabi, UAEFriday 16 November 2018

Protesters in Tehran burn an American flag and a hundred dollar bill during a demonstration on the anniversary of the 1979 US embassy seizure. US sanctions on Iran have come into effect. Ali Mohammadi / Bloomberg

US turns the screws on Iran as full sanctions take effect

As midnight hits in Washington on Sunday, some of the toughest US sanctions on Iran's energy, shipping, shipbuilding and financial sectors snapped back into place as the Trump administration attempts to increase pressure on Tehran to bring it back to the negotiating table.

Experts who spoke to The National, from different sides of the debate, said sanctions and economic pressure alone will not be enough to change Iran’s political calculations and force it to negotiate.

The new sanctions will apply to businesses, banks and oil exporters dealing with Iran but they include eight temporary waivers, including for China, India, Japan, South Korea, Italy and Turkey. The US administration expects a complete cutting off of Iran from the SWIFT network for banking transactions.

Oil prices fell on Monday. Brent crude futures were at $72.39 per barrel at 05.40am, down 44 cents, or 0.6 per cent from their last close. US West Texas Intermediate crude futures were down 53 cents, or 0.8 per cent, at $62.61 a barrel.

The UAE voiced strong support for the sanctions in a statement issued on Sunday by the Ambassador to the US Yousef Al Otaiba, who said: "The UAE will continue to work closely with the US, regional allies, and other responsible nations to apply all the tools of diplomacy and statecraft to hold Iran accountable for its destabilising activities in the Middle East and beyond."

While the timing of the sanctions is tied to the US withdrawal from the nuclear deal in May, it also coincides — as pointed out by US Secretary of State Mike Pompeo — with the 39th anniversary of the takeover of the US embassy in Iran in 1979 that led to the taking of 52 American diplomats hostage for 444 days.

Mr Pompeo said the goal of the economic pressure “is to compel Iran to abandon its destructive activities”. But Ali Vaez of the International Crisis Group told The National that such a goal lacks understanding of how the Iranian regime has behaved historically. “There is no doubt that these sanctions will inflict significant harm on the Iranian economy. But they are unlikely to either cause economic collapse in Iran or bring Iran back to the negotiating table,” Mr Vaez said.

“The only thing that the Iranian leaders deem as more dangerous than the sanctions is surrendering to them,” he said, comparing current measures with Iran’s economic performance and regional behaviour over the past 40 years. “There’s almost no correlation between economic pressure and political calculus. Tehran pursues what it deems vital to its national security, come hell or high water.”

Mr Vaez cited the 1980s as a case in point, when Iran was at war with Iraq, with shrinking oil revenue and GDP growth, yet it stayed committed to building up its proxy networks and trying to export its revolution abroad.

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Robin Mills column

Iranian oil could be replaced from a number of sources as Saudi Arabia and Russia turn on the taps

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Behnam Ben Taleblu of the Foundation for Defense of Democracies agreed that sanctions alone were not enough, but argued that when supported by a regional strategy, they might force a change in Iran’s behaviour.

“Washington will need to complement this newfound pressure in two ways in 2019: first, to step up the campaign to push back against Iran in the region, and to work hard to translate economic wins into political ones, especially with the trans-Atlantic community.”

Mr Taleblu told The National that the pressure has to be sustained. “Washington is going to have to work with countries who received exemptions [waivers] to wean them off Iranian oil."

A construction crane stands beyond Iranian flags lining a section of the Hashemi Rafsanjani highway in Tehran. Bloomberg
A construction crane stands beyond Iranian flags lining a section of the Hashemi Rafsanjani highway in Tehran. Bloomberg

The impact of sanctions is in “impeding the regime’s access to the international financial system, threatening to punish those who provide critical services to designated Iranian banks, and bringing back escrow accounts to lock up revenue from oil sales to countries which have received an exemption from US sanctions”, he said.

But for the strategy to succeed, it has to include a regional element, Mr Taleblu added. “This requires building a coalition to condemn and punish Iranian ballistic missile flight-testing, working with regional partners to intercept missile and arms transfers, articulating and striking to an end-state for Syria that helps evict Iran, and countering the political and military influence of Iran’s proxies in Iraq.”

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Read more:

Shifting Middle Eastern sands and the renewed sanctions on Iran

'I won't survive': Iranians reel from sanctions

Iranian oil tankers 'go dark' before renewed US sanctions

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The US administration is working on the idea of establishing an "Arab Nato" to be known as the Middle East Security Alliance, or MESA, that would include the GCC countries along with Jordan and Egypt and address countering Iran. While the plan was to launch the concept at a summit in January, disagreements about its framework and goals, and slow progress on resolving the Qatar crisis, could delay the meeting.