On Sept. 25, Donald Trump utilized his talk at the opening session of the United Nations General Assembly to escalate U.S. attacks on Iran. He accused Iran’s leaders of “sowing chaos, death and destruction” to justify the Washington’s unilateral withdrawal from the nuclear accord with Iran, and its re-imposing harsh sanctions on that sovereign nation. That same day Trump’s ultra-aggressive foreign policy team chimed in. U.S. National Security Adviser John Bolton warned of “terrible consequences” if other governments defy the U.S.-imposed sanctions, and Secretary of State Mike Pompeo added his strong opposition to other governments’ continuing trade with Iran. The article below, based on a talk at a recent Party for Social and Liberation forum in San Francisco, explores the real issues involved, and the U.S. strategy towards Iran.
Washington is trying to force regime change in Iran. Its weapon of choice against Iran is economic warfare. Through illegal sanctions, the Trump administration is attempting to impose so much hardship on the Iranian people that the Islamic Republic will be severely weakened and eventually overthrown.
The danger comes from Washington
On May 8, President Trump announced that the U.S. would exit the nuclear agreement with Iran and re-impose sanctions, which go into full effect in November. Trump claimed that Iran was continuing its pursuit of nuclear weapons. This false claim contradicted the International Atomic Energy Agency, which has certified Iran’s compliance 11 times. Trump’s claim even contradicted his own government’s intelligence.
Comically, Trump said: “We will not allow American cities to be threatened with destruction.” Iran has no military bases anywhere near the U.S. But the Pentagon has Iran virtually surrounded by with huge bases and flotillas. In reality, Iranian cities are in danger of destruction by U.S. bombings, not the other way around.
Background on the nuclear accord
A review of the recent history of U.S.-Iran relations shows that Washington’s justifications for its economic war on Iran are based on falsehoods and distortions.
On July 14, 2015, in Geneva, The Joint Comprehensive Plan of Action, commonly known as the Iran nuclear accord, was signed. The signers of the JCPOA were Iran, the five permanent members of the UN Security Council—Britain, China, France, Russia and the United States— and also Germany and the European Union. According to the JCPOA, the U.S. and others recognize Iran’s right to enrich uranium for peaceful purposes. This is a right guaranteed by the Nuclear Non-Proliferation Treaty. But up to that time, the imperialists had effectively refused to recognize this right.
Even before signing the JCPOA, Iran was in compliance with the Non-Proliferation Treaty. To comply with the JCPOA, Iran has implemented the “Additional Protocol.” This gave the International Atomic Energy Agency more powers to monitor its nuclear facilities. This means that all of Iran’s nuclear facilities have been under constant watch and surveillance.
Since signing JCPOA, Iran has reduced two-thirds of its uranium enrichment activity. Of the 19,500 centrifuges before the deal, only about 6,000 centrifuges are still spinning.
Of the 8 ton stockpile of low-enriched uranium stored at the time of the signing of the deal, Iran has kept about 300 kg and exported the rest. The Fordow facility, built inside a hollowed-out mountain and virtually impenetrable by aerial bombardment, has remained operational, but only as a research center. The heavy water plant at Arak has continued operating, but redesigned to make it impossible to produce weapons-grade plutonium, even though that was never the intent.
Trump’s pull-out of nuclear treaty is illegal
Trump says that one of the flaws of the nuclear accord with Iran is that it caused the U.S. to give billions of dollars to Iran. This is a gross distortion. This was no “gift” from the U.S. When Iran signed the treaty the U.S. and its allies lifted nuclear-related economic sanctions, including oil embargos and financial restrictions. This was supposed to also release $100-to-$120 billion of Iran’s frozen assets, giving Iran back its own money. But only about $35 billion of Iran’s frozen funds have been released.
Also, it is inaccurate to simply say that Trump has withdrawn from the JCPOA, as the U.S. media often do. The accord has no “out” option and is binding on all signatories. As a signatory of the JCPOA, the U.S. did not legally have the option to pull out. Trump’s pulling out of the JCPOA is an illegal act.
Iran remains compliant with treaty
With the U.S. illegally pulling out and the re-imposition of the sanctions, Iran would be well within its rights to pull out. However, Iran’s reaction has been cautious and measured. President Hassan Rouhani has said that Iran would stay in the JCPOA if Iran benefits from it. Supreme Leader Khamenei has said that Iran would have to get guarantees from the European governments if it were to stay in the deal; otherwise the European governments could prove to be untrustworthy like the U.S.
European governments remain in accord
Ever since World War II, European imperialist governments have been relegated to the role of junior partners to the U.S. Given the absolute dominance of the U.S. in the post-World War II era, they felt they had little no choice but to consent to this new relationship of forces. With the decline of the U.S. economic dominance in recent decades, in some instances, some European imperialists have challenged the U.S. – like France during the U.S. invasion of Iraq.
The U.S. unilateral abrogation of the JCPOA humiliated the European regimes, who were signers. Are they willing to challenge the U.S. on this front? There have been statements of indignation from some European officials. For example, France’s Economy Minister Bruno La Maire said, “Do we want to be vassals who obey decisions taken by the United States while clinging to the hem of their trousers?” But the general tone of European leaders has been more cautious. For example, German Chancellor Angela Merkel, vowed to stay in the JCPOA but cautioning against damaging their “valuable transatlantic partnership” with the U.S.
Since May, of this year, there have been ongoing negotiations between Iran and the Europeans. The Europeans have urged Iran to continue to stay within the JCPOA, despite renewed sanctions from the U.S. Since that time, the question has been to what extent are the Europeans willing to confront the Trump administration.
The initial steps from the European capitals were not too promising. European leaders urged their country’s corporations to continue to trade with Iran. They even set up a legal system to potentially fine companies who observed U.S. sanctions without approval from a commission in Europe.
But we must understand that U.S. sanctions are extra-territorial in nature. It’s not just that the U.S. government and U.S. corporations are banned from trading with Iran. Taking advantage of U.S. dominance in international trade, particularly through the dollar being the effective international currency, the U.S. is threatening every company and government that trades with Iran with heavy fines.
Few European corporations have been willing to trade with Iran and risk hefty fines of up to hundreds of millions of dollars from the U.S. Even France’s giant oil company, Total, announced that it would pull out of Iran out of fear of U.S. sanctions.
Five governments create ‘special purpose vehicle’ to bypass sanctions
But in the last week new information indicates some seriousness on the part of European powers to stand up to Trump. According to a spokesman from the German finance ministry, “The German government is working together with the EEAS and European Commission [two key Economic Union bodies], as well as France and the United Kingdom, on maintaining financial payment channels with Iran. The negotiations on this are intensive and ongoing. There are different models under consideration.”
On Sept. 26, the foreign ministers of Britain, France, Germany, Russia, China and Iran issued a joint statement endorsing the creation of the “special purpose vehicle.” This European “special purpose” financial vehicle would function primarily as an accounting tool, and provide necessary legal and monetary loopholes for trade to continue between Iran and EU nations.
If a European nation or state-run oil company wanted to purchase Iranian oil, it would transfer cash to this new special institution, from where Iran would take the cash. The reverse would also be true. Through this special company, Tehran could purchase all kinds of products from Europe using euros.
The EU special purpose financial vehicle will keep the cash inside the EU economic bloc and away from US-controlled global money-transfer network, including SWIFT, the largest of the electronic payment systems financial institutions use to transfer funds. This EU financial vehicle would also avoid the use of any bank that might be afraid of being locked out of U.S. financial markets. The next step is the establishment of a physical office space for this new entity.
If this plan becomes operational, Iran will be able to sell oil and make purchases from Europe. Under those circumstances, Iran will likely stay in the JCPOA and its economy will likely stabilize.
Sanctions already impacting Iran
The way things are right now. Trump did major damage to Iran’s economy even prior to the May 8 announcement just by verbally trashing the agreement.
For over a year now, Iran’s currency, the rial, has been in a downward spiral. A year ago the rial had an exchange rate of 30,000 to one U.S. dollar. Today, the black market rate is as high as 150,000 (5 times as high). In just three weeks, during my stay in Iran in the summer, I could see the immediate effect of the currency decline as, sadly, every day the price of necessities went higher and higher.
Mass fear of the re-imposition of sanctions has done significant damage to the economy. Any capitalist economy relies heavily on the people’s positive perception for consumption and investment. That’ why U.S. economic news: report on consumer confidence on a daily basis.
In the case of Iran, everyone is severely worried about the sanctions. So most people have converted most of their savings to foreign currencies. And this process feeds on itself. The more Iran’s currency loses its value, the more people rush to convert their savings to foreign currencies and keep their foreign currencies in their homes.
So the U.S. sanctions have already hit hard. Iranian people, particularly the working class, are suffering under these illegal sanctions.
In November, U.S. sanctions on Iran’s oil will officially be resumed. The Trump administration is even going beyond the sanctions it imposed on Iran before the 2015 agreement. During the last round of sanctions, India and a few other countries purchased Iran’s oil primarily in a barter system, giving Iran many different commodities in exchange for oil. But through pressure and threats, the U.S. is aggressively trying to keep India and other countries from buying oil from Iran.
The Trump administration is going all-out trying to paralyze Iran’s economy.
In 2012, when the U.S. and the EU imposed severe sanctions, Iran’s oil exports dropped from 2.5 million barrels per day to just a little over 1 million barrels per day. In January 2016, with the lifting of the sanctions, Iran re-emerged as a major oil exporter. How well Iran survives the sanctions in the long term may largely depend on the oil sector.
Sanctions are an instrument of war
We must be clear that sanctions are another instrument of war.
The U.S. is suffocating an oppressed country and making its people suffer under the pretext that it might someday develop nuclear weapons. The real threat to world peace is not the hypothetical possibility that Iran might build and use nuclear weapons. The real threat to the world is the U.S., with its terrifying stockpile of nuclear and conventional weapons, under the leadership of an ignorant far right capitalist politician surrounded by ultra-aggressive warmongers, like Pompeo and Bolton.
Progressives, revolutionaries and anti-war forces must unconditionally condemn U.S. sanctions on Iran and demand an end to the U.S. regime-change policy against Iran.
U.S. hands off Iran!