Chaos Reigns in Trump Administration over Iranian Sanctions

Authored by Tom Luongo via The Strategic Culture Foundation:

Sanctions may indeed be coming but will they have the bite that Donald Trump is hoping for? It’s a good question as we open November with a flurry of edicts from Trump’s State and Treasury Departments.

Let’s go over them all and see just how contradictory they are while at the same time acceding to the reality of just how much the world has changed in the six years since President Obama first went nuclear on Iran with sanctions.

It starts with Trump’s tweet that “Sanctions are Coming.” Okay, fine we knew this. But sanctions don’t account for much if the State Department is handing out 180 day waivers to countries.

Next up was Pompeo saying on the same day that no less than eight countries would be exempt from sanctions for buying oil from Iran.

A little news for Mike Pompeo, Halloween was last week.

Contrast this with 2012 where India, for example, to get around the sanctions had to essentially barter to get much needed Iranian oil, because no such exemption was forthcoming.

South Korea and Japan were also denied waivers then, but according to the Financial Times they are all among the countries to be exempted.

Mr. Pompeo did not name the eight jurisdictions, but Turkey’s energy minister said his country had been given an exemption. India, South Korea, Japan and Iraq are among other US allies that experts expect to benefit. China is also expected to be a beneficiary. The list will be announced on Monday.

Mr. Pompeo pushed back on suggestions that the US was being lenient to Iran or that the Trump administration had failed to deliver a hard line in the absence of European backing. He said two of the eight jurisdictions would reduce Iranian oil imports to zero in a few weeks and the other six had agreed to “greatly reduced” levels.

As always, believe it when you see it. What matters, ultimately, is that Turkey, India and China continue their purchases. They are some of the biggest consumers of Iranian oil. And as the competition drops for Iran’s production so to will the price and I wouldn’t be shocked if eventually all of these countries actually increase their imports of Iranian oil rather than cut one single barrel.

I mean, it’s not like I heard that India was now all of a sudden backing out of the new IPI – India Pakistan India — pipeline that Gazprom is building for it.

In fact, let’s get serious here. India, Iran and Russia just announced more concrete plans about opening up the North South Transport Corridor to ship goods between them.

I find it funny that Turkey is no longer on Trump’s “bad people” list once he was exposed over his relationship with Mohammed bin Salman due to l’affair Khashoggi. All of a sudden there are all sorts of agreement and reciprocity happening between the two countries, but in ways that are not in line with the U.S.’s previous policies.

Turkey has been openly hostile to the U.S. with President Erdogan openly accusing the U.S. of trying to oust him from power in 2016 and fulminating the market turmoil in the Lira earlier in the year.

There’s cooperation between the Turks and the U.S. in Manbij, Syria? Political prisoner transfers?

And now Trump, the ultimate ‘tough guy’ is giving Turkey a waiver on buying Iranian oil?

You can bet that Turkey is not one of the two countries who have agreed to cut imports to zero. In fact, I will be surprised if Turkey cuts its imports more than a nominal amount so that Pompeo can bloviate about winning on this issue and then never bringing it up again.

Do you remember who laundered Iranian oil money in the form of physical gold through their banks during the last sanctions period? That’s right it was Turkey, and Erdogan knew all about it.

Because let us not forget what is really going on here. The U.S. doesn’t have the same power it had to enforce these types of escalating sanctions regimes like they used to.

Which brings me to the next U.S. proclamation vis a vis Iran. And that is the pressure the State Department is putting on international financial messaging service SWIFT to cut Iran’s financial institutions out of the their system, similar to what Obama did in 2012.

In the recent past Trump ‘dog-whistled’ that Iran would not be subject to SWIFT expulsion, but his Treasury Secretary Steve Mnuchin is adamant that Iran be cut off. Apparently the argument to keep Iran in SWIFT based on being able to better monitor their activity failed to win over Mnuchin.

I’m not at all surprised about this as so much of this anti-Iran policy has been driven by the Israelis and the Saudis, who still feel that using the U.S. as their bully is the best path to getting what they want. In my opinion, Mnuchin’s loyalties lie with the U.S. They lie with Goldman-Sachs first and Israel second.

The U.S. is way down on his priority list. Until I see something from Treasury other than insipid anti-Russian neocolonialism I will continue to hold that opinion.

And that brings me to why I think there’s, ultimately, a lot less here than meets the eye.

Russia’s alternative to SWIFT, SPFS, is not only open for business it is now the dominant financial messaging system in Russia and its list of interested international clients include banks from all of the countries I’ve already talked about – India, Iran, Turkey and China.

And Russia was quite savvy releasing this ‘news’ at the same time as the U.S. finally had to put up or shut up about sanctions on Iran. It was a deft piece of a diplomacy if you ask me.

Now, don’t’ for a second think resistance to this situation will be easy for Iran or the Iranian people. It won’t be. It’s already hard and the fact that Pompeo, Trump and the rest of the gang that can’t negotiate don’t seem to care one whit about that tells us all we need to know about their collective moral compass.

They don’t have one.

But, as always, when governments fight the people lose.

So, unlike in 2012, Iran has a lot more friends. But those friends also have a lot more power and resources than they had back then. A Russian alternative to SWIFT is not only a viable work-around for the sanctions it is the birth of a new and parallel regional monetary system at a time when there is a growing fear of a political and financial meltdown just over the horizon in the West.

These countries will need to have alternative ways to conduct and clear transactions going forward. Because you can bet that there will be more of these edicts, each one successively less effective than the last, over the next few years.