Iran Reacts to EU Embargo Implementation
Iran’s governor to OPEC, Mohammad Ali Khatibi, speaking of sanctions implemented on Sunday, warned “the EU would bear ‘the consequences of politicizing the market,’” (Bloomberg 7/1). Iranian ambassador to the UN, Mohammad Khazaee, suggested the current sanctions regime “by itself indicates that they are not willing to engage with us in a meaningful dialogue,” (NYT 6/29).
Three Days of Iranian Missile Tests Begin
Iranian Revolutionary Guards General Amir Ali Hajizadeh has announced three days of missile tests starting on Monday, saying the exercises are “a message ‘that the Islamic Republic of Iran is resolute in standing up to … bullying, and will respond to any possible evil decisively and strongly’” (Reuters 7/1; CNN 7/2). The war games will include target bases “made to look like airbases of ‘extra-regional powers’” and “long-range, medium-range, and short-range missiles”, (CNN 7/2). Hajizadeh, who is head of the Revolutionary Guards airborne division added that “If [Israelis] take any action, they will hand us an excuse to wipe them off the face of the earth” (Reuters 7/1).
Bill Would Stop Oil Trade through Hormuz
Iran’s National Security and Foreign Policy Committee has drafted a bill that would attempt to stop oil tankers from shipping crude through the Strait of Hormuz to countries that support sanctions against Iran. Iranian MP Ibrahim Agha-Mohammadi stated that as of Sunday, 100 of 290 members of the Iranian parliament had signed the measure (Reuters 7/2).
Iranian Domestic Markets Weaken
The imposition of the new measures threaten to “make the distortion in the economy even worse”, according to the New York Times, in a country where the national currency has lost 50 percent of its value in the last year and currency speculation has become a significant factor in the market(NYT 7/1). The dollar was trading at just over 18,500 Rials last Saturday, by Thursday it was above 20,000 for the first time since late January (Washington Post 6/29).
Oil Markets Face Insecurities
Exxon Mobil Corp. Chief Executive Rex Tillerson said last week “‘what happens on the day-of is hard to predict’”, referencing today which marks the first day of trading after the implementation of the EU embargo on the import of Iranian oil. Barclays oil analyst, Amrita Sen, commented, “If demand recovers, you will see the shortage quite quickly” (WSJ 7/1).
In a Bloomberg survey of 42 analysts on June 28, 16 of them expected crude futures to increase, 12 forecast little change in prices, and 14 expected a decline in prices (Bloomberg 7/2).
Iran to Launch Caspian Submarines
Fars, an semiofficial Iranian news agency, has quoted Adm. Abbas Zamini Tehran as saying that Iran plans to deploy “light submarines” in the Caspian Sea (AP 6/30).
Iran Changes Oil Market Strategy
Iranian oil minister, Ghasemi, said Friday Iran had begun exporting gasoline rather than importing it, as it had in the past, potentially allowing the Islamic Republic to cushion some of the sanctions (WSJ 7/1).
Iranian oil officials and contractors have said they may shut down some of its oil wells for temporary maintenance, which could damage reservoirs and push up global oil prices. JBC Energy, a Vienna-based oil consultancy, said on Friday that Iran’s crude oil production has fallen to its lowest level since 1989, following its 10-year war with Iraq (WSJ 7/1).
Iran Requests OPEC Meeting to Address “Irrational” Prices
On Saturday, Iranian Oil Minister Rostam Qasemi said, “We have asked the secretary general to set up an extraordinary meeting as prices have become irrational,” on his ministry’s official news website Shana (AP 6/30). OPEC had last met on June 14, where members agreed to keep output at 30 million bpd, but production has topped 33 million in the interim (AP 6/30).
Brent for August increased 7 percent on June 29, closing at $97.80, before sliding to $95.77 today, on speculation based on the Iranian oil embargo and labor strikes in Norway. On June 21st Brent had fallen below $90 (Bloomberg 7/2).
– “The Blame Game”
Trita Parsi, President of the National Iranian American Council, writes in the Daily Beast that attempting to minimize the political blowback from Moscow Talks is a short-sighted solution to a long-term problem:
Since the political cost of a small deal was deemed higher than the political cost of no deal, failing in Moscow would translate to success in Washington. So according to diplomats from the P5+1, Obama changed the goal post and sidestepped the principle of reciprocity and made demands of the Iranians without offering anything in terms of sanctions that Tehran viewed as valuable. That way, the President could assert that he offered no compromise and no sanctions relief – which would cause failure in Moscow but be well received in Washington.
In political terms, the Obama Administration’s strategy seems to have worked. The talks failed to produce an agreement—and no one in Washington complained. There were no sustained attacks from the Republicans. No complaints from Netanyahu. Democrats in Congress stayed silent. In fact, Obama was praised for having stood firm—and refusing to reach a compromise.
But what is politically expedient in the short term may be detrimental in the medium-term and disastrous geopolitically. Come November, the failure to reach a deal may become a political liability. The Republicans will still criticize Obama’s record on Iran, accusing him of having failed to stop Iran’s nuclear program, betraying the Iranian people and not standing up for Israel’s security. They have no choice but to attack Obama, and Iran is viewed by the Republicans and by Israel as Obama’s weak spot—deal or no deal.
Read the full article at The Daily Beast
– “For Iran, sanctions are a price worth paying to preserve the Islamic republic”
Hadi Kahalzadeh and John Schiemann write in the Guardian that the West does not understand Iran’s cost-benefit analysis when it comes to sanctions and its nuclear program:
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Sanctions also play into Khamenei’s efforts to consolidate his power and justify internal suppression. Hence, Iran may actually view sanctions not as a cost, but as a benefit. Iran can – and does – point to sanctions as the suffering it bears in its role as the standard bearer of resistance in the Islamic world against what it regards as US imperialism.
On this view, the Islamic Republic is a model to be emulated by Arab revolutionaries, the successful export of which only further legitimises the three founding myths of the regime. Sanctions are therefore an economic investment with short-term costs that will pay large dividends in the long term.
Iran is not playing chess, no matter how much the US and the EU might wish it to be so. With Iran and the west playing different games, a peaceful resolution in the near future seems very unlikely.